White Collar Criminals



The biggest missing piece of the Spotify discussion, to me, has always been the company’s behind-the-scenes finances. We can sit here all week and debate whether their artist per-stream payouts are fair or not, but unless we know how much money the company is taking in — and therefore how much they have available to pay out — a “fair” or “unfair” assessment is all just conjecture. Finally we have some numbers to look at, and it turns out that even with 10 million active users worldwide and 72% of revenue paid out to artists/labels, Spotify is still hemorrhaging money. Some quick stats:

  • 10 million “active users” worldwide in 13 countries (figure presumably does not include those who signed up but don’t use the service. Spotify will not release country-by-country data).
  • 3 million of those users pay either $4.99 a month (for unlimited, ad-free streams to computers) or $9.99 (for unlimited, ad-free streams to mobile and digital devices as well as computers, and the ability to download songs for off-line listening)
  • Spotify lost about $41.5 Million in 2010, the company reported last year
  • About 72% of its revenues go to record companies and other music license holders (by contrast, Pandora only devotes 54% of its revenues to content costs)

With that in mind… are Spotify’s payouts really unfair? How can a company be expected to pay out more money when what they’re already paying is resulting in a deep loss? Part of that undoubtedly has to do with the way the four U.S. major label groups raped and pillaged Spotify to get the U.S. deal done.

Worth noting: 2011 figures, not yet released, could be significantly different. This is important because Spotify launched in the U.S. in 2011.

With MOG’s music service about to be pawned off and Rdio struggling to find a foothold in consumers’ minds, what’s next for streaming companies? Spotify is spending like crazy to gain ubiquity in the streaming service space — to be the iTunes of streaming, if you will — which is probably the only way it’s going to be able to survive. Even with the posted losses, the company is still valued at around $1 Billion. Interesting food for thought.


[Deadline, via MS homie Axl Rosenberg]

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