Spotify hits 2.5 million subscribers

But profits slide as the cost of big expansion plans bite
Darren Allan

November 24, 2011
Spotify Logo

Spotify has been pushing ahead with major expansion plans this year.

Firstly, it tried to shift more free users to paying subscribers by cutting the amount of free listening hours in half, and crucially limiting the amount of times users could play a song to five.

Then the service opened up in the US market, and it integrated with Facebook, these latter two moves having made a definite difference to the numbers who are willing to stump up in order to listen to the library of streaming tunes.

Indeed, Spotify now has 2.5 million paying subscribers according to its own figures.

In a blog post, a Spotify spokesperson said: “So we’d like to say a big thank you to all our subscribers, new and old. Keep spreading the good news about Spotify!”

“Of course, we’ll continue to focus on providing you with the best music service possible. We’ve got some exciting developments in the works, which we’ll share with you very soon.”

Exciting developments? Apparently so. Rumour has it that there’s an iPad on the way, and the service may look to add streaming video to its audio delights.

There is some not-so-good news hidden beneath the growing user base, however. While subscriber numbers and revenue might be up, Spotify’s profits are actually down this year, due to having to fork out for said expansions and strike deals with the big US music labels.

While revenue increased some £10 million to £63 million, losses also increased by £10 million to £26 million, a nasty sting in the tail.

Things should be on the up from here in terms of profits, but Spotify still has a long way to go before it’s in the black.






 

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