Audio streaming service Spotify is now officially the largest music company in the world after going public yesterday, however while the market has valued the company at 25 billion dollars it has yet to turn a profit and is likely to operate in the red for some time to come.
Spotify’s problem is that the income it brings in from subscriptions and advertising does not exceed the cost of licensing the vast library of content that makes the service so attractive to consumers.
This is one it shares with other streaming giants such as Netflix, which operated at a loss for many years, and now despite it’s 60 billion dollar valuation only manages to bring in 350 million dollars in profit annually.