In its latest earnings report released today, Spotify celebrates a significant surge in its user base, boasting 220 million Premium subscribers and 551 million monthly active users as of June 30th. Compared to the same period last year, these figures represent impressive increases of 27 percent and 17 percent, respectively, surpassing the company’s outlook from the previous quarter.
Spotify celebrates a significant surge in its user base, boasting 220 million Premium subscribers and 551 million monthly active users as of June 30th
However, despite the remarkable growth in listener numbers, Spotify faces a concerning challenge: a decline in its average revenue per user. Currently, the average revenue per user stands at €4.27 (around $4.72), marking a 6 percent drop year-on-year and a slight fall from €4.32 (around $4.79) recorded last quarter.
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Just yesterday, Spotify made headlines when it announced its decision to raise prices in the US and other global markets. The price hike mirrors similar moves made by other music streaming competitors like Apple Music, Amazon Music, Tidal, and YouTube Music Premium. The objective behind these price increases is clear – to reverse the downward trend in revenue per user. However, the impact of these changes won’t be apparent until the next quarter.
Throughout 2023, Spotify has been undergoing a series of measures aimed at enhancing efficiency. As outlined by CEO Daniel Ek, the company’s priorities for the year have been “speed and efficiency.” This led to a 6 percent reduction in its global workforce, amounting to an estimated 600 employees, in January. In April, Spotify took further steps by shutting down its Clubhouse competitor, Spotify Live, and its Worldle competitor, Heardle. Additionally, the company axed an additional 200 roles from its podcasting division in June.
The second quarter of this year saw Spotify report a net loss of €302 million (approximately $333 million), in contrast to a loss of €125 million (around $138.5 million) during the same quarter last year. Although the company has traditionally prioritized growth over quarterly profits, it is evident that Spotify is committed to reducing these losses in the future.
Interestingly, Spotify’s earnings release does not mention its long-awaited HiFi streaming option, which was announced more than two years ago. The HiFi streaming was intended to offer CD-quality lossless streams to users. Rumors suggest it might be introduced as part of a more expensive subscription tier known as “Supremium,” possibly making its debut in non-US markets later this year. A survey conducted last year hinted at a potential new streaming tier called “Platinum,” which would include HiFi alongside other premium features, possibly priced at $19.99 per month.
Despite lacking regular user number comparisons with its closest competitors, Spotify proudly claims the title of the world’s most popular audio streaming service. The company’s consistent growth and extensive user base have solidified its position as a dominant force in the music streaming industry.