Things appear to be looking up for Spotify. The Swedish music streaming giant posted their earnings for 2013 and the numbers are heading in the right direction. In its latest financial statements, Spotify reported that its revenue grew to 747 million Euros in 2013, or about $1.03 billion. That was up about 74 percent from 2012, the company said in its filings according to the NY Times. On the flip side, Spotify also had $80 million in net losses during 2013, down from a $115 million loss in 2012.
According to statements made by the company, it pays out 70 percent of its revenue to artists. Its overhead is growing rapidly as the company expands its workforce. According to Yahoo!, Spotify currently has 1,500 employees and is looking to expand to 2,000.
In a statement on the Spotify website, founder and CEO Daniel Ek claims that the company has 50 million active users, 12.5 million of whom are $10/month subscribers. How it monetizes those users is the issue that faces the company. Right now it relies on the "freemium" model to get people to join for free in the hope they will pay a subscription fee down the road. However the "freemium" model has its advantages and disadvantages. According to the NY Times, $897 million, or about 91 percent of its sales, came from subscriptions, and only $90 million from advertising.
Spotify has come under fire lately for the lack of payouts artists have received. Taylor Swift decided to pull all of her music from the streaming service and got into a very public tiff with Spotify head honchos saying "It doesn't feel right" to have her music there. News emerged earlier this month that Aloe Blacc, the singer on Avicii's massively successful single, especially on Spotify, "Wake Me Up" made $4,000 from a massive 168 million streams.
Even with all of this, the service is reportedly according to Blake Morgan, the "per-stream rate that artists get will likely never go up."
Spotify is in a good position right now with the new addition of its streams to the Billboard album chart. The service is starting to close the gap between revenues and losses and is gaining users. Its premium base is growing as well as streaming becomes much more mainstream within the music industry. They may not turn a profit immediately, but Spotify is heading in the right direction financially.
