Spotify — Leonard would ship this

Today's victim is Spotify. A music streaming service so desperate to justify its existence, it's literally being used as Google's guinea pig for alternative billing because their margins are too pathetic to afford normal app store fees. | With Spotify's notoriously thin margins paying most revenue to record labels, their contribution margin per customer is so anemic that their customer acquisition payback period probably stretches longer than most user attention spans. | Organic sharing of bad unit economics is still bad unit economics. While other apps get to enjoy 85-90% gross margins, Spotify is literally the poster child for why freemium doesn't work when your variable costs eat your lunch. Sources from Lenny's Newsletter and Podcast: How to win in consumer subscription (Newsletter), The most important consumer subscription metrics to track (Newsletter), What is good free-to-paid conversion (Newsletter)