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Neither Spotify nor musicians are making much money from streaming

Billy Steele
11.25.14
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Spotify may be a big name when it comes to music streaming, but the company is hardly rolling in the dough. The private company disclosed today that it took in 747 million euros (around $1.03 billion at the time) in 2013, up about 74 percent from 2012. However, shelling out a good portion of that to record companies and publishers led to net losses of $80 million for the year -- a near 70 percent cut that takes the majority of the service's revenue. The numbers reveal that Spotify isn't quite lining its pockets with cash. In fact, more folks opt for the free option instead of paying a monthly fee. Only 8 million of the 36 million active listeners at the end of last year were opening their wallets. Some quick math shows that to be a little less than a quarter of the total user base.

In the financial statement, Spotify said 91 percent of sales ($897 million) are from subscriptions with an additional $90 million coming from ads. If the same 70 percent cut heads to licensing fees for both, the free listeners are obviously earning labels, and in turn artists, much less. It's quite easy to see why acts like Taylor Swift and others are upset that the service isn't paying what they think it should, especially for the non-paying customers. And of course, YouTube's recent effort and the pending integration of Beats Music into Apple's music plans could make the uphill climb a bit steeper.

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