Spotify Can’t Stop Losing Money And Reportedly Hasn’t Made A Profit In Three Years

05.09.15 4 years ago 12 Comments

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Someone pick up Jay Z on line two. Shawn Corey Carter on line two; it’s urgent.

You would think Spotify would be booming considering its popularity, but the truth is much different. Turns out that the biggest streaming music service in the world has not collected a profit in three years, according to Mashable:

The streaming music startup lost $197 million in 2014, a drastic increase over the year before.

Spotify is bringing in a lot of money — $1.3 billion in revenue last year — but it’s just not turning a profit.

In fact, its losses are getting worse, almost tripling from 2013, when the company lost $68 million. Revenue grew by 45 percent.

These numbers may not seem like a good indicator of success, but Spotify claims its plans to expand into video services have curbed any immediate chance to profit. Indeed, creating a service that hosts this many users comes at a tremendous cost. Dominating the market share may mean that Spotify is hamstrung by its own massive size, according to the New York Times.

With 15 million paying users and 45 million free users at the end of 2014, Spotify is by far the most popular service of its kind. According to its latest accounts, subscriptions make up 91 percent of the company’s revenue, with the rest coming from ads.

These numbers could be deceptive, though. With major networks like HBO and Amazon funding huge transitions into digital and streaming, Spotify has paid the cost to rule that space. Consumer loyalty might help them stave off their looming rivals. Or it might sink them while players like Tidal look for their next big opportunity.

Still, it’s increasingly difficult for Spotify to spin the stats about lost money into lofty rhetoric of future success. Perhaps that’s the lesson Jay Z (with his Tidal rants) can draw from it.

(Via NYT and Mashable)

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