Revenues for Spotify, the world’s biggest music streaming service, surged 80% last year to nearly €2bn £1.5bn, but losses widened as it invested heavily amid tough competition from the likes of Apple Music and Tidal.
Revenues jumped to €1.95bn, as the growth rate accelerated from 45% in 2014 and 74% in 2013. Revenues from advertisements nearly doubled to €196m, while revenues from subscriptions rose 78% to €1.74bn.
The Swedish company said: “In many ways, it was our best year ever.”
Spotify charges a fee of about £9.99 a month for its premium subscription offering, but also has a free service, which features advertising. It had 89m active monthly users at the end of 2015, up from 60m a year earlier. The company’s founder, Daniel Ek, said in March that Spotify had 30m paying subscribers.
Even so, Spotify – which has yet to make a profit since launching in 2008 – slid deeper into the red. Net losses widened to €173m from €162m in 2014. Spotify’s royalty and distribution fees, paid to music copyright holders, rose 85% to €1.63bn in 2015.
The company stepped up investment in 2015 amid growing competition. Apple launched a streaming service last year and rapper Jay-Z has founded Tidal. Other rivals include France-based Deezer and US-based Rhapsody, also known as Napster.
Spotify launched Discover Weekly, which generates a personalised playlist of songs, started offering video content and recently teamed up with Starbucks in the US to bring in new subscribers. After pausing its international expansion last year, the firm added Indonesia as its 59th country this year.
The results filed by its Luxembourg-based holding company Spotify Technologies said: “We believe our model supports profitability at scale. We believe that we will generate substantial revenues as our reach expands and that, at scale, our margins will improve. We will therefore continue to invest relentlessly in our product and marketing initiatives to accelerate reach.”
Digital music revenues overtook the takings from CDs and vinyl records for the first time last year, a recent industry report showed.
The firm raised €890m in its most recent funding round from private equity group TPG, Goldman Sachs and hedge fund Dragoneer.
This article was written by Julia Kollewe, for theguardian.com on Tuesday 24th May 2016 13.18 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010