November 15, 2013 12:44

Spotify's UK revenue falls as user numbers grow

Accounts reveal the streaming service's British arm made a loss of £10.1 million in 2012

Spotify's UK revenue falls as user numbers grow

Photo: Press

Spotify UK recorded losses last year as subscription revenue to the music streaming service fell while it invested in growth.

Company accounts reveal that the British arm of the service made a loss of £10.1 million in 2012, compared with a profit of £21 million in 2011.

Spotify's revenues fell to £92.6 million in 2012, down from £96.5 million a year earlier. The decline was partly due to a fall in subscription revenue, which fell from £72.4 million to £64.7 million due to a change in the way subscriptions were booked.

Advertising on the UK platform grew slightly from £8.1 million to £9.1 million to the year ending December 31, 2012. The Independent reports that subscription numbers have been growing in 2013 thanks in part to partnerships with companies such as Vodafone.

The platform 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.

Talking to NME earlier on in the year about their US profits, a spokesperson said: "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."

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