Spotify’s revenue increased 80% last year while the music-streaming service also managed to limit its net losses to $188.7 million, up only 6.7% on 2014.

According to regulatory filing in Luxembourg, Spotify collected $2.18 billion in revenue in 2015, of which 89.9% came from paid subscriptions and the remainder from advertising. Subscription revenue rose 78% while ad revenue almost doubled.

In 2014, Spotify’s losses soared by 289% and its revenue was only up 45%. “In many ways, [2015] was our best year ever,” the company said in the filing.

Spotify paid $1.83 billion in royalties, distribution and other costs for the year, up 85% year-on-year. The subscription service now has more than 25 million users worldwide, about 41% of all paying audio music subscribers worldwide.

With Spotify planning an initial public offering in the next few years, Recode said the 2015 results are “the kind of performance it will need to be able to replicate with consistency.”

“If Spotify can keep it up, then it will have pulled off something special by showing it can run — and grow — a streaming music service at scale,” Recode said. “Traditionally, streaming music services have struggled because their music expenses increased at the same pace as their growth — or even faster than their growth.”

Quartz cautioned that Spotify is overly dependent on its paid subscribers, who account for only one third of its user base. Many artists have objected to their music being available for free on Spotify’s ad-supported tier.

“If the company is to continue expanding at its current rate, that — in conjunction with the free tier’s meager profits — could be cause for some more concern,” Quartz said.

Spotify directors Martin Lorentzon and Par-Jorgen Parson also noted in the regulatory filing that the service faces competition from “players with substantial resources at their disposal.” They include Apple Music, which already has 13 million paying subscribers.

“Music has mass market appeal — and, as such, we believe we are just at the beginning of a much larger market opportunity, benefiting from significant first mover advantages,” Spotify said.

, , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *