Spotify revenues double but losses widen in FY2012
Spotify more than doubled its revenues in FY2012, but its net losses widened to €58.7m (£51.3m) as it spent big to lure new subscribers to the service.
According to the company’s latest financial statement, filed in Luxembourg today, its sales jumped from €190.4m (£166.3m) in 2011 to €434.7m (£379.7m) in 2012, as its number of active users doubled to more than 20 million.
Its premium service subscribers climbed to more than 6 million in the year.
However, the company’s net losses widened to €58.7m (£51.3m), compared with €45.4m (£39.7) in 2011.
This was largely due to the firm’s cost of sales – which include the 70%-plus percentage that it pays to rightsholders in royalty fees – rose to €363m (£317.2m) in 2012, up from €186m (£163m) in 2011. [Source: Financial Times].
A Spotify spokesperson told Music Week: “During 2012 Spotify saw dramatically increased revenues while maintaining a free to paid conversion rate of well over 20% – unheard of for a freemium business, and a clear demonstration of the success of the business model.
“In 2012 the business focused on driving user growth, international expansion and product development, resulting in soaring user numbers and increased market penetration.
“Our key priority throughout 2013 and beyond remains bringing our unrivalled music experience to even more people while continuing to build for long-term growth – both for our company and for the music industry as a whole.”
Spotify’s long-term aim is to one day reach enough free and premium subscribers to turn a profit, whilst paying rightsholders a fair royalty rate.
In terms of a rough guide to what the company paid to rightsholders in the year: 70% of £317.2m = £222m.
Founder Daniel Ek has predicted that the company will pay out $500m (£329m) to rightsholders in its FY2013.
The company’s FY2011 results showed an annual revenue rise of 160%, but its losses grew 59%.
The UK arm of the firm, itself a limited company, significantly narrowed its losses in 2011.
Source: Music Week
