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Spotify bled red ink in 2009

Heading in the right direction, though

5 things you didn’t know about cloud backup

Financial documents filed with Companies House show that Spotify Ltd lost £16.6m in its first year of trading, on revenue of £11.3m.

Accounts for the UK operation show it ended 2009 with seven million subscribers, of whom 250,000 had converted to a paid account. Of the revenues, £4.5m came from ads and £6.8 from subs. The figures obviously exclude Spotify's overseas businesses - including Spotify AB and Spotify SA, headquartered in Luxembourg.

It's ancient history now - and much has changed recently. But the breakdown of costs remains highly relevant.

Spotify slammed the door on the free lemonade stand about midway through 2009, switching from mostly ad-supported to mostly real-cash-please. It throttled the flow of free signups and worked hard to convert free subscribers to paid.

The "cost of sales", which covers royalties, was £18.8m. This figure dwarves the administrative expenses of £8.29m. (There's no separate category for R&D - which there should be, given the generous tax credits available for this category).

The pace of change at the business was illustrated by MusicAlly recently, citing Swedish reports, which revealed that Spotify had paid €40m to rightsholders in its two-year history - but three-quarters of this was paid out in the past eight months.

So the company is estimated to gain about €6.2m of revenue a month, from around 650,000 subscribers. That's heading in the right direction. ®

5 things you didn’t know about cloud backup

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