News July 30, 2020

Spotify hits 138m premium subscribers as growth slows

Spotify hits 138m premium subscribers as growth slows

now has 138 million subscribers with monthly active users up to 299 million.

The subscriber figure was “well above expectations” and grew in all regions in the three months to June 30, Spotify revealed in its Q2 report this week.

It hit 130 million in Q1, with growth up 66% over the past two years. Spotify expects to grow that figure significantly, between 2 million and 6 million in Q3, as lockdowns continue.

The service said its Family Plan the “significant driver” of “outperformance”.

It’s a healthy trend for Spotify, which has a greater gross margin from premium (28.1% in the quarter) than its ad-supported tier (-11.9%).

However, a closer look at the figures showed that the 6% growth in premium subscriber numbers during Q2 is slower compared to its average 6.5% growth in the past four quarters.

The average revenue per paying user continues to decline, falling to €4.41 (A$7.23) in the quarter, representing a drop of 9% year-on-year.

This is due to the fact that Spotify has increased the number of users around the world by offering cheaper rates in emerging markets and promoting less expensive student programs.

Total revenue during the period – its first since pandemic restrictions — was €1.89 billion ($3.1 billion). This represented a 13% year-on-year increase.

But ad-supported revenue fell 21% to €131 million ($214.8 million), which the company blamed on the pandemic but was still “slightly above” expectations.

Spotify founder . A Swedish billionaire, entrepreneur and technologist.

“Our business performed well in Q2 and continues to operate at a high level despite the continuing uncertainty surrounding the COVID-19 pandemic,” Spotify said in a statement.

“Excluding the impact of social charges related to the increase in our share price during Q2, all of our key metrics would have finished at or ahead of our expectations.”

All regions including Australia returned to pre-pandemic levels of consumption, except for Latin America which remained 6% below the level.

“Despite the ongoing uncertainty around COVID-19, we had our largest ever bi-annual campaign with strong gross additions in both the ‘3 months on us’ intro offer for new users, as well as the win-back offer for returning customers.”

The report showed some interesting trends. The once calculated success in its Top 40 biggest selling tracks, but streaming offers different criteria.

Spotify’s top-selling artists are now made up of 43,000 acts, representing a rise of 43%. The number of top tier acts was 30,000 a year ago.

In-car listening dropped by 50% in April as people stayed off the roads, but grew up at the end of the quarter to about 10% below COVID-19 levels.

Podcast catalogue is up 50% this year to 1.5 million shows with strong growth among MAUs.

Spotify is now in 92 markets around the world. In July it launched in 13 new territories across Europe including Russia.

By the end of the year, Spotify it plans to have between 146-153 million paid users and as many as 348 million total MAUs.

It also plans to break the €2 billion ($3.26 billion) milestone in revenue in both Q3 and Q4.

Related articles