Despite recently published accounts that show losses of £16m for Spotify Limited, the online music service is raising funding for “ambitious growth plans” which are likely to include expansion into the US market.
The 2009 financial accounts for Spotify’s UK-headquartered arm show revenues of £11.32 million, however administrative and distribution costs meant an operating loss of £16.4 million. Nearly 40% of revenue came from advertisements (£4.51 million), while the remaining £6.81 million came from subscriptions. At the end of 2009, the service had seven million users across Europe, of whom just over 250,000 were paying subscribers.
Since its digital jukebox service launched in October 2008, Spotify has also paid nearly £35 million to rightsholders. Royalties are paid to music labels and publishers for every track played, whether on its free or subscription services.
The company is not yet thought to have signed up the US arms of all four major labels – Universal, Sony, Warner and EMI – and a reduced music catalogue could diminish the service’s appeal for a US launch.
The Swedish company, based in London, says it is “confident” it can secure new investment to address the US market and that it had “all the capabilities and financial resources” needed to execute its growth plans.