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In Spotify's F 1 it states:"Generally, Premium Service royalties are based on the greater of a percentage of revenue and a per User amount, while royalties for the Ad Supported Service are based on the greater of a percentage of revenue and an amount for each time a sound recording and musical composition is streamed."Because of this system, Spotify is essentially screwed into an ever increasing net loss feedback loop. The only way to combat this is to either negotiate lower deals directly with music labels or to cut costs somewhere else. This is the main problem with music streaming services and it is why they are difficult to become profitable.Along the road, Spotify has also had some bumps.
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