Spotify makes $2 billion but fails to turn a profit | radioinfo

Spotify makes $2 billion but fails to turn a profit

Wednesday 25 May, 2016

It may be the biggest music streaming company in the world but while Spotify's revenue has increased by 80%, it remains in the red.
 
Spotify made $2 billion in revenue, almost twice the growth rate that the company saw in 2014, and while it’s a leader in on-line music streaming, Spotify has never turned a profit.

The company's latest financial results show that it pays 83% of its US$ 2.12 Billion gross earnings in rights payments to artists.  The rest is spent on sales, marketing, salareis and admin.
 
Despite the top line loss, the revenue growth is a significant indicator of audience interest in this type of music streaming service. Spotify has almost 90 million subscribers. The figures show that monthly subscription revenue grew 78% and Ad Sales nearly doubled, up 98% year on year.
 
The revenue increasw indicates consumer willingness to pay for renting music and advertiser interest in this platform.

"In many ways, it was our best year ever," the company said in a message to shareholders.
 
The financial results were filed by its Luxembourg-based holding company Spotify Technologies.
 
It said: “We believe our model supports profitability at scale. We believe that we will generate substantial revenues as our reach expands and that, at scale, our margins will improve. We will therefore continue to invest relentlessly in our product and marketing initiatives to accelerate reach.”

Fast facts for Spotify:

Subscribers: Over 30 million (as of March 2016)
Active users: Over 75 million (as of June 2015)
Number of songs: Over 30 million
Number of playlists: Over 2 billion
Available in 59 markets

Photo: M-SUR / Shutterstock.com

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