Revenue Streams: Spotify’s Bid to Generate a Profit

The company is critical to the revival in the music industry but, with its brutal business model, can it make money?

By Anna Nicolaou

It should have been Daniel Ek’s victory lap. On the eve of the Grammy Awards in January, the founder of Spotify sat in a sun-drenched Tribeca loft, where rising stars such as Alessia Cara took to the stage to entertain some of the most influential figures in the music industry. In attendance were executives from Amazon, Apple, Google and Facebook.

Mr Ek, clad in his signature T-shirt and Nikes, was holding court. His invention has injected billions of dollars back into the music business and he was sitting back to enjoy a performance of “Despacito” by Luis Fonsi — the most streamed song of all time. “The music business is back where it should be,” declared Nas, the rapper who dominated hip-hop when the compact disc was king in the 1990s, “with artists getting paid”.

Just minutes later lawyers representing songwriters announced a victory in a Washington court battle over royalty rates. The court awarded songwriters across America their largest ever pay rise, adding tens of millions to Spotify’s annual streaming costs. If Mr Ek was jolted by the news, he didn’t show it.