Since launching in 2006, Spotify has revolutionized how people access music, podcasts, and audio content. Today, it’s the world’s largest streaming service. But behind the playlists and podcast deals, the company faces a simple and persistent problem: Spotify still hasn’t figured out how to turn a profit.
Despite its success with users, Spotify has never posted a full-year net profit. Over the years, the company has made a string of expensive, high-profile mistakes, from podcast studios no one asked for to flashy exclusivity deals that haven’t paid off. As those investments have continued to flop, the company has turned to increasingly exploitative tactics to cover its losses that harm the artists who power its platform and the consumers who pay for it.
One of the most glaring problems is how Spotify treats musicians. The platform pays artists just a fraction of a penny per stream—as little as $0.0033 per stream—making it impossible for most creators to earn a living from their work. From global superstars in Nashville to up-and-coming artists based out of Los Angeles, creators across the industry have called out Spotify’s unfair revenue-sharing model. But instead of addressing their concerns, Spotify has worked to downplay the criticism, even silencing groups trying to raise awareness about their business tactics.
Spotify has also faced repeated criticism over its data collection and advertising practices. The company uses listening habits and behavioral signals to track users’ moods and preferences, information it repackages into invasive ads. While the worst of these practices has been kept in check by app store privacy measures, Spotify’s behavior has still raised the concerns of cybersecurity experts and consumer watchdogs.
However, these shady tactics haven’t stopped Spotify’s financial situation from spiraling. After its podcast spending spree fizzled, Spotify shifted its focus to audiobooks, aggressively pushing the product onto users who didn’t ask for it. According to a recent bipartisan request for federal investigation, Spotify has quietly shifted millions of subscribers into more expensive bundled plans without clear notice or consent.
Lawmakers are right to call attention to Spotify’s unethical business practices. However, despite the recent spotlight being shown on their anti-consumer, anti-creator tactics, Spotify has had some success in convincing lawmakers to change the rules to make it easier for them to abuse their users for financial gain.
Legislation like the Open App Markets Act (OAMA), which was introduced in Congress earlier this year, would give Spotify and companies like it more control over how they charge users, collect data, and distribute apps, all while rolling back safeguards that currently prevent companies from misleading customers. Spotify has lobbied heavily for the bill, pitching it as a way to promote competition. However, the fact is that OAMA would open the door for Spotify to double down on its shady tactics with even fewer checks in place.
Lawmakers shouldn’t be fooled by Spotify’s lobbying, and Congress shouldn’t pass legislation bailing a company out for poor business decisions that have consistently prioritized profit over principle.
The fact is that Spotify’s path to profitability shouldn’t come at the expense of the people who make and use its platform. Our elected officials should be wary of granting more power to a company whose business model relies on hiding fees, shortchanging artists, and pushing products consumers don’t want.
Phil Labonte is the founder and lead singer of the heavy metal band All That Remains and a contributor to Timcast IRL.
