Spotify’s financial records for the past year were filed on Thursday, and it seems like the company has at least a couple of reasons to celebrate. One, the company managed to attract as many as 14 million new subscribers — taking the total user base up to 140 million, and two, it recorded a massive, $3.3 Billion in revenue.
However, the company isn’t exactly taking home the $3.3 Billion. At least $2 Billion will be used as payments for record labels. These payments will be made over the next couple of years and will fuel continued allegiance in the future.
What this means is that, the company’s partners expect at least this amount in guarantee payments. And of course, Spotify must also pay out per stream payments to its partners — that is, a certain amount of money meted out every time someone streams a song. So in addition t a fixed amount that enables Spotify to host songs on its platform in the first place, it must also pay out some money every time someone streams a song.
So you see, Spotify doesn’t exactly make all that much of a profit. And this is also why small revenues can spell a lot of trouble for the company. Also, Spotify did not update the number of paying subscribers from March, which is still constant at around 50 million.