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Spotify’s Losses Widen Despite Revenue Hike

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Authored by Felix Richter via Spotify,

With more than 50 million subscribers, roughly 100 million users and $3+ billion in annual revenue, Spotify is the undisputed leader in the booming music streaming market. And yet, a look at the company’s latest results leads to one question: will music streaming ever be a profitable business?

According to leaked figures first reported by The Information, Spotify generated €2.9 billion ($3.2 billion) in revenue last year, up 49 percent compared to 2015. However, the company’s costs piled up just as quickly, leading to a steep increase in operating losses. It’s a problem that all streaming providers face and one that might eventually give Apple a competitive edge over Spotify and its peers: Apple has a hugely profitable hardware business and billions of dollars to spend. As long as Apple Music supports hardware sales and helps to lock users into the Apple ecosystem, it probably doesn’t matter if it’s profitable. Companies such as Spotify will eventually have to figure out a way to keep royalty costs at bay in order to make music streaming a profitable and sustainable business.

Spotify is currently valued at $13 billion and is reportedly planning to go public later this year or early 2018 through a direct listing at NYSE.

 

Infographic: Spotify's Losses Widen Despite Revenue Hike | Statista