Spotify posts loss of almost 20 million euro in 2009
Spotify recently presented its financial accounts for 2009. Founders Daniel Ek and Martin Lorentzon will not have had too much reason to open a bottle of bubbles. The net result was a loss of 19,5 million euro. Spotify’s revenues, consisting of advertising income and subscriptions, were around 13,2 million euro. The total costs, therefore, amounted to over 30 million euro.
At the end of 2009, around 7 million people had registered an account with Spotify, 250.000 paid for a premium subscription. The paying subscribers contributed 60% to the revenue. The remaining 40% came from advertising income.
According to Spotify, 2009 was the year in which the focus was to work on creating an expansive user base and that these achievements will reflect in next year’s annual reports. In 2009, the user base grew from one million to seven million.
Despite the disappointing results, Spotify is adamant it will expand to the US before year’s end.
Besides Spotify’s losses, artists are not really that well off with the new service. Lady Gaga famously received 1150 Swedish crowns (about 120 euro) for over one million streams of her hit Poker Face. Probably, this isn’t that bi a deal for Lady Gaga as she is already a well established and much lauded artist with a sizeable income from all kinds of musical activities. But for emerging artists, for whom internet is heralded as THE way to expand their reach and support themselves with their music, it is a bleak prospect that one needs ten million streams a month to make minimum wages (Dutch standards).
The way that we’ve become used to a free and abundant supply of music, for which we think we can hold piracy mainly responsible, make it hard for legitimate models and the artists that cooperate with them to earn their keep with a streaming service.
It’s either that, or Spotify’s proposition is just not right, but I haven’t seen any complaints there.
Comments(3)
Louigi Verona
Actually, it is Spotify's proposition. The royalties for streaming are several times lower that those from downloads, resulting in poor compensation to the artists. The reason why streaming is cheap is because in the dawn of the streaming era publishers did not think streaming is any good and put a low price on it. Blaming "piracy" for that is a little bit weird as it has nothing to do with it (as usual).
I work in that sector, so I know, but you can check it, although how - I am not sure. I don't know how much "inside" information is that, but I think it should be pretty transaprent.
Wouter
Hi Louigi,
Of course it is the proposition of Spotify. Our point is that we believe the reason they chose this proposition has little to do with quality concerns from the early days of streaming (after all, commercial streaming services have not been around in Europe for all that long), but more to do with the perceived value of access to music.
If the majority of the group that Spotify targets is willing to pay little, because there are so many free alternatives, their proposition has to be adjusted accordingly.
However, perhaps we've made an error in judgement. Perhaps we should invite the founders of Spotify for an interview on Future of Copyright. As an industry insider, do you happen to be in a position do put in a good word for us?
Louigi Verona
Ah, I wish I was, but I have no contacts with Spotify founders. An interview with them is a good idea though.
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