Spotify has recently been valued at $1bn following a recent drive for investment and for me it brings some sanity to the current digital media market that has seen big social media sites receive valuations that seem to be based on guesswork alone.
Happily Spotify bucks this trend as it seems to be well monetized. Guaranteeing no advertising ‘wastage’ and offering a unique mix of audio and visual formats are huge revenue-generating tools. Spotify also offer their premium service which allows users to avoid ads thereby generating money from people wishing to avoid ads they generate money from!
Now while I’m a complete convert to twitter’s microblogging service I don’t understand where the revenue is! Yes there’s a huge reach, but will Promoted Tweets bring in the dough? Does twitter have a viable business model to explain its recent valuation of £6bn on this year’s predicted sales of just £67m?
Perhaps I shouldn’t worry and just thank my lucky stars that there are seemingly plenty of backers willing to pay big money.
Here’s a video that asks a similar question
http://www.youtube.com/watch?feature=player_embedded&v=ZRd-xX5zk0A (check out the rise of Groupon)
Maybe you disagree? I don’t pretend to be an expert on the subject so if you can show me the light then I welcome your comments below, but beware-i’m charging 10p per comment!