Spotify now has over 345 million active members using its music streaming service
155 million of them are premium users.
On Tuesday, Spotify released its earnings for the last quarter of 2020. The overly optimistic report starts with them claiming that they “ended 2020 with strong Q4 performance” and they are “well-positioned for continued growth in 2021.” They base their optimism on the following data and analysis.
By the end of the Q4 of 2020, Spotify reported 345 million active users, out of which 155 million are premium users. Compared to 2019, that’s a 24% increase in their premium subscribers. In the last quarter alone, they managed to add 10 million new subscribers, most of which came from North America and Europe. A massive increase was reported in the ad-supported monthly active userbase that increased by about 30% and now accounts for 199 million.
This year (as expected), despite their strong growth, Spotify wasn’t profitable. They reported a loss of €125 million (~$150 million USD). But then again, that’s an improvement over 2019 when they lost €209 million. This was expected because the company was mainly focused on market share growth, customer acquisitions, and growing its user base.
Spotify made significant investments in several areas out of the music scope. Their recent endeavors include experimenting with celebrities reading books such as American Slave and Frankenstein.
Then there is podcasting, something which they have already poured millions of dollars into. In Q4 2020, they signed some big-time names to start a podcast on their service. These names include Ava Duvernay, Meghan Marle, and Prince Harry. By the end of the quarter, there were over 2.2 million podcasts on their platform. Compared to 2019, podcast consumption was practically doubled in 2020, according to the data from the report. Furthermore, they reported that about 25% of their users engaged with podcast content during Q4 of 2020.
At the same time, some experts and analysts claim that investments in podcasts are not yet justified. An analyst for Citi wrote an investor’s note in which he shared his concerns about the lack of indications that podcasting will be profitable. According to him, there are no signs of it based on the current data.
Regardless, the overall impression is that Spotify won’t be deterred from its plan to hold as much market share in the podcasting industry as possible. Last year, they indicated that they plan to add a subscription podcast service and open a new income source.
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