By Eliot Van Buskirk of Evolver.fm.
Spotify chief executive and co-founder Daniel Ek dropped a startling statistic at Los Angeles’ Innovation Forum event on Tuesday: that his freemium music service is on track to pay out $500 million to music copyright holders over the course of this year. That’s a big number — and it also happens to be equivalent to what Spotify has paid out in every other year combined, according to Ek (Spotify launched in October 2008, only in Sweden, and now reaches over 17 countries including the United States, which is the world’s biggest music market).
This $500 million payout is also about one sixth of Spotify’s total valuation, most recently reported to be $3 billion. Spotify now has approximately as many songs as users — over 20 million of each — with about a quarter of those paying for a subscription.
Of course, it’s debatable how much of that money will filter through to artists (both the recording and songwriting kind), because that depends on their individual contracts with their labels and publishers, but no matter how you slice it, $500 million in revenue is nothing to sneeze at.
@spotify will pay $500 mil in 2013 to rightsholders, the same amount as it paid out since it launched. –CEO Daniel Ek via Innovation Forum
— Alex Pham (@AlexPham) February 5, 2013
According to Evolver.fm’s calculations, Spotify could earn $1 billion in overall revenue in 2013, too.