For profitability, Spotify needs tenfold increase in membership

Spotify is doing well in Europe. In the past year, Dutch Spotify users streamed for 2000 years of music. In Sweden and Norway, the streaming music service is the music industry’s second biggest digital earner, surpassed only by iTunes. However, the company is not profitable yet. To take that important step, Spotify has been looking to expand across the Atlantic for some time now.

Breaking in to the relatively mature digital music market in the US is no easy job for Spotify. Jonathan Foster, Spotify Europe’s general manager tells a NRC next reporter: “There is a lot of movement in the music industry, over there.” However, to achieve profitability, Spotify deems going West essential. “America is the most important market for music. Our business model only works when we get an extra digit and can increase our scale tenfold.”

The limitations to the Spotify Open membership most likely are a concession to US labels to prevent Spotify from cannibalising the paid music services that already successfully rolled out over there over the last ten years, and are still being rolled out.

Source: NRC next