Wesley Hilliard
Spotify reaches 365 million monthly active users, just missing forecast targets, yet posted a $23.6 million loss despite strong paid subscription numbers.
Spotify has long operated at a net loss with the hope of one day establishing enough paid subscribers and ad revenue to offset its increasing costs. The company sometimes posts a profit in a quarter, but these occurrences are rare.
The Wall Street Journal reports that Spotify has now failed to reach its forecast for total monthly active users. Despite missing its target, the company still increased its active user base by 22% YoY to 365 million.
There are now 165 million paying subscribers, which is 20% higher than the year-ago quarter and a number that meets Spotify's goals. However, the company has lowered its annual growth target to around 400 million active users, and 177 million paid users.
Despite the increase in users and improved ad performance, the company could not post a profit and its cashflow dropped significantly, too. Spotify generated only $40 million versus $48 million in the year-ago quarter.
Controversy has surrounded Spotify thanks to its continual lack of profits. The company has been involved in multiple lawsuits surrounding music distribution and payments.
Spotify's main competitor, Apple Music, is known to pay artists as much as double Spotify's rates per stream. Both companies charge similar rates, however Apple doesn't offer an ad-supported tier.
Spotify has been banking on its push into podcasting to ultimately tilt the financial odds in its favor.
Comparisons are hard to make as Apple doesn't share active user numbers on a regular basis, but the number was estimated to be around 72 million in June 2020. If Apple Music continues to grow at an estimated 30% to 40% per year, the company could cross 100 million paid subscribers in 2021.
Andrew Orr
Christine McKee
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Amber Neely
33 Comments
I just cannot feel any sympathy for Spotify. It is not Apple’s fault they have an ad supported free level to inflate their subscription numbers that is not making any money. Spotify is a Swedish based operation so they automatically have “Favorite Son” status with the EU. This is and a EU that hates American Big Tech’. Spotify has been sued for lack of payment, failure to report play count correctly, and so much more. Between Apple Music, Bandcamp, and SoundCloud I have all of my eclectic musical tastes more than covered. Spotify to me is the “Facebook” of music streaming.
‘We lose money on each subscriber but we make it up on volume…’
Seriously Asking?!
What can be the business model, when a company has 365,000,000 Monthly users, ....And LOSES Money !!
Think about it. ....ANY Company with that many users, would have figured out by now that, "Keep Monthly Costs Less than Monthly Revenue", ...and Voilá !! ....Profitability.
Has to be some crap-ass management, because there cannot be any other explanation.
It would be great if EU regulators would actually force Sputterfy to pay music artists more…
Embarrassing that Apple hasn’t overtaken Spotify in subscribers. Jimmy and Dre were doing a better job with Apple Music.
Spotify is a scumbag company. They refuse to pay their artists decently and will even fight against them but will pay non-artists $100,000,000 for exclusive podcasts. They’re like Robin Hood except they steal from the artists!!