Spotify Comes In Second To iTunes As Source Of Revenue For Record Labels

With iTunes taking the lead, Spotify, the free on-demand and subscription-based music streamer, is reportedly the second largest source of revenue for major record labels worldwide.

Although it comes second, Spotify apparently takes a seat way behind the force that is iTunes. In 2011 Apple paid out an estimated $3.2 billion to music publishers, which is similar to the numbers given out during Apple’s quarterly conference calls.

Spotify became really popular in 2006 in Europe, and launched in the U.S. in July of 2011. At that time, the company had a catalog of 15 million songs. This number grew to 18 million and continues to grow by 10,000 to 20,000 tracks per day. According to recent estimates from AppData, 23 million people used Spotify last month and Spotify CEO, Daniel Ek, stated that there are more than 10 million users in the U.S. alone, with over 3 million of those paying subscribers.

A source from Business Insider stated that the gap between Apple and Spotify is extremely large. Spotify is currently raising $220 million at a $4 billion valuation.

At this year’s SXSW conference in Austin, Spotify investor, Napster co-founder, and former Facebook president, Sean Parker, argued that if Spotify continues to grow at the rate it is with subscriptions and downloads then it will overtake iTunes in under two years in terms of contributions to the recorded music business.

Spotify is doing well, but still falls short compared to Apple. The reason might be due to investors’ skepticism because Spotify doesn’t own the content it sells to consumers, the labels do.

Whether or not Sean Parker’s prediction will come true has yet to be seen, but it will be interesting to watch as Spotify competes with iTunes.

Source: Business Insider via ModMyi

Kaylie lives in Ottawa and got her first Mac in 2007 and is now a fan for life.