The website “The Information”, disclosed some figures about Spotify, claiming they came from “two people briefed on the numbers” which were also shared with investors.
The streaming coloss – reportedly – has driven revenues of €1.9bn in the first half of 2017 and looks set to generate €4.1bn by the end of the year. Losses grew too, but – unfortunately – “The Information”’s data are less precise in this field, suggesting the company saw an operating loss of “between” €100m and €200m for the period. The 20-steps-forward-two-steps-back dynamic is seemingly not scuppering its trading price for shares, with one source giving Spotify a valuation of $16bn, up from $13bn earlier in the year.
The Information says the company ran up losses of close to €1bn between 2014 and 2016, but renegotiated licensing deals are possibly working in its favour, although it has to hit certain subscriber targets to really feel the benefit. The last official numbers issued by the company came in June when it said it had 140m users, of which 60m were paying subscribers. Its nearest competitor, Apple Music, had officially announced 27m subscribers in June, with recent rumours suggesting this has now passed 30m. Apple Music might be half the size in terms of subscribers but is not having to balance out the drain on revenues caused by a free tier that is much larger than a paying tier.
According to this leaked report, Spotify has boosted its gross margins from 15% last year to 22% for the opening six months of this year. That’s good but considerably behind the 35% gross margins Netflix (the company it is invariably compared to despite the fact they are chasing different audiences and have markedly different stances on licensing versus content acquisition) enjoys.