Business News Digital

Spotify revenues up in 2013, though operating losses up too

By | Published on Wednesday 26 November 2014


Spotify’s global revenues were up 73.6% in 2013 to 747 million euros (£593 million), reports The Guardian, 91% of that income coming from paying subscribers rather than users of the streaming service’s ad-funded freemium tier. But before you all high five each other, operating losses also grew by 16.4% to 80 million euros (£63 million).

It was recently confirmed that Spotify’s UK and French businesses actually went into profit in 2013. But no one expected that trend to be followed through on a global level, given the firm’s continued rampant worldwide expansion (plus it’s hard to know what costs are covered at a national and global level). The rising losses were posted by the parent Spotify company based in Luxembourg.

Of course, there’s lots in the global figures for the streaming naysayers to get their teeth into – not least those on Team Swift who argue that artists should be able to withhold their music from freemium users, who are contributing so little of the cash. Though Spotify CEO Daniel Ek recently argued that the free tier was vital for converting people to paid users, which in turn, he claims, has meant that Spotify has been able to pay out $2 billion to the music industry to date

In response to Taylor Swift’s removal of her catalogue from the streaming service, Ek said: “If we want to drive people to pay for music, we have to compete with free [options like piracy, radio and YouTube] to get their attention in the first place. More than 80% of our subscribers started as free users. If you take away only one thing, it should be this: No free, no paid, no $2 billion”.

That Spotify’s operating loss has continued to grow year-on-year will also remain a sticking point for many (even though the firm’s business plan will have likely expected such losses), and the debate over streaming revenues, royalties and sustainability will continue to rumble on throughout 2015.

It will be interesting to see this time next year how the period of rapid growth that has occurred this year – with free and paid subscriber numbers both up considerably in the second and third quarters – will affect the financials for 2014. Spotify’s success is ultimately a matter of scale, but whether that scale is close to being reached remains a question mark.

Speaking of booms though, Spotify this week announced that One Direction had now passed the one billion streams milestone on the service, following the recent release of their fourth album, ‘Four’. In celebration, Spotify this morning announced the arrival of Rammstein’s entire back catalogue on its platform.

Now you may choose between a playlist” target=”_blank”>a playlist of 1D’s ten most popular tracks worldwide and another curated by Rammstein featuring songs that have inspired them. Or ignore both entirely.