Music streaming giant Spotify has quietly shifted its subscription revenue out of Australia and funnelled it through its head office in Sweden.
Documents filed to the Australian Securities and Investment Commission (ASIC) show the company recorded no income from subscribers in Australia in 2020 despite reporting $129 million of “premium revenue” from local subscribers for its paid service in 2016.
The amount of revenue Spotify’s Australian subsidiary has recorded from local subscribers has dramatically dropped over the years even as the business grew globally, with Spotify last recording $415,944 in revenue from Australian subscribers in 2019.
Spotify is listed on the New York Stock Exchange. Credit:AP
Spotify is listed on the New York Stock Exchange with a market capitalisation of $US47.96 billion ($62.11 billion) and its share price has more than doubled since the coronavirus pandemic began.
The company has grown to 356 million users globally with 158 million subscribers or 44 per cent of users worldwide premium users.
Spotify would not disclose the number of subscribers it has in Australia but research released by Telsyte on Monday estimated 10.5 million Australians were using streaming music services at the end of 2020 and put Spotify as the largest streaming music service in Australia with 7.7 million users.
Its premium service costs subscribers $11.99 a month for an individual and $18.99 a month for a family in Australia. If the paid subscriber numbers in Australia reflected Spotify’s global split of 44 per cent there would be 3.3 million paid subscribers in Australia, generating revenue of around $395 million.
The only revenue the streaming service reported in Australia for 2020 was $24.8 million in advertising from Spotify’s free service, up from $21.3 million the previous year for both advertising and premium subscribers.
Spotify booked a profit in Australia of $9,163 for 2020 and it paid income tax of $588,916 to the
Australian Taxation Office for the year.
A spokeswoman for Spotify defended the shift in the company’s revenue.
“Spotify complies with all applicable tax laws in Australia and financial statement requirements, and pays corporate taxes in Australia on taxable profits,” she said.
Spotify’s local results come as the company increases its efforts to diversify from music into podcasts, which it sees as a key growth area both in Australia and globally.
Alicia Sbrugnera, head of music for Australia and New Zealand at Spotify, said the company recognised the impact of the coronavirus pandemic on local artists who had been unable to earn an income from live performances and was focused on how to best support them.
Spotify launched a service called Loud & Clear earlier in the year to break down how its payments to artists were calculated.
“We believe artists deserve more clarity and transparency around how the music economy works,” Ms Sbrugnera said.” “It is their work that powers Spotify, it sits at the core of our business, and there are important questions that need to be answered.”
Ms Sbrugnera said the way subscribers and users listened to Spotify had changed during the pandemic but use of the streaming service remained strong.
“As people around the world increasingly moved inside during the pandemic, we’ve seen listening change in a variety of ways,” she said. “With fewer people streaming from their cars during their daily commutes and an increase in working from home, more people are streaming across devices like computer desktops, TVs, smart speakers, and gaming consoles.”
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