×

Spotify Tops 108 Million Paying Subscribers

In a second-quarter earnings report released today, Spotify revealed that it has topped 108 million paying subscribers — up 8 million from the previous quarter — and 232 million monthly active users.

It also pointed to new agreements “two of our four major label partners on the renewal of our global sound recording licenses,” and said it is in “active discussions” with the other two. Music Business Worldwide speculated that the two labels that have renewed agreements are Sony Music and the independent label collective Merlin; a source confirmed to Variety that the company’s negotiations with Warner Music are ongoing, leaving Universal, the world’s largest music company, as the other label that has not renewed its deal.

The subscription growth was below its projection, which CFO Barry McCarthy said in Wednesday morning’s investor call was attributed to a “shortfall in execution” — specifically a student promotion — “rather than a softness in the business,” and the company can make up for it. “That’s on us,” he said.

Spotify expects to add between 2 million and 6 million premium subscribers in the third quarter, and hopes to reach between 120-125 million paid users by the year’s end.

The company also said the audience for its podcasts — a primary target for future growth, in which is has invested hundreds of millions of dollars — has grown 50% over the first quarter of 2019.

The company also attempted to calm any investor nerves about the ongoing state of negotiations. “This is the sixth round of label negotiations we’ve worked through in our 13-year history,” it noted “and, while it is typically a long drawn-out process, it has become part of the normal cadence of the business.”

During the investor call, cofounder and CEO Daniel Ek pointed to Africa, Russia and South Korea as prime target markets for growth, and noted that its troubled launch in India is “growing in line with expectations.”

He also said the company believes it is still “in the early stages of subscriber growth,” and pointed to projects like vertical videos and its Spotify Singles feature as “enabling artists to connect with fans in bigger ways.”

The company’s total revenue for the quarter was $1.86 billion — up 31% from the same period in 2018 — of which subscription revenue made up 90.1% and $1.67 billion. Ad supported revenue for the quarter reached $184 million, up 34%. McCarthy said he expects the company’s year-over-year growth rate to “come down slightly — you can’t sustain 35% growth.”

The famously money-losing company’s operating losses for the quarter were just $3.3 million, down from $104.5 million in 2018.

“Our better than expected loss in the quarter was a result of higher Gross Profit and lower than expected spend across artist marketing, R&D, and G&A,” the report reads.

Its important average revenue per user (ARPU) was €4.86, down around 1% from last year but 2% when calculating exchange rates. “Downward pressure on ARPU continues to moderate, and we continue to expect that ARPU declines through the remainder of the year will be in the low single digits,” the report says.

 

 

More Digital

  • Van Weezer

    Weezer Debuts Online Video Game as Throwback to Simpler Times -- And Album Promo

    Eight-bit diehards, get your thumbs ready: pop rock darlings Weezer have launched a nostalgia-heavy online side-scrolling action game, playable via web browsers.  The “The End of the Game” game has users playing as one of the band’s four members and jumping and shooting their way in a (surprisingly difficult) boss fight against an oversized, beanie-clad [...]

  • Google-Mountain-View-Calif

    Google Commits $800 Million, Mostly in Ad Credits, to Coronavirus Relief Efforts

    Google and parent Alphabet are pitching in to help small businesses, health organizations and governments dealing with the COVID-19 pandemic. The internet company has earmarked more than $800 million for coronavirus relief, about three-fourths of which ($610 million) is in the form of Google Ad credits to small and midsize businesses and governmental orgs, Alphabet [...]

  • Why Are Music Streams Down If

    Why Are Music Streams Down If Everyone's Stuck at Home? Experts Weigh in

    While it might seem counterintuitive that music streams would decline at a time when so many Americans were ordered to stay home, data-savvy label executives were neither startled nor concerned by the 7.6% drop in plays that happened in the March 13-19 tracking week. Simply put, they say it’s down to focus on news and [...]

  • MipTV Online Plus Initiative Launches

    MipTV Online Plus Features Showcases, Pitches, Presentations

    Reed Midem launches its MipTV Online Plus initiative Monday as a digital alternative to the conference that was scheduled to open on the same day in Cannes, but it includes many of the elements that were planned for the physical event. Among the streamed sessions on Monday morning (Paris time) will be the invitation-only Drama [...]

  • Marlina the Murderer in Four Acts

    WarnerMedia and Sony-Backed Asian Streamer Hooq Files For Liquidation

    Hooq, the multi-territory streaming service in Asia backed by WarnerMedia and Sony, filed Friday for voluntary liquidation in Singapore. In recent weeks it had been reported that the company had failed to make full remittances to some of its in-production original series. The company was started in 2015 and remains majority controlled by Singaporean phone [...]

More From Our Brands

Access exclusive content