Taylor Swift renewed the ongoing debate about whether Spotify, and streaming music services in general, are a good or bad thing for the artists whose music they carry. Swift's label pulled her catalog shortly after the release of her new album, and accused Spotify of paying a pittance for her spins. Spotify CEO Daniel Ek fired back in his own blog post, saying Spotify has paid out $2 billion in royalties to artists so far and that this number was poised to grow rapidly.
Spotify's revenue nearly doubled in a year
Today we got some hard data to back up Ek's argument. As reported by The Guardian, a filing covering Spotify's finances for 2012 and 2013 showed that it generated more than $1 billion in revenue for 2013, nearly double what it earned in 2012. It also came a lot closer to turning a profit, with its overall revenue increasing at a faster clip than its costs did. As Recode's Peter Kafka points out, this positive growth is what enabled Spotify to raise fresh funding at a $4 billion valuation.
In a lot of ways, both sides in this debate have a point. Streaming revenues aren't likely to add up to the same kind of paydays that artists made in the days when people still bought physical records, at least not for a long time. At the same time, album sales have been in decline for many years before Spotify even came on the scene. As industry analysis shows, the growth in the music industry is coming from streaming.
In fact Spotify says Taylor Swift is a good example. It claims to have paid her $2 million in total royalties over the last 12 months, but to have been on pace to pay her $6 million over the next year, before she pulled her music. We don't have the company's 2014 numbers yet, but consider today's news another bullet point backing up Spotify's argument about its growth potential.