Spotify losses deepen despite rapid expansion

STOCKHOLM, Sweden — Streaming leader Spotify said Monday that its losses deepened last year even as the company topped $2 billion in revenue amid the global boom in online music.

The Swedish company founded in 2008 has been at the forefront of the music industry’s turn to streaming, which offers unlimited music on demand, yet it has never turned a profit itself.

Luxembourg-based holding company Spotify Technologies, submitting its annual earnings report, said its revenue jumped 80 percent to 1.945 billion euros ($2.18 billion) in 2015.

The growth rate is significantly stronger than the 45 percent it charted in 2014 and slightly higher than the 74 percent seen in 2013.

“In many ways, it was our best year ever,” the company said in a message to shareholders, describing Spotify as the top driver of growth for the entire music industry.

The company said its revenue from advertisements nearly doubled and that its user base also grew significantly.

Spotify said it had 89 million active monthly users by the end of 2015, up from 60 million a year earlier, of whom some 28 million were paying for subscriptions.

The company’s founder, Daniel Ek, had said in March that Spotify reached 30 million paying subscribers.

But the growth did not erase losses, with Spotify putting a priority on investments at a stage when streaming is increasingly becoming mainstream.

The company’s net losses totalled 173 million euros, nearly seven percent deeper than a year before.

“We believe our model supports profitability at scale,” the company said.

“We believe that we will generate substantial revenues as our reach expands and that, at scale, our margins will improve,” it said.

“We will therefore continue to invest relentlessly in our product and marketing initiatives to accelerate reach,” it said.

Spotify says it offers more than 30 million songs on-demand but has also faced growing competition.

Tech giant Apple last year launched its own streaming service and rap mogul Jay-Z has spearheaded rival Tidal, adding to a market that also includes French-based Deezer and US-based Rhapsody.

Spotify has also faced prominent holdouts including Tayor Swift, Adele and Radiohead who have kept some or all of their music off the service, in part due to objections to its free tier.

source: interaksyon.com

Spotify readies to launch video

NEW YORK — Spotify said Monday it will imminently launch video content as the music streaming leader seeks ways to build an audience in the increasingly competitive sector.

The Swedish company will begin webcasting videos by the end of next week on both Android and Apple system smartphones, a Spotify spokesman said.

The videos will initially be available in four markets — Britain, Germany, Sweden and the United States.

Spotify’s chief executive Daniel Ek had announced the expansion into video in May during an event in New York on the company’s future plans, although he did not give a timeframe and the company has been testing its offerings.

  
Spotify at the time said that it would offer exclusive content from media partners as well as existing production and podcasts.

Media companies involved in Spotify’s video plans include major US networks, the BBC, sports leader ESPN, documentary news site Vice and comedy channel Adult Swim.

The Wall Street Journal quoted Spotify’s vice president of product, Shiva Rajaraman, as saying the primary audience would still be music fans.

The company, the report said, will air original music-themed series but most video will consist of short snippets.

Spotify is the leader of the fast-growing sector of streaming. The company says it has more than 75 million regular users, of whom 20 million pay subscriptions for advertisement-free access.

The company, which is privately held, does not release its earnings but is widely believed to be gambling that it can invest heavily initially and turn a profit later.

Smaller rivals have invested heavily in video as a way to win over customers.

Apple Music, which launched in June, recently offered an exclusive tour movie by pop superstar Taylor Swift.

Tidal, led by rap mogul Jay Z, has gone a step further by exclusively webcasting series without a direct music link including the drug-dealing drama “Money and Violence.”

Online content giant YouTube also recently launched a music streaming site, which lets users toggle between videos and audio-only tracks.

source: interaksyon.com