Because streaming music advances their other ambitions, Apple Music, Amazon, Alphabet’s Google and YouTube units, don’t need their services to be hugely profitable, though none of them are selling subscriptions at prices that suggest a willingness to lose money. That gives the tech companies a major advantage over smaller companies like Pandora Media Inc., Spotify AB and French counterpart Deezer, whose main businesses are music streaming.
“I think that any company that has some other motive [for offering streaming] is going to win,” said Paul Young, a music-business professor at the USC Thornton School of Music. That is at least partly because the music-only companies are burdened by heavy costs. The paid services typically spend 70% of their revenue on licensing music and much of the rest on acquiring customers.