Exclusive: Europe's biggest tech hope Spotify starts talking about profit

Thu Dec 1, 2016 7:39am EST
 
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By Mia Shanley

HELSINKI (Reuters) - Music streaming service Spotify, one of Europe's most valuable tech start-ups, could start to become profitable as early as next year, said a board member who was also one of the company's first investors.

Spotify, the global leader of the music streaming industry even in the face of mounting competition from tech giant Apple Music (AAPL.O: Quote) - has posted steep losses since it was created a decade ago by Swedish founders Daniel Ek and Martin Lorentzon.

"Up until now, I think it's been growth, growth growth," Par-Jorgen Parson, a general partner at venture capital firm Northzone, told Reuters on the sidelines of tech start-up conference Slush in Helsinki.

"Maybe profitability will start to become a priority too." Asked if that profitability could come as early as next year, Parson said: "Absolutely, yes."

Spotify, which based on a funding round last year had a value of over $8 billion, reported an operating loss of 184.5 million euros ($195.5 million) in 2015, up from 165.1 million in 2014.

A valuation of $8 billion would be Europe's biggest tech listing since the market launch of German e-commerce investor Rocket Internet (RKET.DE: Quote) in 2014.

Spotify, present in 60 markets worldwide, charges users monthly fees for access to huge libraries of music to play on phones or computers, but profits largely depend on royalty licensing deals it strikes with powerful music labels every few years.

Northzone first invested in Spotify in 2008 and though it does not say how much it owns today, it remains the second-biggest shareholder after the founders. Other investors include Creandum, DST Global and Accel Partners.   Continued...

 
Earphones are seen on a tablet screen with a Spotify logo on it, in Zenica, Bosnia and Herzegovina, February 20, 2014. REUTERS/Dado Ruvic/File Photo