Spotify was founded in 2006, and launched in 2008. During that time, the company has never made a profit. Despite bringing in $2 billion in revenue last year, they actually posted a loss for the year. The majority of their revenue goes to pay for royalties that are paid to artists. Additionally, there are costs for the company to keep their employees around and their platform up and running. Spotify is one of the more popular streaming music services out there, rivaling the likes of Apple Music and Google Play Music.
In 2015, the company raked in $2.18 billion. That’s a healthy 81% increase over the $1.21 billion they brought in the year before. However according to some numbers posted by The Wall Street Journal, they also posted a loss of $193 million for the year. That’s a wider loss than they posted the year prior, of $181 million. Their revenue mostly (about 89%) comes from Premium subscriptions, which are $10 per month, or $14.99 for family plans – which gives you 6 accounts. Just a few months ago, it was announced by Spotify’s CEO, Daniel Ek, that they have 30 million music subscribers.
Spotify offers a slew of services with their Premium tier. The most popular and convenient feature, is the ability to listen to your music on virtually any device. Spotify also allows you to control music from any device (even if it’s not playing on that device). Spotify also has a ton of playlists that have been created for all sorts of things. Although they aren’t quite on the level of Google Play Music’s playlist curation, thanks to them acquiring Songza a few years ago. Spotify offers a free version of their service, which is supported by ads and limits where users can listen to their music. They have another tier that’s between Premium and free, which basically gives users an ad-free experience. But they aren’t able to listen on mobile. That’s reserved for their Premium tier.
In the past year, Spotify has been looking for ways to get their users more involved with their product. Adding podcasts and now videos to the platform. However, their problem isn’t just getting users involved, they need to bring in more users and somehow turn a profit.