Spotify on its way to be profitable over 2010

Spotify, a Swedish online streaming service, highly likely has made its first profit over 2010. Three-quarter of the revenues came from subscriptions and a quarter from advertisements.

Daniel Ek launched Spotify in 2006. The service provides music as a stream and users can choose a song from a large database. These songs are interrupted by advertisements. Users, who don’t want the advertisements to interrupt the songs, can get a subscription. In that case, in return for a small amount paid per month, the songs won’t be interrupted.

The service is expending substantially according to the calculations. In 2009 the revenues were € 13 million, in 2010 they are estimated at € 59 million. Spotify paid around € 45 million for royalties and € 10 million for business costs. If the calculation of the analysts is correct, the service has made a profit of a few millions (4 million). Spotify hasn’t confirmed any of this.

In Sweden and Finland Spotify is very popular, mainly because of the deal with Scandinavian internet provider Telia. The Scandinavian users of Spotify get their service bundled with their TV and broadband subscription.

Spotify crossed over the Pacific to the United States last July. Spotify already has 200.000 subscribers in the US. At this moment, Spotify has 1,9 million users who pay for the service in Europe and the US. This looks like that’s a lot, but there are over 6 million users that are still using the service for free.

Read more about Spotify on FutureofCopyright.com:

• Spotify to enter "uninteresting" Belgian market this summer
• Spotify launches in the U.S.
• Facebook and Spotify to integrate social network and streaming music service
• For profitability, Spotify needs tenfold increase in membership

References: Nu.nl and Guardian.co.uk

By: Karen Groen