Digital Media

Spotify is draining even more money the bigger it gets

The more people who stream Spotify, the harder it is for the service to hang onto money, according to a report.

spotify1.jpg

Spotify, founded by Daniel Ek, is the world's biggest streaming music service by listeners.

Spotify

Everything at Spotify seems to be getting bigger, including its losses.

Spotify's operating loss widened to between 300 million and 400 million euros last year, possibly more than doubling its loss from the previous year of 184 million euros, according to a report in The Information that cites two unnamed people familiar with the results.

Spotify's financial health isn't only key to its own survival but also to the viability of streaming generally, as the main way consumers listen to music today.

Spotify founder Daniel Ek has long argued that widespread scale is key to making Spotify, and streaming music overall, sustainable. But as Spotify has grown to the biggest music service by both paying subscribers and listeners overall, that growth appears to be bringing about larger and larger losses, raising questions about whether streaming music can ever exist as a business standing on its own two feet.

That could mean the only services to survive are those owned by a giant parent company, like Apple.

According to the report, Spotify's monthly active users hit 126 million at the end of last year, up from 100 million announced almost one year ago. Even though Spotify's losses are widening, the revenue it was bringing in during the last three months of the year would have put it on track for 50 percent higher sales than the year before.

Despite Spotify's losses, CNBC reported last week that the company has positive free cash flow, a sign that its sales are strong enough to cover fundamental costs.

Spotify declined to comment.