Spotify Report Record Losses. What Does It Mean For Musicians?
October 12, 2011
With Companies House annual reports out this week, Spotify has reported record losses. After nearly doubling their user base from 3.4 million to 5.4 million thanks to a partnership with Facebook, Spotifys annual losses plummeted to 26.5 million.
Here is how Spotify's finances look over the last two years
£45m came from subscriptions and £18m from advertising.
Spotify spent £64m on licensing music from rights-holders
An interesting fact about Spotify is that they have NO press team. We spoke to them a few months ago and asked how they managed to gain so much press momentum. It is simply by having a great product. But anyway...
What do Spotify's losses mean for musicians ?
At Ditto we have been distributing unsigned artists to Spotify since their launch in 2009 and its no secret that we are big fans.
Over at the Ditto Music Facebook we asked our artists if they are happy to have their music on Spotify, despite recent reports of low pay outs. 95 % of our artists WERE happy and saw Spotify as a great promotional tool.
Some Comments From The Ditto Music Facebook
Daniel Lowe I think it's great. It's given me more exposure. As far as the pay for the streams, I get paid more for a stream on spotify than I do from last.fm
ake Kulkowski It may not be so great on the payment front, but its getting your music out there in a broader spectrum for anyone to access and if they like it, share with their friends and get you/your band noticed, its cool in that sense.
Jennie Walker Can't WAIT for my music to start streaming on Spotify. This is going to be good!
What Next For Spotify?
The financial reports highlight the fact that Spotify is far from monetising. Sean Parker recently said that Spotify is not trying to make money from people streaming music, but the revenue will be made once people move your music to devices such as iPods, car stereos, hi-fis etc.
Our advice is to sit tight and make use of the service as the media attention gathers. We are currently in the short tail which does not represent Spotify's overall goal and market position.
Spotify will increase pay-outs to artists as their revenue increases. We are confident that this will happen over the next few years.
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