Spotify subscriber base hits 165m as Q2 revenue grows 23%

Spotify’s subscriber base has grown to 165 million while Q2 revenue showed a 23% rise to €2.33 billion (AU$3.74 billion).

The platform now has 210 million free users, while total monthly active users (MAUs) nudged the 365 million mark, up 9 million.

Most figures were on target with what Spotify had predicted, with an extra 7 million subscribers gained in Q2, and 2 million free users since Q1.

CEO and founder Daniel Ek said Q2 was a strong quarter for Spotify overall.

“While MAU growth was softer than expected in the first half of the year, we are seeing that trendline reverse and all the leading indicators show that we are back on track,” he said.

“By accelerating our pace of innovation and investing for the long term, we continue to cement our standing as the preferred audio platform around the world.”

Much of Q2’s revenue growth came from subscribers, up 17% YoY to €2.05 billion ($3.29 billion).

Ad-supported revenue had a stronger rise, up 110% YoY to €275 million ($441.7million).

The average revenue per user (ARPU) on the premium service dropped 3% to €4.29 ($6.89).

Operating profit dropped to €12 million ($19.2 million) from €14 million ($22.4 million) in Q1.

Full-time employees around the world number 7,085, from 6,049 a year ago.

For Q3, Spotify expects revenue to grow to between €2.31 billion ($3.71 billion) and €2.51 billion ($4.03 billion), subscribers to between 170 million and 174 million, and MAUs to between 377 and 382 million.

Spotify said “COVID-19 continued to weigh on our performance in several markets” and it “paused marketing campaigns due to the severity of the pandemic”.

“Overall, we saw a return to better growth patterns in the back half of [Q2],” the company added.

“Although we continue to face near-term uncertainty with respect to COVID-19, we remain confident in the underlying health of our user funnel, and our existing user retention activity remains consistent with historical trends.”

What’s New feed

With over 50,000 hours of content uploaded to Spotify every day, the service announced earlier this week it is introducing  a personalised What’s New feed for its music and podcast consumers.

“What’s New makes it easier than ever to catch all the latest songs and episodes from the creators you follow. Plus, it’s even updated in real time, so you know you’ll get to listen to new content just as it’s released,” Spotify said in a blog post.

The global roll-out is expected to begin in weeks, on iOS and Android.

Content creator income

While this new feature shifts the spotlight to creators and their revenue, a new report questions how much they actually make.

Spotify says 90% of its royalties are shared among the top 0.8% (or 57,000) of artists.

But a study by Rolling Stone, headlined ‘The Rosy ‘Creator Economy’ Is Music’s Biggest Lie’, estimates Spotify paid roughly US$5 billion in royalties – 90% of which would be $4.5 billion.

Calling the 0.8% the Spotify Gold Club, Stone calculates that 13,400 (0.2%) earned over $50,000 in 2020.

7,800 artists in that group earned over $100,000 and 1,820 artists generated over $500,000.

870 made more than $1 million.

“This all reveals a painful truth: even among the elite 0.8% ‘Gold Club’ of artists on Spotify, there is a vast disparity between successful and unsuccessful, with the majority of artists firmly in the latter category”, summarises the report.

“Obviously, the ‘passion economy’ isn’t working for the 99.2% of Spotify creators outside of the 57,000 top tier.”