Spotify commits to global growth despite increased losses

Music streaming service Spotify is to continue to expand globally, despite recording a €45.4m (£35.9m) loss in 2011.

The deficit came despite the company increasing its revenue for the year to €187.8m, compared with €73.9m in 2010.

The loss has been attributed to the heavy costs involved in licensing from record labels the music Spotify offers.

The service confirmed plans to expand to Canada, as well as some countries in Asia and South America.

It is already available in 15 countries, including the UK and US.

The London-based firm has also set up subsidiaries in Singapore and Hong Kong, but is yet to launch the product in either country.

The Wall Street Journal reported growth in the company's premium-member subscriptions, citing its latest financial report. Income from paying customers last year made the firm €156.9m, up from €52.6m in 2010.

However Spotify's other revenue model - playing ads inbetween music for non-paying subscribers - has slowed.

The company recorded only a minor increase - €6.5m - in advertising revenue, making €27.6m in 2011.

Premium fee

Subscribers to the service can either pay £9.99 for a full membership, which allows mobile listening, or £4.99 for unlimited, ad-free listening on a desktop or laptop computer.

At the end of 2011, according to the financial report, Spotify had 32.8 million registered users. The company has said 15 million are active, with four million paying to use the service - a number Spotify has said is steadily growing.

It will need to increase further if the company is to balance out the cost of licensing its huge catalogue of about 15 million tracks.

Spotify pays record labels a small fee every time a song is streamed, regardless of whether the member is a paying subscriber or not.

Despite Spotify reportedly paying out in the region of €200m to labels since 2008, some artists have removed themselves from the library, suggesting that the comparatively low fees for streaming did not provide enough compensation for any potential lost sales through more traditional means.

Source: BBC News