Spotify, the European music streaming service, has released its first financials. And they appear gloomy as the company is on the brink of entering the U.S. market.
However, the mobile market could be the key to Spotify’s success.
First the “bad news.”
Auditors Ernst & Young, said there is “material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern.” Spotify had a 2009 loss of over £16.4 million.
Spotify told Music Alley: “2009 saw us focus on establishing a new and innovative music service and bringing it to millions of people across Europe. The groundwork laid in our launch year has been crucial to the significant achievements made in 2010. Further strengthening and expansion of the service remains our top priority.”
In 2009, the company had 7 million total users, with only 250,000 paying for subscriptions.
But Om Malik at GigaOm said things might be better than they look: “It seems the Internet is obsessing over Spotify’s revenues and losses from 2009, which doesn’t make sense considering that in about five weeks we’ll ring in 2011, and especially since Spotify will close the books on what will arguably be a year of scorching growth.”
In October it was rumored the number of paying subscribers had reached 650,000. Malik’s estimates show Spotify will bring in close to $140 million (102.5 million Euros) in 2010.
The mobile market may the key for Spotify as it prepares to enter the United States, even though it still is negotiating U.S. rights with some of the big labels.
Mailk said: “The company is looking at a big 2011. With more wireless carriers interested in pushing Spotify, and handset makers such as Nokia promoting the service aggressively on its Ovi platform, there will be significant momentum for Spotify’s subscriber base.”