Spotify Might be the Biggest Streaming Service, But Its Financial Clock is Ticking

Spotify says they have about 100 million active users, 40 million of which are paid premium subscribers. That makes it the biggest of all the streaming companies. Great, right? Sure–if they could figure out a way to actually be profitable.

Spotify, just like the other streaming music companies, have never made money, thanks to the music licensing structure imposed on it. And that has balls-deep investors very, very worried. The BBC explains why.

It’s amazing to think that just 10 years ago, flat-rate digital music streaming services were a mere gleam in the eye of industry executives.

It was as recently as September 2007 that Rick Rubin, then co-head of Columbia Records, put forward the idea as a way of combating online music piracy and file-sharing.

“You’d pay, say, $19.95 a month, and the music will come from anywhere you’d like,” he told the New York Times.

“In this new world, there will be a virtual library that will be accessible from your car, from your cell phone, from your computer, from your television.”

As it turned out, he was essentially describing Spotify, which launched just over a year later.

He even got the price right. In those heady days, when the pound was a lot stronger, $19.95 was equivalent to £10, which, give or take a penny, is the monthly cost of Spotify Premium in the UK today.

But Spotify is yet to make a profit, while plans to float the firm on the stock market have reportedly been delayed, raising a big question mark over its business model.

Keep going.

 

Alan Cross

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 30+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.

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