Spotify Board Member: Profitability Could Happen Next Year
December 1, 2016 at 11:55 AM (PT)
A SPOTIFY Board member and one of its first investors, told REUTERS that the streaming service could start to become profitable as early as next year. Despite steep losses over its decade-long existence and mounting competition, PAR-JORGEN PARSON, a general partner at venture capital firm NORTHZONE, believes a profitability tipping point is near.
"Up until now, I think it's been growth, growth growth," he said. "Maybe profitability will start to become a priority too."
SPOTIFY reported an operating loss of 184.5 million euros ($195.5 million) in 2015, up from 165.1 million in 2014. Not surprisingly, some analysts contend that SPOTIFY's business model is flawed and it is hostage to the record labels. But with over 40 million paid users, SPOTIFY could begin to exert greater leverage in its negotiations with the music industry.
PARSON, however, believes that SPOTIDY's focus in 2017 will be addressing the needs of artists, helping them plan tours or driving merchandise or ticket sales, while at the same time preparing itself for an IPO. "As an investor - and I've been in the company now for almost 10 years - we're looking forward to an IPO at some point in time," he said, adding that he doesn't see any scenario where the founders are letting go of the control. DANIEL [EK] and MARTIN [LORENTZON] -- I think they have found their calling in life."