Taylor Swift made a greater profit from music streaming in 2013 than Spotify
Spotify made a £46m loss in 2013 as a result of global expansion in a bid to boost its international presence - ironically this saw Taylor Swift, who ditched the firm over a pay dispute, earn more from streaming than it did.
Swift allegedly received $2m internationally from Spotify
Scott Borchetta, the head of Swift’s record label ‘Big Machine’, earlier this month said the star received around $2m in revenue from international streaming through Spotify, in the year preceding October 2014.
But Swift removed her music library from the site claiming she did not like giving away her “art” for free, adding she should receive more income from the service. However, since launching, Spotify has yet to record an annual net profit - although its French and UK subsidiaries did in 2014.
Although Spotify reported £592m in revenue in 2013, up 73.6 per cent on 2012, its operating costs also jumped bringing a loss of £46m.
As a privately owned firm, Spotify is not obligated to regularly publish its financials with a shareholder letter, glimpsed by the Guardian, providing the latest indication of the firm’s health.
Spotify’s shareholder letter, posted in Luxembourg on Tuesday, read: “We believe that music has mass market appeal – and as such, we believe we are just at the beginning of a much larger market opportunity. We believe our model supports profitability at scale.
“We have already proven that we’ve created real value for our users, and we know that the more time people spend with our product, the more likely they are to become paying subscribers. We believe that we will generate substantial revenues as our reach expands, and that, at scale, our margins will improve.”
Despite Swift’s complaints, the firm paid 80 per cent of its entire turnover to record labels and artists with it hoping to entice more of its free users into its £10 a month subscription model.
In 2013, it made £537m from subscriptions and £54m from advertising despite 80 per cent of users opting not to upgrade to premium.
The firm pays out $0.006 to $0.0084 per stream to artists.