Musical Social Media Giant Reports £4.4m pre-Tax Loss

By Jon Partridge on at

The CBS-owned, social-media music hub,, has reported a whopping £4.4m pre-tax loss for 2011, as ad revenue stagnated and what growth they had in the US market essentially back-pedalled. That doesn't sound too good now, does it?

The UK-founded site was snapped up by CBS back in May 2007 for $280m, but only reported a slim increase of 1.7 per cent in total revenue back in 2011, increasing from £7.99m to £8.1m. Before that, revenue growth was almost at 10% between 2009 and 2010, the site's best year. relies on advertising sales, which account for the majority of total revenues (up to 70 per cent), fell slightly year on year in 2011 to £5.66m. Subscriptions, however, managed to increase revenue, which was up 4.5 per cent year on year, to £1.77m. made just more than £4m in the UK market, which accounts for over 50 per cent of global revenues, up 4.88 per cent. But on the other hand, in the US which is the world's largest music market,'s revenues fell 4.3 per cent to £2.98m. Revenue from the rest of the world only added up to just less than £1m. Perhaps the East is the next market to crack?

Total staff costs climbed up to £3.4m, despite a slight decrease in staff members, whilst admin fees decreased down to £8.1m. Music licensing fees are the site's biggest expense, with royalties needing to be paid to copyright owners based on the number of streams paid. For popular artists, that's going to amount to quite a hefty amount of cash.

Since 2008, has been operating at a loss, but managed to decrease the total amount of losses in 2009, which amounted only to £2.8m. However, in 2010, losses again increased up to over £5m. I'm sure their accountant has quite the headache most of the time.

While the site is a fantastic destination for music aficionados, I'm hoping it can edge its way closer to profitability. Hopefully, and CBS, can get things together, turn around their losses and "Paint it Black." [The Guardian]