The U.K. arm of Spotify grew its revenues by over 40% in 2013, entering profitability for the first time.
According to the company’s latest set of financial results, published by Companies House, year-on-year revenues grew from £92.6 million ($147 million) in 2012 to £131.4 million ($210 million) in 2013 -- a rise of almost 42%.
Of arguably greater significance, especially to critics of the streaming model and its long term economic viability, was Spotify U.K.’s turnaround of an £11 million ($17.6 million) net loss in 2012 to a £2.6 million ($4.2 million) profit, after taxation, the following year.
“This growth can be attributed to a 42% year-on-year growth in U.K. subscriptions and also to an increase in advertising revenue,” said a spokesperson for the London-based company.
Companies House records state that between 2012 and 2013 subscription revenues grew year-on-year from £64.8 million ($103.9 million) to £92 million ($147.6 million), with Spotify crediting its partnership with mobile phone network Vodafone U.K. and introduction of student packages with helping to fuel the rise in subscription sales.
Meanwhile, advertising income in the same period rose from £9.1 million ($14.6 million) to £10.2 million ($16.4 million). More profitable was "Intercompany Services," which rose from £17.8 million ($28.6 million) in 2012 to £29 million ($46.6 million) in 2013.
Those revenues were offset by cost of sales -- a category that includes royalties paid to labels and publishers -- totalling £96.2 million ($155 million), up from £76.7 million ($123.5 million) the previous year. Administrative expenses for the year ending December 31 2013 totalled £20.6 million ($33.2 million).
“The growth seen by Spotify Ltd (the trading name of Spotify U.K.) mirrors the growth of digital recorded music revenues in the U.K. in 2013, which saw digital revenues account for 50% of total U.K. record industry trade revenues for the first time, and a 41% increase in streaming revenues on the previous year,” a Spotify spokesperson went on to say.