Online music service Spotify, founded in Sweden, continues to grow. In 2011 the company reached a revenue of €187.8 million, up from €73.9 million in 2011. This according to a year-end filing from Spotify's parent company in Luxembourg.
However, the filing makes it clear that the vast majority of the service's user base is not bringing in any substantial revenue. At the end of 2011 Spotify had 32.8 million registered users, of which 2.6 million were subscribing to one of Spotify's paid offerings. The remaining 30,2 million customers were using the free, ad-supported, service. And the paying users, 7.9 percent of the total user base, brought in a whopping 83.5 percent of Spotify's total revenue.
In 2011, the average revenue per user from these paying customers was €60, a huge contrast to the average revenue per user from the users of the free, ad-supported service which was €0.9.
The good news for Spotify is that the revenue from the paying customers is growing fast, with a 300 percent growth from 2010 to 2011. During that same period, the advertising revenues grew with a mere 30 percent.
A smaller, but even faster growing, part of Spotify's revenue comes from paid, downloadable content. Spotify sold €3.3 million worth of downloads in 2011, compared to just €137.000 in 2010.
Spotify saw a net loss for 2011 after taxation of €45.4 million, a larger number than the €28.5 million loss in 2010. The increased loss is explained by investments in staff, international expansion and engineering.
A spokesperson for Spotify leaves the following comment in an email to Computer Sweden:
"Offering both a basic free and fully-featured paid-for service has been instrumental to what we've achieved so far, both in fighting piracy and convincing millions of people to pay for music. Over 15 million people now actively use the service worldwide, with 4 million of them now paying. That's a pretty phenomenal following for a music service still in its relative infancy. 2011 saw us continue our focus on bringing an unrivalled music experience to a global audience. We're building for the long-term."