Spotify Earnings Growth Still Comes At A Cost

The 20,000 Foot View: Spotify’s 2016 accounts reveal strong growth in both revenue and user, as well as improved conversion to paid. But they also show growing losses (both in absolute and relative terms) for streaming music’s leading player. The health of Spotify is a bellwether for the health of the streaming music market and its current prognosis is that it is fit and healthy now, but that will end sometime unless it improves its lifestyle. 

Key Findings

• Spotify recorded            of            billion in 2016, up                       billion in 2015
• Spotify added            net new revenue in 2016            to            million in 2015
• Spotify’s total            user ARPU increased from            in            to           
• Paid subscriber            from            in 2015 to            pulled            by pricing discounts
• Spotify’s Cost            Sales (previously reported as Royalty            and Other Costs) were            billion,                       of revenue, down slightly from            2015
• Spotify, and            streaming services, need to explore            revenue streams such as data            rights to drive margin
• Big tech            may seek to combine labels            streaming services to control the            chain and make the model            viable

Companies and brands mentioned in this report: Amazon, AOL, Alibaba, Merlin, Polygram, Spotify, Tencent, Universal Music, Vivendi