Spotify has become many people’s go-to platform for music streaming, but as more and more listeners jump on board, the losses continue to pile up.
The company has today declared a net loss in 2016 of $581m USD, Billboard reports, despite revenues climbing over a billion dollars in the same period, from $2.014b USD to a new total of $3.064b. Those losses are up significantly from the 2015 figure of $257m, with the increase in revenue nowhere near enough to cover the increased licensing costs from servicing so many new consumers.
The figures somewhat overshadow the announcement that the service has now hit over 140 million users globally, up 40% from the same time last year, but only 50 million of those users have paid subscriptions. Those subscribers make up the vast majority of revenue, contributing $2.76b, while ad revenue trails behind at $308.1m.
Some high points from the report include an increase in revenue from paid subscriptions (up 52%, with the subscriber base growing from 28m to 40m), a similar increase in overall ad revenue (up 50%), and the service’s launch into Japan – a hugely important market and part of the company’s continued push into vital Asian territories.
While the company announced that it has raised a further $1b from investors, it also noted that it will be paying out a minimum of $2.2b in royalty payments to rights-owners throughout the course of the next two years; renegotiating royalty rates in an effort to bring sustainability to the business model must certainly be a priority.