Spotify is Still Bleeding Money But Predicts a Return to Profitability

By Andrew Orr, Apple Insider | People are flocking to Spotify as shown by the company’s recent financial results, but it continues to bleed over a quarter-billion dollars per quarter — even after its layoffs in January. Spotify has worked on adding more content to its service in the form of podcasts and audiobooks, and redesigned its app in a bid to keep users engaged with the platform. It had strong user growth in the first quarter of 2023 but posted another financial loss.

The streaming company recorded 515 million active monthly users, a 22% increase from the previous year. That represented Spotify’s largest-ever first-quarter increase and outperformed projections by 15 million.

According to the company, growth was seen across almost all age groups and in developed and emerging economies.
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Read the full story here:
https://appleinsider.com/articles/23/04/25/spotify-is-still-bleeding-money-but-predicts-a-return-to-profitability

Andrew Orr is a writer and commentator who has been sharing his insights on technology since 2015. He has authored numerous online articles covering a range of topics including Apple, privacy, and security. Andrew joined AppleInsider in 2022 as a Contributing Writer covering news, tips, and reviews.

[Our Thanks to Jamie Krutz for submitting this article! Http://www.jamiekrutz.com]

Comments from Chasm: Spotify first started in 2006, and has never overcome those early losses, even though there have been a few (and far between) quarters of net profits, and continues to lose far more money than it makes over the past 17 years.

To be fair, Spotify essentially invented and popularized streaming on-demand music services, and they have a vastly larger total audience than any other service. Given that its audience is at least five times the size of its nearest competitor, Apple Music, how can it continue to lose so much of its investor’s money?

It should be noted that Apple Music doesn’t break out its numbers, but it is estimated to be approaching 100 million paying subscribers, and given the incredible amounts of income the Services division is reporting as a whole, one has to expect that Apple Music became profitable very shortly after launching and continues to be profitable.

Spotify has every advantage here, but struggles to make a dime. Even the free tier has ads, which in theory should be making Spotify money, but it sure doesn’t seem like that part of the business is working. On top of this, Spotify has been sued a fair few times for being slow on royalty payments or just plain trying not to pay, while Apple Music can pay nearly three times as much in royalties per stream and still rake in the cash.

Something is really siphoning off Spotify’s income is the only conclusion I can come up with. Probably a combination of too many promotional premium trials tied in with other products, and excessive executive compensation. Either way, from here it looks like a really bad investment for shareholders hoping for a good return on investment, at present you won’t see any return at all.

If you NEED half a billion customers, with half of them being paying subscribers to make a real go of something, your business plan needs a rethink IMO.

PS. Bonus: they’re ruining the podcast world while they’re at it — another venture they’ve thrown a tonne of money at that has not rewarded them in the slightest.