Spotify could finally turn a profit in 2017, expand to China, Russia & South Korea


Apple Music rival Spotify could finally turn a profit in 2107, one of its board members told the media Thursday. Asked if the Swedish music service could become profitable soon, Par-Jorgen Parson, one of Spotify’s first investors, told Reuters that it was “absolutely” the case.

Spotify currently operates in 60 markets and has more than 40 million paid subscribers. Apple Music is available in 115 markets and has 17 million paying customers and over 30 million songs in its catalog.

New York-based Parson said:

Up until now, I think it’s been growth, growth, growth. Maybe profitability will start to become a priority too. As an investor—and I’ve been in the company now for almost ten years—we’re looking forward to an initial public offering at some point in time.

But the moment that we start to optimize on profitability rather than growth, then these unit economics will kick in right away, and they are really solid, and have been for quite some time.

The focus for 2017, Parson said, will be addressing the needs of artists, helping them plan tours or driving merchandise or ticket sales. Spotify just launched in Japan and has its eye on markets like China, Russia and South Korea, he said.

Asked if that profitability could come as early as next year, Parson said: “Absolutely, yes.” Spotify has been spending money on securing streaming rights and exclusive deals with artists for years so this should be music to their investors.

Spotify’s funding round last year had a value of over $8 billion.

Launched in October 2008 by Swedish startup Spotify AB, the service is one of Europe’s most valuable technology startups. Because it lacks the resources of Apple, Google and Amazon, Spotify was limited to a few European countries at first.

A few years since its inception, Spotify hit U.S. shores and is now facing competitive pressure from big name rivals like Apple, Google and Amazon, to name a few. While Spotify’s ad-supported free tier has helped it attract millions of new users, the company has to date posted a loss in every quarter.

In 2015, Spotify reported an operating loss of 184.5 million euros ($195.5 million), up from 165.1 million euros in 2014, or approximately $175.4 million. Spotify employs about 2,000 people across the world.

Source: Reuters