×

Spotify Passes 140 Million Users, Promises to Pay Labels $2 Billion as Losses Widen

Spotify passed 140 million worldwide users as both its revenue and operating loss grew significantly in 2016, according to the company’s annual financial statement released Thursday morning. The company is expected to list itself on the stock market this or next year.

The company did not say how many of those were paid subscriptions; in March, it said it had reached 50 million. Its closest competitor in the streaming market, Apple Music, announced earlier this month that it had passed the 27-million subscriber mark.

The company also said it will pay record labels at least $2 billion over the next two years. Spotify inked licensing deals with both Universal Music Group and the independent label collective Merlin earlier this year; it is still negotiating with Sony Music Entertainment and Warner Music Group.

Spotify showed an operating loss of some 349 million Euros ($389 million) compared with a 236 million Euro loss the previous year.  Its gross profit was just $502 million. “This is explained by substantial investments that have been made during the year, mostly in product development, international expansion and a general increase in personnel,” directors Daniel Ek and Par Jorgen Parsson wrote in the filing.

It also cast a cautious eye on its future financial prospects. “Streaming music is an emerging market, which makes it difficult to evaluate our current and future prospects,” the filing continues. “We face strong competition for users, listening hours and advertiser spending, and we face competition from players with substantial resources at their disposal,” it reads, clearly referring to Apple, Google and Amazon. The filing It then speaks of its need for licenses from rights holders and recruiting and retaining qualified personnel, or else “our ability to successfully grow our business could be harmed.

“If we cannot maintain Spotify’s culture as we grow, we could lose the innovation, teamwork and focus that contribute crucially to our success.”

Still, Spotify remains the service to beat amid fierce competition from Apple Music, Amazon and YouTube, and to a lesser extent Tidal and Deezer. The major labels are said to own approximately 18 percent equity in Spotify, which to a large degree unites their prospects for success in the streaming market.

 

 

 

More Biz

  • Herb Dorfman Obit Dead

    Herb Dorfman, Orion Pictures Home Video Executive, Dies at 77

    Herb Dorfman, former Orion Pictures executive and a home video industry veteran, died Feb. 25 of complications from Parkinson’s disease and dementia. He was 77. Dorfman served as head of home entertainment for Orion Pictures from 1987 to late 1996. Orion was a prosperous independent studio in those days that turned out a steady stream [...]

  • Bob Chapek

    What Disney's Theme Parks Reveal About New CEO Bob Chapek

    Theme parks and resorts aren’t likely top of mind for the industry set when they think of Disney. But in light of the recent (and very swift) appointment of parks and consumer products head Bob Chapek to succeed Bob Iger as Disney CEO, Chapek’s recent interviews at the parks offer a few insights about the [...]

  • Justin Dini Josh Line

    ViacomCBS Promotes Josh Line and Justin Dini in Communications and Marketing

    ViacomCBS has named Comedy Central veteran Josh Line to serve as executive VP and chief brand officer for the newly enlarged company. Line will oversee all marketing strategies for the company with an emphasis on synergy efforts across a collection of brands that range from MTV, Nickelodeon, BET and Comedy Central to Paramount Pictures, CBS [...]

  • Lizzo Grammys performance

    Lizzo Hit With Copyright Suit Over 'Truth Hurts'

    Three songwriters filed a countersuit against Lizzo in federal court on Friday, alleging that they have been denied proper credit for writing her breakout hit, “Truth Hurts.” Lizzo sued the songwriters — brothers Justin and Jeremiah Raisen, as well as Justin “Yves” Rothman — last October, seeking a determination that they did not deserve credit [...]

  • Marcie Allen

    Marcie Allen Confirms She’s in Talks to Sell MAC Presents

    Marcie Allen, founder and owner of the music experiential agency MAC Presents, confirmed to Variety that she is in talks to sell the company, which she launched in 2004. Over the years the agency has engineered partnerships between major artists and brands, including the Rolling Stones, Billy Joel, Keith Urban, Green Day, John Mayer and [...]

  • media stocks - wall-street

    Stock Markets Log Historic Losses Amid Coronavirus Selloff

    U.S. corporate giants are the teeth of another wild ride on Wall Street as investors brace for the end of a week of historic losses for the Dow and other major indices. The Dow was down 357 points, or 1.3%, at the close of trading Friday, after falling more than 1,000 points early on in [...]

More From Our Brands

Access exclusive content