Next are the music licensing costs per track. So that means that Spotify is spending $0.05*84,000*30, or about £126,000 per month on its streaming alone. If you look for streaming costs, you find that it's probably around $0.05 per GB (the link is to an analysis of Netflix, reckoned to be paying $0.03 per GB but Netflix is big).
(Yes, 84 terabytes per day.) Per month, multiply by 30.
That gives us 84,000 GB per day streamed. So assume around 1 million streams online at any one time, and divide our streamed data by 5. A more reasonable assumption is that 1 in 5 users actually uses it to that extent. And rising.īut that assumes that everyone's using the service all the time. If they all listen for 70 minutes per day, that's 5,000,000 x 84MB per day = 420,000 GB per day of streamed data. It says it has 5 million users (as of early September probably more now). Per user, that means that it is streaming 160*60*70 = 672,000 kilobits per day = 84 MBytes per day. Spotify says that the average user listens to its product for 70 minutes per day. In Spotify's case, it has two income streams: subscriptions, and adverts. Spotify (and Napster and We7, who we can also treat in this) have two principal costs: streaming (for which they have to pay a per-track fee to the MCPS/PRS, the music licensing group, representing the authors of the music plus whatever their bandwidth costs are) and storage/hosting.
(If you want a little background, Rory Cellan-Jones, the BBC's Technology/Business correspondent, has wondered who is making money in online music streaming.) But I thought that I should investigate more closely: there's lots of misinformation around.
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