Strong steps taken by Western music companies to cease operations in Russia will have a big impact on the country but result in little damage to the global market.
the company’s decision to shut down operations in Russia will result in about 1.5 million lapsed subscribers. By’s estimate, those 1.5 million subscriptions are worth a maximum of $40 million of revenue and $12 million of gross margin per year — negligible amounts for a company that could reach $13 billion of revenue in 2022.
Global businesses such as Spotify make most of their money from developed markets in North America and Western Europe. At $2.26 per month, a 30% gross margin — meaning the remaining 70% is paid in royalties to rights holders — and a 3.75% monthly churn rate, a Premium subscription in Russia has a lifetime value of roughly $17.60, less than half the LTV for Spotify’s average global subscriber. That would put the 1.5 million lapsed Russian subscriptions at a collective lifetime value of only $26.
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