×

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

  • Reed Hastings seen on day one

    Netflix CEO Reed Hastings' New Book Title, Release Date Announced

    Reed Hastings promises to share the untold story about how Netflix shifted its culture more than a decade ago — and pivoted from a DVD-by-mail company to a streaming giant — in a new book due out this spring. “No Rule Rules: Netflix and the Culture of Reinvention,” is set to be released May 12, [...]

  • A-ha - Take On Me Video

    A-ha's 'Take on Me' Tops 1 Billion YouTube Views, Second '80s Video to Hit Milestone

    Norwegian synthpop trio A-ha’s “Take On Me” has joined YouTube’s billion-views club. The iconic video from A-ha, which combines live action with pencil-sketch animation, is only the second song from the 1980s to reach the elite YouTube milestone, after Guns N’ Roses’ “Sweet Child O’ Mine” crested the one-billion-views mark last fall (and currently has [...]

  • Terms and Conditions

    YouTube Drives Into Feature Doc Space With Brian Hill's 'Terms and Conditions' (EXCLUSIVE)

    YouTube is driving into the feature documentary space with a bold new film on drill music from one of the U.K.’s most celebrated documentarians. The controversial genre represented in the Brian Hill-directed “Terms and Conditions: A U.K. Drill Story” has become inadvertently associated with violence and knife-crime in the U.K., and marks a daring step [...]

  • America Ferrera Gentrified Variety

    With ‘Gentefied,’ America Ferrera Brings a Series Unlike Any Other to Netflix

    America Ferrera had directed before, but not like this. She and her crew were shooting scenes from a massive burner party — think a miniature Burning Man, complete with drugs and costumes and bad dancing — for Netflix’s upcoming series “Gentefied.” Though she wouldn’t appear on camera, Ferrera was dressed for the occasion in a [...]

  • Alamo Drafthouse LA

    Alamo Drafthouse Unveils Monthly Subscription Service

    Alamo Drafthouse, the Texas-based cinema chain that popularized in-theater dining, is offering a subscription service to rival the AMCs and Regals of the exhibition industry. The company unveiled Season Pass, a monthly program that will be available to patrons in its 41 locations across the country. Season Pass will provide one regularly priced ticket per [...]

  • TV Decline Pay TV Placeholder

    Traditional Pay-TV Operators Lost 6 Million Subscribers in 2019 as Cord-Cutting Picks Up Speed

    The U.S. satellite and cable TV business declined at an unprecedented rate last year — with traditional pay-TV providers dropping a staggering 6 million customers, a 7% year-over-year decline. In the fourth quarter of 2019 alone, traditional TV distributors lost around 1.5 million subs, dropping to about 83 million total at year-end, according to estimates [...]

  • Onward Animated Film 2020

    ‘Onward’ Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Disney Pixar claims the top spot in spending with “Onward.” Ads placed for the animated film had an estimated media value of $4.99 million through Sunday for 784 national ad airings on 35 networks. [...]

More From Our Brands

Access exclusive content