Spotify Posted $59 Million Net Loss For 2011 [Report]

Spotify Losing Money

Music streaming service Spotify might show up in just about all of your friends Facebook timeline feeds but that hasn’t been enough for the company to turn a profit.

Research firm PrivCo is claiming to have obtained Spotify’s full year financials and it says despite generating $244 million in revenue the company still lost $59 million. If those numbers are correct that means Spotify managed to grow year-over-year by 151%.

The $59 million net loss if correct would be slightly higher than the $57 million on $236 million in revenue that The Wall Street Journal had reported in August.

According to PrivCo’s founder and CEO Sam Hamadeh:

“Spotify’s 2011 results indicate that drastic changes must be be made quickly to its business model in order to generate growth while actually improving operating margins so that break-even, let alone profitability, is somewhere, anywhere, on the horizon.”

The biggest problem for the company according to the report is that it pays nearly every dollar it earns back to licensing fees and royalties. The report also found that employee costs were up by 173% from the prior year.

Spotify has become the darling of the social music space, however licensing music in such a manner that record labels allow a partnership to continue well into the future is proving to be difficult. With Apple engaging directly with record company’s at the moment Spotify could soon find itself losing money and facing even stiffer competition.

Here is the Spotify financials chart as provided by PrivCo:

PrivCo Spotify Financials



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