Just recently, Spotify became the leader in music streaming having 50 million paid subscribers. However, it lost a lot of money because it reportedly had little income and more expenses.
The company had a significant growth from 30 million subscribers in March 2016, 40 million subscribers in September 2016 and 50 million this year. This is considered by most critics as an impressive feat to the streaming service.
According to The Verge, there are more subscribers to Spotify if free users were added. If they are added, customers will amount to 100 million subscribers.
This seemed to be a firm lead, compared to Apple iTunes, which only had 20 million subscribers. Tidal, another music streaming device, only manage to have 1.1 million subscribers last year.
However, Spotify seemed not to be gaining that much profit for the past years. The company reportedly filed a revenue of $2.8 billion in 2015 and lost $194 million in revenue. Apparently, the music streaming company seemed to be using a lot of its money, while, charging its users little.
According to Quartz, the company has to pay the license to the 30 million songs it uses online. Sadly, the license tends to be more expensive as the days go by.
Eighty percent of the Spotify's revenue reportedly goes to copyright payments. It also did not help that the $9.99 subscription for their premium users only makes up 30 percent of what the music streaming company gains.
When users go to premium, Spotify removed bothering advertisement that pops-up every now and then while listening to the music streaming app. Users can use the app for free even if they don't go premium, that is the reason why the majority of its users opt to avail the free service rather than the premium.
Spotify's revenue problem still does not erase the fact that having 50 million paying subscribers is an amazing news. This means that the company still has a lot of room to grow despite its shaky revenue status right now.