Spotify is reportedly a huge digital account for record labels worldwide, but it's not necessarily bringing in the dough. That's what Billboard says, and they have some interesting findings vis-a-vis the digital vs. brick-and-mortar divide.
Just a few days ago, it was reported that Spotify is the music industry's second-largest revenue source. Now that claim is being disputed in light of some new industry analysis. According to Billboard's numbers, in 2011 labels earned $525 million in sales through retail giant Walmart, compared to less than $175 million through Spotify's subscriptions in a dozen countries.
And the Walmart revenue is in the US alone. Even if Spotify were to increase their international footprint, they would need to grow their revenues by nearly four-fold to match Walmart's impact. Their international dominance isn't as clear-cut as before either, since the company still loses out to physical formats in Norway, Sweden, Denmark, and Finland, countries that have been Spotify's traditional revenue base.
In the US, Spotify ranks pretty low--just 6% of digital revenue and 3% of total music revenue in 2011, putting them behind brick-and-mortars like Walmart, Target, and Best Buy as well as iTunes (the number one revenue source) and Amazon. In fact, Spotify's US numbers are comparable to competing subscription services like Rhapsody and Muve Music. Even performance and synchronization royalties outdid Spotify.
Of course, the subscription service still doesn't have a full year in the US market under its belt. It will surely improve, but probably not nearly enough in the short term to match those optimistic--if hasty--early assessments. Read the detailed findings here.
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