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Spotify made £16.66 million in losses in 2009
By CMU Editorial | Published on Tuesday 23 November 2010
According to Music Ally, who have been analysing accounts for 2009 published by Spotify’s UK-based limited company, which actually operates the streaming music service across Europe, the digital firm made a net loss of £16.66 million last year.
As a breakdown, the company brought in £4.51 million in ad sales and £6.81 million in subscriptions. Its ‘costs of sale’, of which the biggest chunk will be royalty fees paid to labels and publishers, were £18.82 million, added to which were distribution costs of £608,711 and admin expenses of £8.29 million.
Of course, while sixteen and a half million might seem like a big amount of money to lose in a year, Spotify is a digital start up backed by a big stash of venture capital, and would probably expect to be making losses of that size at this stage in its business plan.
Plus, Spotify is a rapidly expanding company and its 2009 figures are unlikely to be representative of its 2010 performance. This year has seen a rapid expansion in both Spotify’s free and premium subscribers, and a three-fold increase in its royalty pay outs to content owners. That said, many reckon losses for 2010 could prove to be much higher than for 2009.
While losses of this scale aren’t really a surprise at this stage, some continue to doubt that Spotify-style services – and especially the free-to-use ad-funded version – will ever add up long term, and therefore wonder what will happen when the venture capital that allows multi-million losses runs out, especially as it is a lot less likely now than five years ago that a traditional media conglom will step in to buy the company, allowing a few more years grace. But let’s leave such pessimism for another day shall we?
Commenting on Music Ally’s report on their 2009 financials, a Spotify spokesman told the website: “2009 saw us focus on establishing a new and innovative music service and bringing it to millions of people across Europe. The groundwork laid in our launch year has been crucial to the significant achievements made in 2010. Further strengthening and expansion of the service remains our top priority”.
You can read Music Ally’s analysis of the figures here:
musically.com/blog/2010/11/22/spotify-ltd-reveals-16-66m-loss-for-2009/
