Spotify Losses Well Past $100 Million, According to Filings

France, Britain, and the United States also craved world domination at some point.

And how’d that work out?

This isn’t a history lecture, at least not yet.  But the broader question is whether an obscenely expensive Spotify expansion agenda can land on its feet.  According to another batch of financial filings surfacing on parent entity Spotify Technologies SA this morning, losses at the company have now easily careened past $100 million.

And, probably much further: the figures are just for 2010 and 2011, meaning that costs for the massive, current-year expansion remain unknown.

The annual report, apparently finished in late April and unearthed by the Wall Street Journal, also points to near-term launches in Canada, and eventually Asia and South America.  Specific landing dates weren’t mentioned, though the company isn’t shy about its aggressive global expansion strategy.

There’s another interesting stat: 32.8 million.  That’s the registered userbase at the end of last year, which also coincides with an active userbase of 10 million (at the time) and a subscriber level approaching 3 million.

Of course, paying subscribers are the best kind of customer, and maybe the way out of this leveraged mess.  Just recently, Spotify announced its four millionth subscriber, though the pace of expansion remains the source of debate.  Evolver recently pointed to slowing ‘monthly average user’ (MAU) figures on Spotify’s Facebook app; frankly, we’re not sure if that means anything given growing ‘Daily Average User’ (DAU) numbers.  Let’s see.

Against the uncertain growth and heavy losses, revenues are climbing.  In 2011, revenues pushed past $234 million, according to the documents, a multiple of year-2010 results of $117 million.

It’s a confusing dump of data, but one thing is certain: Spotify is following the wildly ambitious, Silicon Valley-inspired mantra of hard-spending and failure-fearlessness.  In the filing, the company confirmed that future financing is under consideration, and earlier whispers point to a $100 million-plus bet coming from Goldman Sachs.  All of which supports a philosophy succinctly stated by Spotify CEO Daniel Ek a few months ago.

 “The question of when we’ll be profitable actually feels irrelevant.  Our focus is all on growth.  That is priority one, two, three, four and five. But of course we expect to make a profit in the long run.”

 

17 Responses

  1. HansH

    So in 2011, the average revenue per user from paying customers was $75. Revenue per user from the (active and non-active) users of the free, ad-supported service was about $1.

    That explains for the low rates I guess. Spotify told they paid out $180M in royalties, that’s even little more than 70% off the total revenues ($234 Million)

  2. Dave Ulmer

    And the dotcom dead pool quote of the day goes to, “The question of when we’ll be profitable actually feels irrelevant.”

    And now let’s party like it’s 1999!!

  3. Karma

    So Spotify is using the Amazon model and focusing on growth.

    Amazon didn’t turn a profit for many years and grew to be the biggest e-commerce store in the world.

    Could Spotify become the biggest MUSIC STORE in the world? (surpassing Itunes)?

    Its growth:

    2009: $18 mil revenue

    2010: $99 mil

    2011: $236 mil

    2012: $889 mil projected

    • Mike

      “Could Spotify become the biggest MUSIC STORE in the world? (surpassing Itunes)?”

      Oh, man. 1999 is awesome again. Woodstock’s going to kick ass this year.

  4. @mikedronkers

    Spotify loses $100 million, but it’s cool because profit is ‘irrelevant’.

    Like paying artist royalties.

  5. Albert Torres

    This newsletter should be called Physical Music News instead of Digital Music News. Haven’t you got that streaming is the future? That buying music in download stores is replicating physical in the digital environment? It is the same as if we had to pay per each email we send just because that’s what we do in the physical world!

    I honestly don’t understand what the problem is with Spotify. 99% per cent on what you write about them is negative. I don’t care about what streaming service succeeds, hopefully all of them do as a result of being so many users and susbcribers that there is a lot of music for the labels and artists. But your approach to Spotify is unbelievable.

    • Partly Cloudy

      But this article isn’t about streaming. It’s about Spotify, a company trying to get rich off streaming.

      Two different things. Streaming could success, Spotify might not.

      • Albert Torres

        And iTunes is trying to get rich of donwloads and just because of that is not crucified, in fact iTunes is revered. That’s what I don’t get. Other streaming services try to get rich too, they all pay more or less the same money to labels and artists; just like with the download stores.

        • Albert Torres

          … and I don’t care which streaming service wins, loses or remain. It is just surprising, to say it nicely, what happens with Spotify in Digital Music News.

          • Partly Cloudy

            Spotify deserves it! They have no transparancy and blame labels for any problems and never fixed that.

          • HansH

            Albert, I guess the real reason is: For the money. Any anti Spotify article draws a crowd.

          • Visitor

            Spotify is evil, they let people listen to any music they want any time they want. That’s just evil and dangerous to the music industry.

  6. TUNE HUNTER

    Spotify is a loud event that resambles pushing six inch rod in to the live organizm. (The Music Industry)

    So far Facebook marriage didn’t bring penetration.

    However if they get enough cash they will succed and “New Napster” will be the King on the ashes of once profitable music industry.

  7. @csignore15

    Not sure I can get down with a business model that calls profitability “irrelevant”