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13.02.2017

Spotify is getting huge, but its money issues are also growing


According to the BBC, the clock is ticking for Spotify. It might be crazy to think that a company with 100 million subscribers (40 million of those paying) is having money troubles while essentially being the leader in the market of online music streaming. But it seems to be true. And it’s only getting worse.


Spotify accounted for 51% of music consumption in the US in 2016. And it’s also pretty popular in 60 other countries – that’s a great achievement. And even if the majority of its users don’t pay, 40 million payments each month is still a lot. And the others do get to see ads.

But still, the money seems to be flowing in too slowly. Last year the company had to raise one billion dollars from investors in March after already having raised 500 million in January. Both of those investments have conditions that are tied to the company’s IPO – the later it happens, the more it hurts Spotify. But if the company does an IPO, it will have to tell the world it’s not making money and subject itself to the stock market’s reaction.

Right now, Spotify is reportedly trying to renegotiate its deals with major record labels. According to the BBC, they get around 55% of the company’s revenue. An additional 15% or more is thought to go to publishers and songwriters. Spotify would like to give the record labels less of a cut, but has already been involved in controversies with artists who say they’re not getting enough money as it is.

So, essentially, the company is under pressure from multiple sides. Investors want to see the company make profit, music makers and owners want to get more money. And the more time Spotify takes until its IPO, the more money it owes its investors of the recent past. As CNN so eloquently put it – the clock is ticking.


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Source: http://www.bbc.com/news/business-38930699
Pic: ©WDnetStudio
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