Hi, today we explore:
If you've been on social media this week, you'll have undoubtedly come across Spotify Wrapped — the annual summary, and judgement, of who listened to what music on the streaming platform. The event has been unusually successful in making data collection and tracking cool / fun — but how does Spotify make its money?
Freemium
Spotify makes good use of a "freemium" model, offering up most of its services to users who don't want to pay... as long as they don't mind being constantly interrupted by adverts. In fact, of Spotify's 380 million active users, less than half (172 million) actually pay for Spotify. The rest (more than 200 million) are ad-supported users.
But, as shown in the chart above, Spotify has a big incentive to convert those free users into paid. Paid users brought in almost €2.2bn of revenue (~$2.5bn USD), almost 7x what Spotify made from advertising revenue on the free users.
What about the artists?
About 73% of Spotify's revenue went on what it called "costs of revenue" — which is primarily what was distributed to record labels, artists, music publishers, and other rights holders, for the right to stream their music or podcasts.
Exactly how much Spotify pays artists is a) hard to find and b) likely to vary a lot from artist to artist, but most estimates suggest that 1,000 streams of a song will net $3 to $5 to the rights holder. That means you need to be racking up hundreds of thousands of streams per month to earn a reasonable wage.
More than one-third of the world's population has never used the internet, according to a new global report from the UN’s International Telecommunication Union (ITU).
The ITU estimates that there are now 4.9 billion people online, up almost 800 million on the number pre-pandemic.
That progress was accelerated by the pandemic, but it still leaves ~2.9 billion people (roughly 9x the population of the US), without access. Many of those people live in lower-income or developing countries, with access in the least-developed countries in the world at just 27%.
Extremely online
Most of you reading this, and us who are writing it, could probably be described as extremely online. The internet likely touches our work, personal and social lives in some way. That's not the case for everyone who has access. Many of the 4.9 billion who have access might only have it infrequently, through shared devices or with a poor quality connection.
Toy story
Toys "R" Us is back.
This week the iconic toy retailer announced it would be opening a 20,000 sq ft two-level, store in New Jersey, less than a year after the brand's first failed relaunch.
Children's Bargain Town
Toys "R" Us, first founded back in 1948 under the name "Children's Bargain Town", was one of the most iconic retailers to fall victim to big-box competition and e-commerce. At the height of its reach, the company operated more than 900 stores across the United States, all of which were closed in mid-2018 as the company fell into bankruptcy after 5 years of declining sales and a looming debt pile.
Since then, the Toys "R" Us brand has had quite a ride. After the bankruptcy the rights were picked up by a company called Tru Kidz Brand, which opened 2 smaller stores... which lasted about a year before succumbing to COVID-19, leaving the brand to be sold on again.
The latest owner is WHP Global, which along with building the new flagship store has struck a deal with Macy's to sell toys under the Toys "R" Us brand in more than 400 Macy's department stores. A Toys "R" Us comeback? Stranger things have happened.
1)Apple is expecting to ship 10 million fewer iPhones over the coming months than it was initially expecting — blaming supply constraints and weakening demand for the new models. Maybe the religious 2-year replacement cycle is coming to an end?
2) Tesla is finally going to start shipping the Cyberquad. Sorry, correction, they're going to ship a kids version of the vehicle... a $1,900 all-electric mini ATV.
3) The first 5 games of the Chess World Championshiphave all ended in draws, following the pattern of the last championship — where all 12 games ended in a draw.
4)Grab, Southeast Asia's largest ride-hailing company has debuted on the Nasdaq, briefly grabbing a $40bn valuation before shares slipped 20%. Separately, DocuSign shares fell almost 31% after a disappointing update.
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6)44% of non-parents say it is not likely that they will have children someday, an increase on the 37% who answered similarly in 2018, according to Pew Research Center.
7) An Austrian surgeon has been fined €2,700 (~$3,000 USD) for gross negligence, after accidentally amputating the wrong leg of a patient in surgery.
*This is sponsored content.
