Spotify is celebrating a milestone in music streaming today. The company announced that it now has 10 million paying subscribers globally, and a total of 40 million active users worldwide.
Spotify CEO and co-founder Daniel Ek said in a statement that the Swedish company has had an amazing year, “growing from 20 markers to 56 as people from all around the world embrace streaming music.”
“We’re widening out lead in the digital music space and will continue to focus on getting everyone in the world to listen to more music.”
But even with 10 million paying costumers, Spotify is having a hard time generating money. Bloomberg Businessweek points out that a report by private-company performance analysis firm PrivCo last year indicated that Spotify had lost $200 million since it started. And another report indicated that the streaming business model–including others like Pandora and Rhapsody–are “inherently unprofitable.” The problem is that most of the company’s income, specifically Spotify, goes to royalties (roughly around 70 percent). The rest is for paying bills, and there’s only a bit left over.
But that shouldn’t last forever. Although 10 million paying users might not be enough yet to turn a profit, Spotify is closer now more than ever to being able to generate some real money for itself.
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