Digital Notes: Spotify Revenue Grew Fast in 2011, but Losses Mounted, Too

By BEN SISARIO

Everything about the streaming-music service Spotify is growing rapidly: the number of people who listen, the number of apps that work on its platform, the amount of money it takes in and  the amount of money it loses.

Citing documents filed with regulators in Luxembourg, The Wall Street Journal reported that Spotify had $236 million in revenue last year,  an increase of 140 percent from the $99 million it reported for 2010. Also, the company, which was founded in 2006, has been losing larger sums of money each year. In 2011, its net loss was $56.6 million, up from $42 million in 2010 and $26 million in 2009.

Spotify is reportedly raising more than $200 million in a round of financing that would value the company at up to $4 billion.

The numbers for 2011 are largely in line, if slightly lower, than what Spotify's chief executive, Daniel Ek, confirmed to a Swedish newspaper, Dagens Industri, in April. “The quest ion of when we'll show a profit actually feels irrelevant,” he said at the time. “Our focus is entirely on growth. It is priority one, two, three, four and five.”

Spotify, which came to the United States a year ago, is available in 15 countries and is expanding quickly. It offers streams of millions of songs free, with advertising, or without ads for monthly subscriptions of about $5 to $10. Last month, the company said that 15 million people logged on each month and that four million were paying subscribers, but it did not break those numbers down by country.

The filing in Luxembourg, where Spotify's parent company is located, said the company had 32.8 million registered users by the end of 2011, according to The Journal. That means that a little less than half its customers return at least once a month, and that about 12 percent of those who try it decide to pay. In the past, up to 70 percent of Spotify's revenue has come from subscriptions.

Spotify declined to comment on the numbers but said in a statement: “Offering both a basic free and fully featured paid-for service has been instrumental to what we've achieved so far, both in fighting piracy and convincing millions of people to pay for music. Over 15 million people now actively use the service worldwide, with four million of them now paying. That's a pretty phenomenal following for a music service still in its relative infancy.”

Ben Sisario writes about the music industry. Follow @sisario on Twitter.