Spotify’s $600 Million Loss, Currency Risk and What it Means for Artists

Stuart Dredge over at Music Ally is reporting Spotify’s losses widened to $600 million last year.   Read his article here.

I just wanted to point out that some significant portion of these widening losses are due to currency swings.   March 29th 2016 Spotify announced a $1 billion US denominated convertible debt deal with TPG and others.  Since that time the US dollar has risen considerably against most currencies.  A disproportionate share of Spotify’s income is NOT in US Dollars.  Therefore the vig on that convertible debt is now headed towards payday loan rates. Ouch!

This is good news and bad news for artists.

The good news is this may force Spotify to limit the free tier and convert more US subscribers to premium.  They need more US dollar income to stop the hemorrhaging from the US debt!  Remember artists’ royalties from premium subscribers are 8-10 times higher than free listeners.  More premium subscribers is a good thing for artists.

The bad news is Spotify has already indicated they want to pay lower royalties to artists because they are losing so much money.  This is completely fucked up. It’s not our fault the company is so poorly managed.

Artists and labels should stand strong and not give in to Spotify’s demands.  Make the bondholders/shareholders get the expenses and management under control. Or eat the losses.

Not our problem!

 

 

 

 

 

 

 

 

About David C Lowery

Platinum selling singer songwriter for the bands Cracker and Camper Van Beethoven; platinum selling producer; founder of pitch-a-tent records; founder Sound of Music Studios; platinum selling music publisher; angel investor; digital skeptic; college lecturer and founder of the University of Georgia Terry College Artists' Rights Symposium.