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Spotify's revenue hits €2bn, but when will it make money?

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Daniel Slye
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The new figures, which come as Spotify s paying users reach 30 million, could raise questions about whether the subscription model, which accounts for a growing proportion of music industry revenues, is sustainable in its current form.

€m

Spotify is succeeding at encouraging more people to pay for its services, but its rapid global growth has also meant pay-outs to artists and publishers increased.

Of Spotify s 89m users at the end of 2015, more than two thirds are on its advertising-supported free service, although ads accounted for just 10.1pc of revenue.

The economics of the freemium tier remain challenging and every single freemium user is lossmaking on a gross margin basis, said Alice Enders of Enders Analysis.

Ms Enders said Spotify still had to significantly grow its base of paying users to be near to profitability, and that it could adjust its model, for example by raising prices for customers.

History

Launched in 2008, it has grown to 30 million paying subscribers, the world's biggest streaming service

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Price

£9.99 a month for unlimited streaming, or free, advert-funded option.

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Daniel Slye
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