In its first-quarter earnings report, Spotify missed Wall Street’s earnings target by a whopping $0.53 a share, despite beating expectations for both revenue and paid subscriber growth.

The streaming service posted a net loss of $0.90 per share, compared to the consensus estimate of $0.37, even as top-line revenue grew by 33 percent year-over-year and beat the Street by 3 percent.

Part of the shortfall could be attributed to various promotion campaigns the streaming service ran during the period, which included discounted service bundles offered in partnership with Hulu. But the stark disconnect between revenue and earnings underscored a long-standing concern over Spotify’s core business model.

“The most important thing is [Libra] will enable paying for things digitally in many of the places around the world where those kind of methods just doesn’t exist. A service like Spotify, you can imagine what would happen by allowing users for instance to be able to pay artists directly,”

The licensing deals it has with the record labels, on which its business depends, are based on a percentage of its revenue rather than a fixed rate or fee. At the same time, the royalty rates it must pay to songwriters and publishers, on which its business also depends, are largely out of its hands, fixed by statute, rate court or some other external mechanism and in most cases not subject to negotiation.

All of that leaves Spotify with precious little control over its gross margin, making it difficult to translate revenue growth into commensurate earnings growth.

With a series of recent moves by the company, however, it is becoming clearer just how extensive and systematic Spotify’s efforts are — and how far it is prepared to go — to try to claw back whatever measure of control it can wherever it can.

The efforts began in earnest last year, in the wake of the company’s public listing, when it quietly began striking direct deals with unsigned, independent artists.

While Spotify has not sought to acquire any rights from those artists, which it is prohibited from doing under its deals with the labels, whatever number of plays that music is able to generate on the service dilutes the market shares of the labels that are used to calculate their payments.

The efforts picked up speed with Spotify’s aggressive move into podcasts, including the acquisitions of Gimlet Media and Anchor. As discussed in a previous post, the move into podcasting and podcast production has a significant long-term strategic component to it for Spotify. But it also clearly reflects an effort to build up a part of its business — and aggregate listening hours — not covered by its deals with the labels and where Spotify has more direct control over the margins it earns.

As also discussed in the previous post, Spotify has signed on for the launch of Facebook’s planned cryptocurrency Libra and its blockchain-powered payment system. That system, CEO Daniel Ek has now confirmed, could eventually lead to Spotify users (or Spotify itself) paying artists directly, further reducing the share of its total cost base covered by its label deals.

Meanwhile, Spotify has been equally as aggressive in looking to trim and control what it must pay songwriters and publishers.

It risked the scorn and anger of composers and publishers by leading the charge to try to try to roll back the Copyright Royalty Board’s latest rate-setting for mechanical rights, which is poised to give artists and rights owners a major pay raise between now and 2022.

Then last week, it gobsmacked the industry again by claiming that, under the same CRB ruling it is challenging in court, it “overpaid” publishers last year and is now demanding its money back.

Points for chutzpah on the last one, if nothing else.

Notably, Spotify is not demanding a lump-sum refund from publishers but said it will treat the amount it claims it is owed as recoupable advances against its royalty payments for 2019 — a clear stab at margin-management.

Whether all of those efforts — and no doubt there are more to come — will give Spotify the leverage it needs to manage its earnings effectively remains to be seen. But they will clearly further burden the already heavily freighted relationship between Spotify and the rest of the industry.

For now at least, with its 100 million paying subscribers and 217 million monthly active users, Spotify is the industry’s largest customer in what has become its most important business segment: streaming.

While the label oligopoly keeps Spotify from growing into they industry’s 800-pound gorilla, it’s still a pretty big monkey.

Most of the meaningful alternatives available to the the labels and publishers, moreover, come with their own complications. Spotify’s largest U.S. competitors are all controlled by major technology companies that are not as dependent on music for their earnings, and are therefore in a position to drive much harder bargains with rights owners if they choose to.

Artists and rights owners need need pure-play streaming services like Spotify to survive and thrive lest they be cast upon the un-tender mercies of the Silicon Valley giants.

As a publicly traded company, meanwhile, Spotify has no choice but to gain financial control over its operations. That’s not only a matter of how much it pays out and to whom. It’s a matter of whether it can gain enough predictability over its own income statement that can make realistic financial projections and not miss them by $0.53 a share.

If it can’t do that under the current arrangements it needs to make new ones.

Given the volume of chatter in the music business around blockchain and cryptocurrencies, this week’s confirmation that Spotify has signed on to Facebook’s planned launch of a cryptocurrency-based payment system called Libra will no doubt set tongues wagging anew.

So far, Spotify is the only music or media-related organization among the launch partners, but its presence and prominence is sure to fuel speculation about the intentions of other steaming services and media providers regarding blockchain.

In truth, though, the move likely reveals more about Spotify’s own ambitions that about the future prospects for blockchain in the music business.

For starters, Libra isn’t very blockchain-y. Transaction data on Libra will not be bundled into blocks and will not be chained, although transactions will be recorded sequentially by time-stamp. Nor will there be any mining. Libra coins will be backed by a reserve made up of fiat currencies and fiat-denominated instruments and will be issued by the Libra Association, a not-for-profit foundation being established in Switzerland, much as a central bank controls the fiat monetary supply.

In lieu of miners, Libra will have “validator” nodes, and consensus will be established by an internally developed protocol rather than by a proof-of-work or proof-of-stake type consensus mechanism used by fully decentralized blockchains like Bitcoin and Ethereum.

