What’s going on with tech, recently?
Netflix cracking down on password sharing, reddit’s API changes, every streaming platform raising their prices, YouTube fighting against adblockers and potentially charging creators for visibility… the list goes on and on, and it seems to be coming from every direction all at once.
Am I missing some huge financial change in the tech investment sphere that has affected Silicon Valley (ie. freakout due to the SVB collapse)?
Or is this just a case of companies seeing each other get away with squeezing consumers, and following suit?
All of them are built on venture capital and borrowing money used to be “free” so investors were fine with borrowing with 0% interest and spending them on all the shiny tech projects. Now with interest rate being 5.25% they all of them all demanding return on their investment and companies that never in their lifetime were profitable are forced to come up with a way to make that money.
I’d love to read more about this, do you have a reference??
A good overview: https://fortune.com/2022/12/28/investing-outlook-2023-fed-interest-rates-stocks-inflation-cheap-money-era/amp/
It’s been the talk since quite some time ago and it’s finally here.
The keyword is “the end of cheap money” if you want to Google some more.
What kind of effect would this have the share prices? I guess for Spotify a $1 isn’t super crazy for people to accept, you’d think it’d rise?
At the very least, profitable companies can maintain their valuation. Unlike, say, Twitter valuation which dropped to a third of what Musk pay for because it’s losing even more money after the takeover.
I fear it’s the last option.
I mean, who doesn’t hate Diablo Immortal, but the sheep play it in masses and it seems to pay off.
As long as most people don’t care, then the providers won’t bother.
Interest rates are rising up globally, to fight global inflation, and the general feeling of a recession.
This is having several impacts in several ways. Mostly it comes down to VC (venture capital) and lending money being harder to get.
During the good time VC’s threw the net wide and invested in everything they could, knowing that only a select few would truly pay off. Well, it time for those investments to put up or shut up.
This is further having an impact on stock market and public companies. Previously potential has been seen as king. Looking for the next big thing, having lots of users etc. Now being actually profitable and surviving is going to be king.
Think of Tesla as riding this line nearly perfectly (and I’m no Elon fanboy). It rode the potential wave hard, it’s stock price soared, they were the first player in electric cars. They would have an edge on everyone! Then they started plummeting as markets saw the looming interest rates. Then they posted some profitable years, and are soaring again.
I recently read a pretty interesting take that a lot of this started because Silicon Valley Bank failed, and now all these companies have to do something they haven’t really had a necessity to do before — to make profit.
And all of them aren’t run by business geniuses as previously believed, on the contrary, most of the leaders are so disconnected from reality that they genuinely have no idea what people want in a service, they can’t take feedback or advice because “they know better”, and all the other stuff that comes with that.
So they do what they think is right, while missing the whole point of the product they are so desperately trying to make profitable.
Look at spez’s “we’ll stay profit-focused until profits arrive” and Musk’s rush to get at least some ROI on his $44 bn middle age crisis toy.
Aside from the VC funding that others have mentioned, being a publicly listed company means that there is a never-ending pursuit for increasing profits. Investors who buy stocks want to see a positive return. The problem with some tech platforms is that their product / service offering is already ideal, so their choices are to either spend money to innovative and build something new (risky!) or simply raise prices. Subscription pricing is ideal because it provides a consistent revenue base and allows the company to forecast what revenue is likely to be in the future.
The market. With the post covid shift, the market is asking for profitability over growth. So like every company public or wanting to go public is more interested in profitability.
My company went public a few years ago and we felt similar pressures from the market starting earlier this year maybe before.
The global oligarchy has decided its time to reap the latest round of fiat money purchased real goods.
We’re getting a twofer because they want to reassert their dominance over labor since we’ve gotten uppity due to the covid money.
It’s taught as the “business cycle” as if it’s some kind of natural thing that’s not driven 100% by those who imagine the imaginary value of our fiat currency.
They raised the price by 1 whole dollar after however many years and y’all are acting like it’s the tech apocalypse. This is hardly on the same scale as what Netflix is doing.
There’s a reason you’re poor.
That reason is wages not keeping up with inflation. Eg, if the US min wage kept up with inflation, it’d be something like $25/h (vs $7.25 federally today). I think you’d be able to afford an extra buck a month for music if you got paid that much more. And that’s just inflation. Don’t look up tying it to productivity cause that’ll just be sad.
Sure, but it ain’t because of a dollar extra on spotify.
😂😂
Meh, I dropped them more than a year ago because I just can’t stand having 60% of my ui be bullshit podcasts that I don’t want.
It’s my fault guys, just the other day I was thinking of how they had never raised the subscription price (in my country), unlike Netflix, which felt like they were raising it every year.
Woah how did you make your username show up as ****** ?
No wait that’s my password, hunter2
How did you turn your password into *'s like that?
I put on my robe and wizard hat
I love they have to sensationalize the title because if they said “raised prices by a dollar” most folks would wonder why it’s a headline.
