Spotify! The strongest leading music streaming company, that has 140 million people around the world! What hasn’t been said behind the 75 million paid subscribers. They are heading towards a deficit crisis.
Spotify has a debt of approximately $1.5 billion as of 2017, and 70% of its revenue is paid for royalty to Three Big Music Labels such as Universal Music Group, Sony Music Entertainment and Warner Music Group. According to Spotify’s financial report, registered with the Luxembourg business registry in June 2017, the owner’s total loss has increased from approximately € 230 million in 2015 to € 539.2 million in 2016. In 2016, the operating loss increased by 48% from 2015. The main reason for these losses is the incredibly high royalty payments. This is because the portion of royalty payments is too large compared to sales.
The deficit increase of Spotify (Statista, 2018)
On the other hand, SoundCloud also is not making meaningful revenue itself. (SoundCloud’s financial statement) As a result, the proposed amount of $1 billion for buyout in 2016, dropped down to $250 million in 2017.
The current streaming platform needs to improve its revenue model. However, there is still room for criticism even though we were to improve our profit structure through continuous royalty negotiations with music labels, but we still earn small profit from musicians. This is because a musician earns $0.00397 in revenue each time a Spotify listener plays a song. Even though Apple does not have much profit in its own right, it sees ‘Apple Music’ as part of its overall business portfolio, so it is in a totally different position compared to ‘Spotify’ or ‘SoundCloud’.
To overcome the disadvantages of the traditional music streaming platform described above, the block-chain-based music platforms emerges. ICO has been targeting on platforms that uses block-chain technologies such as Voise, Muse, Opus, and Musicoin, and new platforms are constantly emerging.
However, as a dual-completed platform, there are no other experienced platforms that have reliably secured a large number of musicians and that has generated remarkable amount of traffic. Still, they falls short to RecordFarm1.0 in terms of acquiring a large number of artists and songs.
Record Farm 1.0 cumulative figures (December, 2017)
Here are the strengths of Record Farm. Record Foundation has the RecordFarm 1.0 platform with a significant amount of users and in addition, is also equipped with a block chain. For the past 3 years, it has maintained its knowhow from Record Farm model 1.0 and through Record Farm 2.0 users will be awarded with RCD tokens and will also create a block-chain-based digital content system that can freely be utilized for content payment.
Record Palm 2.0 service (to be released in 2019)
RECORD Foundation runs the first reward-based music service platform, RecordFarm. A solution to the traditional music industry, it creates the healthy environment where creative works are valued, curations from users are rewarded, and transparency is ensured. The new ecosystem, driven by blockchain technology and RECORD token, simplifies the process and eliminates unnecessary intermediaries.
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