Global music streaming major Spotify forayed into the Indian market in February 2019 and has recently disclosed its financial performance for the first full fiscal year: FY20. The Indian entity of the Stockholm-based company has recorded Rs 16.12 crore in operating revenue during the financial year ending March 2020.
Spotify India makes money through subscriptions and advertising. Income from subscriptions contributed about 65%~ Rs 9.75 crore ~ to the total revenue in FY20.
The India-based entity has also churned Rs 6.37 crore from advertising. It was barely operational for a few months in FY19 and the company’s revenue stood at Rs 34.24 lakh. If we compare this with FY20, its revenue took a leap of 47X.
Marketing drove Spotify India’s growth in FY20
To grow its user base in India, the company spent heavily on marketing and branding, evidently visible from its expense pattern. It spent 88.24% of its total expenditure ~ Rs 159.69 crore on advertising and marketing in FY20.
For perspective, Spotify India garnered 32 million downloads during FY20, per Sensor Tower data. This was 8.5X higher than its download numbers in FY19 when the company didn’t focus much on India.
Besides advertising and promotion costs, Spotify India spent Rs 12.44 crore on employee benefits. This is largely salary and other remuneration costs incurred on the local team. Compared to FY19 when the company spent Rs 6.42 crore on employee benefits, this cost jumped 1.8X in FY20.
Spotify India has recorded a total expenditure of Rs 172.58 crore in FY20. However, it’s not clear whether the expenses include payments to copyright holders and record labels. Entrackr has sent queries to Spotify India to learn about its expense break-up. We will update the story as and when the company responds.
Globally, Spotify provides this split separately but it is unclear if it’s the same in the Indian context as well.
Spotify India’s losses jumped 3.6X to Rs 156.46 crore in FY20 from Rs 44.25 crore during the previous fiscal. On a unit level, the company has spent Rs 9 to make one rupee in FY20.
Spotify India’s growth driver and competition
According to Spotify, media and entertainment, technology and FMCG companies have been driving its advertising revenue. During the beginning of the ongoing fiscal (FY22), the company said that it is working with over 100 brands.
The company is likely to introduce its self-serve Ad Studio platform and podcast advertising technology called Streaming Ad Insertion (SAI) in India to ramp up existing revenue from advertising.
While the pandemic disrupted businesses across sectors, edtech, video and music streaming have witnessed a sharp rise in their usage and engagement. With the increased consumption, music streaming platforms are expected to show improved financials in FY21 and FY22.
That said, homegrown platform Gaana’s FY21 results didn’t show any growth in revenue. According to Fintrackr, growth in its operating revenue remained almost flat in FY21 as it grew by a mere 2.65% to Rs 123 crore as compared to Rs 120 crore in FY20.
It reduced losses to Rs 327 crore in FY21 from Rs 352 crore in FY20. Apart from Gaana, Spotify competes with Jio-Saavn, Wynk, Hungama, among others.
