Since I upgraded to Spotify Premium I haven’t been reminded every five minutes that Spotify needs money with a “Hi, this is Johnathan from Spotify…” advertisement. But the financial numbers also paint a clear picture.
We’re always interested in numbers on Spotify, and PrivCo, a company that sells data on non-pubicly traded companies, has released a financial overview of Spotify. The 2010 and 2011 numbers paint a picture of what we already know – Spotify faces high costs and is operating at a pretty substantial loss. Record companies demand a pretty significant share of the revenues to allow streaming rights, and meanwhile Spotify’s personnel costs have jumped up as they scale to new countries.
In 2011 Spotify had revenues of $244.5 million, but faced cost of sales at $238.9 million. Personnel cost is also fairly huge, ringing in at $31.8 million. This has resulted in an operating loss of 61 million for 2011, according to PrivCo, whose numbers have been confirmed with Spotify by CNET.
High initial costs are a fact of life for any disruptive company, but Spotify still has to convince a bigger chunk of its users to upgrade before their model becomes sustainable.
The company is rumored to be trying to raise anywhere between $100 and €200 million this year. News broke yesterday that Spotify is in talks with Coca-Cola regarding a $10 million investment. Coca-Cola is likely interested in extending their online marketing, after a successful collaboration with record labels to produce the 2010 World Cup anthem “Wavin’ Flag,” Bloomberg reports.
Last year the company raised $100 million from investors including DST Global, Accel Partners and Kleiner Perkins Caufield & Byers.
Edit: This article incorrectly stated that the operating loss was $70 million. It has been fixed to $61 million. It’s been a long day.