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Spotify UK went into profit last year

By | Published on Wednesday 8 October 2014


Spotify’s UK business went into profit last year, which is cheery news given that most streaming music companies are still major loss-makers.

Though it’s hard to know what that really means because the London-based subsidiary sits within the wider Spotify business which, given its continued rapid expansion worldwide, will almost certainly be still working its way through all that start-up capital and making losses overall.

It’s also hard to make comparisons with past figures for Spotify UK, because while at one point a big chunk of the company’s global enterprise went through the London office, that has changed in recent years, presumably pushing some of the income but also some of the costs to elsewhere in the business.

Still, Spotify Ltd’s revenues rose 41.8% last year, from £92.6 million to £131.4 million, meaning that the company made £2.6 million in net profit, compared to a net loss of £11 million in 2012, according to figures filed with Companies House and seen by The Guardian.

Over 70% of that revenue goes to the music rights owners (labels and publishers) according to the terms of their licensing deals, and it’s no secret that Spotify income has become serious business for the UK record labels in the last twelve months, buoyed by this boom in the streaming firm’s British business.

The company’s partnership with Vodafone played no small role in the uplift in Spotify’s UK subscriber base, mobile partnerships being a key part of Spotify’s growth plans worldwide (and those of some of its direct competitors too).

Of course, for Spotify’s investors, it’s not short-term profit that are of interest (because worldwide there probably won’t be any), but the profit to be made when the company is floated or sold off in one mega-transaction. Though, anything that suggests a Spotify-type company can eventually become profitable will provide a great boost to any IPO on Wall Street.