Spotify Expected To Hit $889 Million In Revenue
Music streaming service Spotify currently has 13 million active users and 3 million of them are paying. The company is expected to hit $889 million in revenues this year, which would be up 160% from 2011. However an increase in revenues may also lead to increasing net losses. In 2011 the company’s net losses double to about $60 million.
Spotify CEO Daniel Ek said that the question of when Spotify will hit a profit is irrelevant. “Our focus is entirely on growth,” Ek said in an interview with Dagens Industri. “That is priority one, two, three, four and five.”
Spotify has raised $189 million in funding and has expanded to Australia. The company is currently has a valuation of $4 billion. “We want to build this company long term,” Ek added. “The stock exchange is not an option for us.”
Spotify is opened to additional funding though. “We have no need for more capital to operate the business plan we have,” said Ek in the interview with Dagens Industri. “But I have learned to always take the money [even] when you do not need the money. We work on the principle that if an investor can add strategic value and the valuation is good, we are interested.”
About 70% of the company’s revenues gets paid to the rights holders of the music. This is before Spotify covers their own operational costs. Last year Lady Gaga sold 20 million albums, but hit 1 billion YouTube views in 2010. Ek believes that Spotify can be the company to bridge the sales reality of 20 million albums and the consumer’s appetite for more music (1 billion views).This article was written by Amit Chowdhry. You can follow me at @amitchowdhry or on Google+ at +AmitChowdhry