Yes, Spotify is sticking to a target of launching Stateside by Christmas. In the meantime, our original curiosity about the freemium music service’s underlying viability hasn’t abated.
On that point, Sweden’s Veckans Affärer (Business Weekly) has interpreted company stats and interviewed Spotify’s Europe director to provide a few metrics…
Among them (unconfirmed), it says Spotify has earned €60 million in sales since October 2008′s launch.
Spotify won’t confirm that, but tells paidContent:UK: “In total, we’ve paid close to €40 million to rightsholders since launch across all territories. Approximately €30 million of this has been paid in the first eight months of 2010 alone (January to August).”
VA may have estimated Spotify’s revenue by calculating total subscription income from 500,000 ongoing paying subscribers, each paying €9.99 a month, for 12 months. But Spotify also has a cheaper, €5.99-a-month option, and not everyone will have subscribed since launch two years ago – so lifetime income could be different.
If true, it means two thirds, and maybe much more, of Spotify’s income is going out to rightsholders. Regardless, royalty outgoings are generally high. But these payments are also just two thirds of total costs. Hence, Spotify is not yet in profit.
What are the variables which could boost Spotify? More paying subs, more ad sales, launches in more territories, the phasing-out of startup costs and renegotiating royalty rates that are already likely favourable (they’re certainly secretive).
European director Jonathan Forster tells VA: “The goal is to launch in the U.S. before Christmas this year. If we were to launch the service in the United States without free functionality, we could start tomorrow.”
That’s clearly an indication still sees the free service as a combination of both an ad sales platform and an important showcase for premium. Company execs have been virtually living on planes in recent months, such have been the demands of Transatlantic negotiations.
Spotify has received investment estimated at €85 million and Forster says: “I guarantee that we are not going on an investment round right now.”