The Libra blockchain, in fact, will be permissioned, at least initially, and the right to run a node on the network will run you at least $10 million.

With no mining as an incentive, node operators will be rewarded by being granted separate, registered Libra Investment Tokens, which will appreciate in value based on earnings from the reserve.

Not exactly how Satoshi drew it up.

There are legitimate reasons to design the system that way. Mining is a slow, resource-intensive process that constrains through-put on other blockchains and undermines their scalability. Any system meant to operate at Facebook scale will need to be faster and more scalable than even Ethereum and other blockchain 2.0 protocols.

Pegging Libra coins to a reserve of fiat-based assets will enhance price stability and discourage speculation, while assuring users that they will easily be able to convert their coins to fiat.

Facebook is also launching a crypto-wallet for use with the service called Calibra, which it has registered with the U.S. Treasury Department as a money service business and will comply with anti-money laundering and know-you-customer regulations.

Still, the design smacks a bit of Facebook trying to slip into the financial services business through the back door without being licensed by dressing Libra up in the buzzy trappings of blockchain and crypto.

European financial regulators, in fact, already think they smell a rat and are calling for quick action to review Facebook’s plans.

So what’s Spotify’s angle?

In a blog post Tuesday, Spotify’s chief premium business officer Alex Norström framed it as a way for the streaming service to reach audiences that lack ready access to traditional banking and financial services.

One challenge for Spotify and its users around the world has been the lack of easily accessible payment systems – especially for those in financially underserved markets. This creates an enormous barrier to the bonds we work to foster between creators and their fans. In joining the Libra Association, there is an opportunity to better reach Spotify’s total addressable market, eliminate friction and enable payments in mass scale.

That is no doubt true. But it’s also probably not the whole story.

For all its crypto-compromises, Libra still offers elements of a peer-to-peer payment system, albeit within a walled garden. Any Facebook user can sign up for a Calibra wallet and start making and receiving payments directly.

The open-source Move programming language Libra is written in also supports smart contracts, which means users will be able to create their own applications and tokens.

It’s not hard to imagine a future integration in which artists are able to upload their music directly to Spotify, tie it to a smart contract, and receive payments for streams immediately via Libra. Married to the potential reach of Facebook, that could make for an attractive alternative to the traditional record business for artists.

Spotify, in fact, has already been learning and experimenting with how to marry a creator ecosystem with its distribution platform on the podcasts side since its acquisitions of Anchor and Gimlet Media.

Artists and songwriters could also expect to see a bigger piece of the per-stream pie than they get under the current system, especially if Spotify is successful in its effort to rollback the Copyright Royalty Board’s recent rate-setting.

Further, for a publicly traded company like Spotify, Libra’s connection to the traditional financial system is a feature, not a bug. Exposing part of its revenue to the extreme volatility of Bitcoin and other decentralized cryptocurrencies would be an accounting and reporting nightmare, and a serious risk to its valuation.

Finally, Spotify is likely to have Libra to itself among the major music streaming services, at least for a while. It’s hard to imagine Amazon, Apple or Google being in a hurry to integrate their services with a Facebook payment system. So, if Spotify were to make a serious play at luring artists away from the traditional label system, it would be unlikely to face much competition from its largest current rivals.

Who needs “Friends” more, Netflix of AT&T’s WarnerMedia? 

That was the question put by this week’s headline-grabbing deal in which Netflix agreed to pay $100 million to keep streaming rights to the venerable sitcom for another year. After that, Netflix may still get access to Rachel and the gang but the series is also likely to become available on AT&T’s planned direct-to-consumer streaming service as well.

“Friends” is obviously a valuable series to Netflix, or it would not have paid so handsomely for non-exclusive rights. But calculating that price would have been a fairly straight forward process for Netflix. It knows how many of its subscribers watch the series and how often, and it can calculate its value for attracting new subscribers. For AT&T and WarnerMedia, not so much.

AT&T plans to launch its direct-to-consumer service at the end of 2019 and plans to populate it largely with its own programming, at least in the early years. While Warner has a vast library of content, going back decades, from its many film and television production studios, it doesn’t calculate the value of the movies and TV series in that library the same way Netflix would. 

Like Netflix, AT&T is in the business of selling subscriptions: to wireless service, broadband, landline phone service, and more recently pay-TV through its acquisition of DirecTV. WarnerMedia, however, is built around selling content, in discreet units, for limited times. It has to reckon not just how much a piece of content is worth, but where it worth the most, as AT&T CEO Randall Stephenson acknowledged this week. 

Is “Friends” worth more in broad distribution through platforms like Netflix, or being kept out of circulation to be used as an exclusive to drive subscriptions to the new streaming service? 

And “Friends” is a fairly easy case. The series is more than 20 years old and, presumably, its costs have long-since been recouped, apart from residuals. So in a sense, AT&T and Warner are playing with house money. 

AT&T also spent $104 billion to acquire Time Warner, including assumption of debt, and now has more than $180 billion in debt on its balance sheet. It can’t really afford to leave a cash cow like “Friends” in the barn without fully milking it. 

But not every series is going to command the sort of premium “Friends” can pull in for a non-exclusive deal. AT&T is going to have to make a tricky calculation for every piece of content WarnerMedia owns, and for every new production it finances: Is this movie or series worth more in distribution, or driving subscriptions? 

That could make for some difficult investment decisions, to say nothing of negotiations with potential investors, creators and other rights owners in a new piece of content. 

Over time, as AT&T collects more direct consumer viewing data, that calculation could get easier, or at least more reliable. But there’s a long way to go between now and then.