Skip to main content

Spotify Losses Growing


Spotify posted losses of nearly $200m for the year 2014, up threefold on the previous year's results. Despite growing both paid subscribers and its free tier the company doesn't seem to be able to make the numbers add up.

Unsurprisingly, the services detractors are busy crowing.

A closer look at the the numbers gives something of a lie to that wholly negative picture.

Firstly, in terms of revenue generated, the company saw 45% growth year on year, hitting $1.3bn. At the same time the service paid out $1bn to artists and publishers. (In December 2013 Daniel Ek, CEO, noted that $1bn had been paid out since the service had started, a number that had risen to $2bn when when he reported in 2014). That leaves around $300m in the pot for development costs, advertising and the other costs of doing business.

For a $1bn business that is growing its revenues at a good rate, these losses aren't a warning flag. The company characterised them as caused by product development, international expansion and increased personnel, each of which will have a bottom line boosting pay-off in the near future.

For now Spotify is doing fine but it will face its biggest challenge very soon when Apple starts stomping on its market. Given the performance of incumbent market leaders in areas where Apple has arrived to gatecrash the party things don't look so good. In Spotify's favour a good product, wide reach and a strong team. 

Against them: history...

Interesting times ahead in Stockholm.

Comments

Popular posts from this blog

F1: Robert Kubica Impresses In Renault Test Run

The car may be old but its the performance of the driver that's the story here. Robert Kubica returned to F1, after a fashion, earlier this week with an extensive test run in a 2012 Lotus Renault F1 car at Valencia.
The age of the car and the circuit were likely determined by F1's current rules which ban testing, but the reason for Kubica being in the car is far more interesting. Considered by many to be a potential World Champion and certainly one of the fastest drivers of his generation, Kubica's F1 career seemed to be over after a 2011 crash whilst driving in the Rally of Andora. His Skoda Fabia was penetrated by a guardrail in the high speed accident partially severing his right arm.
Up until last year Kubica has been competing in rallying, with the expectation that the limited movement in his repaired arm would prohibit a return to single seater racing.
So this week's test is both interesting and confusing. Interesting because Kubica completed 115 laps of the ret…

Panos Panay's Defence Of Microsoft Surface Hardware Sounds Eerily Familiar

This weekend I went out with my ten year old daughter to select a laptop for her school year beginning in January. The schools requirements are quite specific, requiring a Windows 10 device, with a preference for a touchscreen and a stylus. She chose a Surface Pro, after trying a large number of different options. Having seen the way I use my own Surface Pro - and tried it herself there was only ever going to be two options - and the other was a Surface Laptop.
I tell you this so that you understand I am a buyer of Microsoft's products through choice, not compulsion. I'm on my third Surface device now. 
So when Panos Panay dismissed reports of the death of the Surface hardware line, I was very interested to see exactly how strong these denials were. Especially how they reflect what has gone before. To whit: Windows 10 Mobile.
Panay claimed that Microsoft is in hardware for the long haul. Almost exactly mirroring the words of Terry Myerson, when he claimed Windows Mobile was g…

WhartonBrooks Indiegogo Windows 10 Mobile Even More Doomed To Failure Than Usual

WhartonBrooks is currently crowd-funding its latest Windows Mobile smartphone on Indiegogo. If crowdfunding isn't already a bad enough idea, a company trying to crowdfund a Windows Mobile device should be warning enough for you.
Not that anyone seems to be taking the project too seriously. With a few weeks left to run the campaign has managed to ensnare just 2% of its $1.1m target.
If you want a better indication of how few Window Mobile loyalists remain I doubt there is one. Of 3,900 Windows Phone enthusiasts Wharton Brooks was seeking for its new phone, it has managed to entice just 50.
Windows for Phones is dead, even if the corpse hasn't stopped twitching yet.