Report: Spotify Makes More Money For Labels Than Physical Sales

posted in: Music News

According to an exclusive piece from Business Insider today, Spotify is now the second largest generator of revenue for record labels after digital music sales.

The story quotes an anonymous source, so the report is impossible to verify. Still, such news isn’t all that surprising. Spotify has been growing at a blindingly fast rate since it was introduced to American listeners last year. Noted Spotify investor Sean Parker predicted that the service would overtake iTunes in the not too distant future. “Spotify is returning a huge amount of money,” said Parker. “We’ll overtake iTunes in terms of what we bring to the record industry in under two years.” Spotify also continues to grow as it expands their offerings to users. The streaming music service recently announced the introduction of free streaming radio to mobile subscribers. Streaming radio had previously been available only on the desktop app and only to premium Spotify users.

This latest news of Spotify’s dominance is also another nail in the coffin of physical formats. Late last week Digital Music News reported that physical music sales make up an infinitesimal percentage of the overall revenues at big box stores. How small? According to the head of EMI Music executive Roger Faxon, “If you take Walmart, Best Buy, and Target, music represents less than 0.3 percent of their turnover.”