Spotify Earnings Growth Still Comes At A Cost
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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