Even the most optimistic technology companies can't avoid the brutal economics of business. The success story that is Spotify is certainly finding that out: According to their own reports, the music service has posted losses totalling $100 million for 2010 and 2011.
There's been conflicting information on how Spotify is doing this year, especially with a full twelve months of the American market under its belt and an expensive global expansion under way. But here's what the raw data states: At the end of last year, Spotify counted 32.8 million users, with 10 million being labeled as "active" and 3 million actually as paying subscribers. Recently, Spotify announced they reached 4 million paying customers, though many dispute those growth numbers.
Still, with that said, the company's revenues are climbing and could buy them out of their substantial losses in the long term. Spotify reported a $234 million haul in 2011, significantly improving their $117 million in 2010. Tuesday came the news that Spotify is looking to expand its services to Canada, South America, and Asia, an ambitious plan that reportedly lender Goldman Sachs is even signing off on. Spotify CEO Daniel Ek seems to sum up the company's predicament succinctly:
"The question of when we'll be profitable actually feels irrelevant. Our focus is all on growth. That is priority one, two, three, four and five. But of course we expect to make a profit in the long run."
Only time will tell. [Digital Music News]