As it marches toward a potential listing on the New York Stock Exchange next year, Spotify continues to solidify its position as the market’s preeminent music streaming service.
The Sweden-based company now has 140 million subscribers — up from 126 million in late 2016 — and raked in $3.3 billion in revenue last year. That’s a 50 percent jump in revenue year-over-year.
To make money, the company has to spend money, though. A lot of money. In a financial report released this morning, Spotify revealed it will pay more than $2 billion to music labels in the next two years.
The payments create a foundation for keeping labels like Universal on its platform, but don’t include the per-stream fees the company pays each time a song is played. And with its deals with Sony and Warner Bros. approaching expiration, Spotify will need to pony up even more dough to keep its content.
While the high cost of doing business has kept its profit relatively low — about $500 million last year — Spotify is betting on the deals creating better margins as labels start to restrict new music to paying customers.
Spotify didn’t update its paid subscribers figure, but the company announced it had passed the 50 million milestone back in March. That’s nearly double its rival Apple Music, which announced it had 27 million paid users at last week’s Worldwide Developer Conference.