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No profit for Spotify

If Apple enters the streaming market it could 'wipe Spotify off the map'

  • 05/01/2010
  • Georgie Rogers
Radiohead's Thom Yorke

Despite several hundred thousand premium subscribers, the popular music streaming service Spotify still isn’t turning a profit, according to Paul Brown, a spokesman for the site.

While other streaming services MySpace Music, Sky Songs and AmazonMP3 all stuck their head above the parapet in 2009, it was Spotify, which launched in the UK in February last year, that gained the most traction.

With a free and premium service that also offers downloads, it's one of the few real competitors to iTunes.

However, Senior Vice President of Strategic Partnerships Paul Brown admitted to 6 Music that they are not in the black yet: "We’re not profitable yet but we’re certainly seeing pretty stellar growth in revenues through the recession."

He remained positive that change in the next twelve months: "When you’ve got several hundred thousand premium subscribers paying a fee [£9.99] every month, that turns into millions of revenue.

"We’ve been doing in excess of a million Euros a month, and counting, on the ad revenue side. To be in double digit million turnover after a year is pretty good."

Threat of Apple

The Spotify application became available on the iPhone and across other mobile platforms such as 3, which saw a boost in premium subscriptions.

There is also a rumoured deal with Google and its new Android-powered phone, but not everyone is predicting a rosy future for the streaming service.

Consulting Editor of Stuff Magazine, Tom Dunmore, claims it is "unlikely" Spotify will turn a profit in 2010.

"Apple has such a huge installed base already with iTunes that it could potentially wipe Spotify off the map."
 
Stuff Magazine, Tom Dunmore

According to him, the greatest threat comes from Apple. An entrance to the streaming market would seem imminent after the recent acquisition of Lala, a similar streaming site to Spotify.

"Apple looks likely to enter this space. With such a huge installed base already with iTunes, it could potentially wipe Spotify off the map," he said.

'Here to stay'

However, the service has industry backing from Will Page, PRS For Music’s Chief Economist.

One of the people behind Radiohead's In Rainbows ‘honesty box’ experiment, he thinks Spotify has secured its place for music consumers, noting its tie-up with telecommunications companies like TeliaSonero in Sweden, where Spotify was conceived.

"That’s a big ISP in Sweden, now offering Spotify as part of a bundled price package," he explained. "First thing, that means is that it’s not going to go away. Spotify is here to stay. It might not win in some areas. It might delay launching in other areas but it’s here to stay in certain areas and it’s going to grow."

Further tie-ins point to Spotify's future. Paul Brown outlined that the company's hopes for the forthcoming year include working with Xbox and Playstation, and beyond.

"Something that I think is very interesting is Wi-Fi enabled radio in the States," he said. "[Internet Radio site] Pandora’s done a good job of getting on those devices in the home.

"All of these things will be for premium subscribers only. We want to be everywhere the consumer is. I think cars are some way off but it would be fantastic if you could have your Spotify fired up on the dashboard of your car."

Have your say

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Comments

Emre Yazgin / London
Everybody LOVES spotify and support it. If it wasnt 9.99 but say 4.99 I am sure their premium subscribers will be MILLIONS rather than thousands. Most of the itunes users I know are switching to spotify, so "Apple will wipe off Spotify because they have more customer base" argument will soon be non existent.

rachel c, london
I think Spotify is awesome, and one of the best digital applications around. Apple may well launch a streaming service but they'll have to make the software and interface as good as Spotify to truly compete. Itunes is so full of bugs and glitches, whereas spotify just works. Good luck to Spotify!

Robbie warke buckfastleigh devon
We have bought spotify for our business (dart rock climbing centre) and we and our customers love it, apple are evil

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