79/264 Gross profit/(loss) and gross margin Year ended December 31, Change 2015 2016 2017 2015 to 2016 2016 to 2017 (in € millions, except percentages) Gross profit/(loss) Premium 257 436 806 179 70 % 370 85 % Ad­Supported (31 ) (35 ) 43 (4 ) 13 % 78 223 % Consolidated 226 401 849 175 77 % 448 112 % Gross margin Premium 15 % 16 % 22 % Ad­Supported (16 )% (12 )% 10 % Consolidated 12 % 14 % 21 % Premium gross profit/(loss) and gross margin For the year ended December 31, 2017 as compared to 2016, Premium gross profit increased by €370 million and Premium gross margin increased from 16% to 22%. The increase was due to growth in revenue that outpaced the growth in content costs, due primarily to a decrease in content costs pursuant to new licensing agreements. For the year ended December 31, 2016 as compared to 2015, Premium gross profit increased by €179 million and Premium gross margin increased from 15% to 16%. The increase was driven largely by a reduction in discounted trial costs as a percentage of revenue. Ad­Supported gross profit/(loss) and gross margin For the year ended December 31, 2017 as compared to 2016, Ad­Supported gross loss changed by €78 million to a gross profit of €43 million, and Ad­Supported gross margin improved from (12)% to 10%. The increase was due to growth in revenue that outpaced the growth in content costs, due primarily to a decrease in content costs pursuant to new licensing agreements. For the year ended December 31, 2016 as compared to 2015, Ad­Supported gross loss increased by €4 million, and Ad­Supported gross margin improved from (16)% to (12)%. The increase was due primarily to reduced streaming delivery costs as a percentage of revenue. Consolidated operating expenses Research and development Year ended December 31, Change 2015 2016 2017 2015 to 2016 2016 to 2017 (in € millions, except percentages) Research and development 136 207 396 71 52 % 189 91 % As a percentage of revenue 7 % 7 % 10 % For the year ended December 31, 2017 as compared to 2016, research and development costs increased €189 million, or 91%, as we continually enhance our platform in order to retain and grow our User base. The increase was due primarily to an increase in personnel­related costs of €131 million and facilities costs of €27 million, resulting from an increased headcount and leased office space to support our growth as compared to the prior fiscal year. The increase in personnel­related costs was due primarily to increased salaries of €68 million, social costs of €48 million, and share­based payments of €5 million. 72