How much money is streaming music service Spotify generating for the music industry?According to figures shared with Music Ally by the company, its payouts to rightsholders have topped €40 million since it launched in October 2008. That’s based on streams of songs across its seven European territories.However, €30 million of those were paid in the first eight months of 2010, as usage of Spotify has grown sharply. That could be boiled down to €3.75 million a month, but Music Ally understands that the figure was much lower at the start of 2010, and much higher now.Those are significant revenues for labels, but here’s another thing: in several European countries, Spotify is now making more money for rightsholders than Apple’s iTunes Store, according to label sources.We’ve heard this in private conversations with labels, but they were backed up this week by public quotes from representatives of UMG and Sony Music in Sweden, in an article published by Swedish media group Dalarnas Tidningar.It includes the unambiguous statement that in Sweden, both Sony and UMG are making more money from Spotify than from any other retailer – online or offline.“Spotify is on track to become the largest single partner we have,” said Sony Music Sweden’s director of digital sales Jacob Herbst (translated quotes).“Looking at the past few months, it is the most revenues for artists and record companies… We already have several artists who receive 80% of their revenues from Spotify. An artist who draws in half a million kronor can get 200,000 to 300,000 from Spotify.”UMG’s local digital boss Martin Glemme also claims in the article that Spotify already generates more revenues for his label than Swedish physical retailer Ahlens and online store CDON, too.There are still question about the sustainability of Spotify’s business – the company is estimated to have around 650,000 paying subscribers, 90% of whom are on its top-tier €9.99 offering, and 10% on its €4.99 tier.That would mean just under €6.2 million of subscription revenues a month, plus whatever Spotify is making from the ads played to its 9.5 million free users – a not-insignificant sum, according to the company.Set that against the considerable costs of running an on-demand streaming music service across seven European territories, and investment in new launches and features. Then add in the monthly rightsholder payouts.It’s safe to say Spotify isn’t turning a profit just yet, but its business model has legs – and is generating significant revenues for labels in Europe already.This extract is from the lead feature in this week’s Music Ally Report. You can sign up for a free two-week trial here, including access to this week’s issue.
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