My partner and I are on the Duo plan because there are only two of us. The price is going from $13 to $15, so it’s not just the family plan that’s getting raised.
Do what I did. Get some homies to be part of the fam and they throw your a few bones. 16$ split why 6 folk
Came here to ask/learn. Looked at the story on CNN today. It’s $1 more. Uh…
Hard to be too upset about this. Everything’s getting more expensive, and I’m assuming music rights holders have been squeezing Spotify more and more. I’d love to go back to music piracy, but having an enormous library available at a moment’s notice is worth the extra dollar to me. I do have a pretty huge collection of video game music since the big N refuses to license their music
Music right holders own spotify. At least the big ones.
It’s the only price hike I don’t mind. I like the service and I use it all day. By far the most content I get for my money.
It’s the ONLY company i pay for media. I don’t pay for movies and tv shows. It’s ridiculous. Like, you need 60 billion streaming services to get the content you want. With music, any given media platform is gonna have the same or similar music libraries. None of this exclusive shit.
Eh, I pay for Netflix and Disney+ (have the bundle, so I have Hulu too). Before I had Disney+, I had Amazon Prime, but I decided I wanted Disney+ more. I’ll probably go back to Amazon Prime at some point, or maybe get HBO or something. I don’t listen to enough music for Spotify to be worth it, so I mostly listen to audiobooks from my library if I want something to listen to.
My point is, you don’t need to have every streaming service all the time, just stick to one or two until you’ve watched everything you’re interested in, then switch to something else.
My main complaint is when looking for something specific. It’s almost always more expensive as a digital rental vs Redbox, so I just refuse to pay more for something that costs the company less. I borrow a lot of movies from my local library, and occasionally get Redbox if I want a recent release, mostly out of stubbornness to pay $5 or whatever for a 24hr rental.
This might be a good time to plug Tidal. Very similar UI and pricing but it sends way more money to the artists. Switching is also very easy and it can transfer your saved playlists and everything.
To be fair, the Family Premium rate went up by $1/mo. Certainly worth it imho.
But do they really need that extra dollar? They already pay less than a percent to artists. So why?
They also have staff that needs to maintain / improve the IT infrastructure. And those workers also need a salary raise to keep up with rising inflation.
Do you think the songs just magically appear on your device?
No, i think hard working artists like me put them there, and pay for the ability to do so. I’m not saying people that work at Spotify don’t deserve a paycheck, i’m saying the artists need a larger one.
Artists do definitely get shafted when it comes to royalties. But let’s not pretend they don’t need to raise prices at this point. The last one was in 2011, which means that they were probably burning investor’s money to be able to afford that.
do you think most of the money doesn’t go to shareholders?
Spotify has never paid a dividend, and a quick search points to that they have done a stock buyback once. I think it’s quite safe to say that most of the money does not go to the shareholders.
Most of the money goes to the rights holders, which incidentally happen to be large shareholders in Spotify, but this claim is disingenious.
They did have $1B stock buyback in 2021. They don’t pay dividends though.
they report to pay ~70%
https://loudandclear.byspotify.com/#box-2
Nearly 70% of that revenue is paid back as royalties to rights holders
The right holders are mostly big record companies (who own spotify) that have songs that always make it into all the playlists. The Artists don’t get much out of it. Other streaming services like deezer offer a model that is more fair for indipendant artists.
$2AUD, between me and wife its almost now same price as 2 individual plans used to cost
But do they really need that extra dollar? They already pay less than a percent to artists. So why?
How to keep poor 9-5 to stay poor.
Spotify pays very very little to artists per stream. Tidal is a better streaming platform to send money their way.
Tidal doesn’t pay that much better; no streaming services do.
If payouts to artists matter to you then buy their music outright from platforms like Bandcamp and Qobuz rather than stream their music for peanuts.
Tidal, Apple music and Deezer pay better, yt music pays worse. Source: i have music on all of these plattforms.
link to your music?
how much does tidal pay? a quick search showed spotify was only taking 30% in which is in line with steam and apple for digital distribution stuff
https://loudandclear.byspotify.com/#box-2
Nearly 70% of that revenue is paid back as royalties to rights holders
Well, spotify may online take 30% but they funnel.most of the money to their owners, the big record companies.
And 30% is not like the 30% steam takes. If you stream only my songs (yes, I’m on spotify) for a whole months, maybe every day 10 songs that makes 300 streams a month, each for 0.2¢. All in all 60¢. The remaining 6.40$ of the 70% of 10$ go to the most streamed artists you never heard…and these artist only get small cuts from theur labels.
You can also buy any merch of theirs and that will make them more than lifetime streaming of all the services combined.
Yeah, this is my go-to for all forms of content creator. If I really like a band, I’ll see them in concert and/or buy random merch. If I really like a YT creator, I’ll buy their merch or send money directly with Patreon or whatever they use. If I really like a Twitch streamer, I’ll send money to them directly.
Just got an email a few hours back for my student account. Everyone is putting the squeeze on.
