Music streaming may be popular but its not profitable

Streaming is quickly becoming the most popular way to listen to music nowadays, but that doesn’t mean it’s profitable, at least at current prices. With millions of users paying the $10/month premium and subscription fee and tens of millions using the ad-supported free option, Spotify is still failing to bring in a profit. In fact, despite how its revenue is skyrocketing,  Spotify’s losses are growing at an even faster rate. 

As streaming music has spread around the world, Spotify’s financial picture has remained much the same year after year: rapid revenue growth, with steady losses. That pattern continued in 2014, as Spotify reported $1.3 billion in revenue, up 45 percent from the previous year. At the same time, the company reported net losses of $197 million, up from a loss of about $68 million in 2013, according to documents filed in Luxembourg, where Spotify’s holding company is registered, and made public on Friday. As an explanation for its loss, the company’s documents cited investments in “product development, international expansion and general increase in personnel.” At the end of 2014 it had 1,354 employees, up from 958 at the end of 2013. Spotify, which is available in 58 countries, offers access to some 30 million songs with a two-tiered model: Users can listen to music with advertising free, or they can subscribe for about $10 a month and bypass advertising.