How Spotify Makes Money When It Gives Most of It Away

Spotify has 777 million users, but about two-thirds of what it earns goes straight to the music industry. So how does it make a profit? In this video, Dime breaks down Spotify’s business model with real numbers: why ads are less than a tenth of its revenue, how the free tier works as a front door to Premium, where the music money goes, how the margin has been growing, what its new bets cost, and the one weak spot in the model. CHAPTERS 0:00 The music industry gets two-thirds 0:21 Welcome to Dime & Margins 0:51 What is Spotify? 1:21 The obvious answer: ads and subscriptions 2:44 The real answer: Premium and the free tier 4:17 Where the money goes 5:51 The margin math 7:21 How the margin is growing 8:58 The new bets: audiobooks, podcasts and AI 10:30 The weak spot 11:59 The takeaway TELL ME IN THE COMMENTS If Spotify raised its Premium price by $1 tomorrow, would you keep paying? Tell me why. SOURCES Spotify’s second-quarter 2026 results and earnings presentation, its Q2 2026 earnings call, and its Loud & Clear 2026 report. The 56 / 14 / 30 split of each streaming euro is one 2024 estimate from the research firm MIDIA. Reported artist-share figures vary by contract. Figures are rounded. Per-user, per-tier and per-subscriber calculations are my own, based on the reported numbers. Dime & Margins explains how well-known companies really make money, in plain language, using numbers from their own reports. New videos every week. Subscribe so you don’t miss the next one. This video is for education and general information only. It is not financial or investment advice. Spotify is a trademark of Spotify AB. This channel is not affiliated with or endorsed by Spotify. #Spotify #BusinessModel #HowCompaniesMakeMoney #ProfitMargins #BusinessExplained #DimeAndMargins