Roger Fingas
Spotify is continuing to show progress towards profit, posting better financial results for its third quarter — including its all-important number of Premium subscribers, which rose from 83 million in June to 87 million.
Including free, ad-based listeners, the company now has 191 million users in total. Premium subscribers are more valuable to the company though as they generate 90 percent of revenue, Reuters noted.
Revenue increased 31 percent in Q3 to 1.352 billion euros, or about $1.54 billion, while gross margins were up year-over-year from 22.3 percent to 25.3. Analysts had typically been expecting figures of 1.33 billion euros and 24.9 percent.
The company did disappoint in one area, reining in its goal for full-year 2018 listeners to between 199 million and 206 million. The average analyst forecast was 208 million.
Apple Music has struggled to catch up with Spotify in terms of global paid subscribers, its last reported figure being 50 million combined trial and subscriber customers. There is no free version of the service beyond a three-month trial, which may be giving Spotify an edge in allowing more people to become hooked. Spotify is also more platform-agnostic — Apple Music is tightly integrated into Apple products, but has a barebones presence on Android and non-HomePod smartspeakers.
Apple has eclipsed Spotify in North America, likely because of the popularity of iPhones, heavy marketing, and a focus on genres like rap and hip-hop.
The company could announce updated subscriber numbers during today's quarterly results call, scheduled for 5 p.m. Eastern time.
William Gallagher
Christine McKee
AppleInsider Staff
Chip Loder
Malcolm Owen
10 Comments
considering i could fill up my tank with gas and get a 6-month subscription for free to a music service and this counts as a paid subscriber, I don't put much weight in these numbers.
(my example was said in jest, however, the new trend is to bundle music subscriptions to other products/services, so the "paid/premium" subscribers may not otherwise "paid" had they not been buying their other product/service).
Yeah, but how many of those paid subscribers pay discounted fee for their service? I used Spotify for a whole year paying $1 a month. Anyways, I love Spotify's algorithm, I think is better than Apple's Music.
Apple doesn't need to have more users than Spotify. Apple only needs to break even or make a small profit. Spotify has been around now for 10 years and has never turned a profit. In fact every year they lose more money. As they get larger, they lose more and more money. They have been a money pit. How long can they keep this up? It's all those free leaches putting a big drain on them. Good starting up to get people on board and make a name for yourself. But at this point, all those free users make their numbers much larger. If they stop that, they would lose a lot of people, and their worth would come crashing down. So now they're stuck.
The other thing is they are at the mercy of the music industry. They really have no other source of income. How much longer are people going to give them millions to keep their doors open? If they can get into the black and stay there, it'll going to take years to get out of debt.
Apple has been buying up music entities like Shazam, and is now moving to pick up 20 billion in debt iHeartMedia.
My money is on Apple burying Spotify, or acquiring them.