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Summary:

Spotify is putting globalisation ahead of profitability, and breaking America is still top of that list.

Asked if the music service is near…

Faisal F

Spotify is putting globalisation ahead of profitability, and breaking America is still top of that list.

Asked if the music service is nearing breakeven, the company’s global corporate and business development head Faisal Galaria told paidContent:UK…

“We’re more focused on, rather than racing toward profitability, building a company that is in many, many countries. That takes a considerable investment to do that.

Rather than focus on short-term profitability, we’re focused on building the world’s best online music service.”

Does that mean, as reports have indicated, Spotify required additional investment to try breaking America?

“There are scenarios in which we’d enter many, many markets that would require raising external capital,” Galaria said. “Or you could adopt a market-by-market approach which doesn’t require further investment. We’re still working out which markets are our priorities.”

Right now, Spotify takes account registrations in Sweden, Norway, Finland, the UK, France, Spain and the Netherlands.

What this boils down to – using investment cash, the company has started with a great, usable product, is making millions in ad sales, has 10 million users and 750,000 paying customers, the majority of whom take the highest of two tiers…

Now it wants to use what may – with competitors like Rdio, Mog and Qriocity looming – be a short window to broaden that user base globally, creating a platform for what could eventually be a more successful business. But, to do so, it may need more cash.

Operating in Europe is easier for Spotify since it uses the UK royalty collector PRS For Music to pay licenses for multiple countries in the continent. Its best bets for international expansion are countries with with licensing regimes that, similarly, are relatively friendly and relatively cheap. For example, German online royalties remain relatively high and, in the U.S., services require more direct label deals.

The company is no longer giving calendar estimates for its U.S. ambitions; negotiations are still playing out.

  1. Richard Tobin Monday, January 17, 2011

    Spotify gets my vote; not just as a consumer but as the right way to deal with the artist’s interests. If they floated I would be in.

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