The well-known streaming music service in the UK became profitable for the first time last year. This was confirmed by the company’s latest financial results. The report said that Spotify’s revenues increased almost 42% in 2013 compared to the previous year.
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The company explained that this growth could be attributed to a respective yoy growth in British subscriptions, as well as to an increase in advertising revenue. Spotify also pointed out that its growth was in line with the growth of digital recorded music revenues in the country last year, as digital revenues in the United Kingdom accounted for 50% of total record industry trade revenues for the first time. The country also saw a 41% increase in streaming revenues on 2013.

Spotify’s subscriptions growth in the country was largely driven by its partnership with Vodafone to bundle subscriptions into its 4G mobile tariffs and a 50% discount for students. Talking in terms of the categories, Spotify’s UK advertising revenues increased only 12% in 2013, but its subscription revenues increased 42% in the same period. In comparison, back in 2012, Spotify’s global revenues increased 128%.

The streaming service now accounts for over 40 million active users across the world, with more than 25% of them paying for subscriptions at full price, at the discounted rate for students, or as part of a bundle in partnerships like that with Vodafone.

The company pays out 70% of its income as royalty payments to labels and publishers. Those then distribute profit to the content creators under the terms of their contracts. Last year, Spotify admitted that the average amount paid to copyright owners for a single stream is between $0.006-0.0084. Some believe that these amounts are too small. For example, Tom York was heavily criticizing the service. David Byrne also criticized streaming music, though he admitted that streaming may be the future of music consumption. He saw main problem in the way labels share income with musicians. Billy Bragg joined his opinion, saying that the problem lies with label contracts rather than streaming payouts. The world is changing and the artists have to adapt: music fans today are increasingly streaming music and the musicians have to adapt their behavior.

Other content creators praise Spotify: for example, Ed Sheeran appreciated the streaming service as a way for fans to discover his music and maybe even buy tickets to see his live performances. His album was streamed almost 26 million times in the first week on the website, which means that 26 million people could listen to the album. Such figure may translate in a hefty amount of money: if only 10% of those listeners consider buying a ticket or going to a festival, this would make touring very comfortable for the artist.

Spotify Ltd’s financial results provide more evidence that as more people pay for their music subscriptions, such businesses can turn a profit.

Spotify is a great app , all my friends using it and its not very expensive for what it offer i think !