Google has announced that they will be acquiring Spotify and all its rights and liabilities for an incredible $41.1 billion. Considering that Spotify has never turned a profit, that’s quite a layout.
Google’s hope is that it can use Spotify’s structure to align its two existing brands better with the music market: YouTube and Google Music.
YouTube, in particular, has been struggling to build relationships with artists and labels who claim they are underpaid by Google. Spotify’s strong ties with the industry may help them reach a compromise that suits everyone.
A single stream on Spotify earns $0.00006543. For the 24 hour period during which the Google deal closes, that goes up to 1 cent per stream!
That’s 15,283 times more per stream! For big streamers, that could mean a bumper payday this quarter.
That sounds like good news, but the expectation is that the royalty method may be killed off as Google tries to harmonize Spotify with YouTube and pay on a “fractions of advertising revenue” model, instead. That could mean much lower payouts in future.
It’s too early to say what, exactly, this take over means for Spotify as a company, but the early signs are that Google has made a wise move but that the music industry may end up paying for it.
