The figures show that the company's business model could be sustainable
Spotify doubled its revenue in 2012, but still made losses.
As Billboard reports, the music subscription service increased its revenue last year to over $573 million (£376 million), up from $246.7 million (£162 million) in 2011. However, its net loss also increased to $77.4 million (£51 million) from $58.8 million (£39 million).
The company has been subject to criticism from those who claim its business model is unsustainable and some artists such as Thom Yorke and Nigel Godrich have spoken out about the way the company pays royalties, arguing that artists get “fuck all” from the service. However, Spotify says that its long-term goal is to make sure artists are properly remunerated for putting their music on the service. These figures indicate that the business model could work if the company can continue to operate on whatever remains after paying the rights holders to the songs. As its business develops and generates more revenue, it will keep a greater share of this revenue.
A spokesperson for Spotify told NME: “During 2012 Spotify saw dramatically increased revenues while maintaining a free to paid conversion rate of well over 20 per cent – unheard of for a freemium business, and a clear demonstration of the success of the business model. In 2012 the business focused on driving user growth, international expansion and product development, resulting in soaring user numbers and increased market penetration. Our key priority throughout 2013 and beyond remains bringing our unrivalled music experience to even more people while continuing to build for long-term growth – both for our company and for the music industry as a whole.”