Spotify’s second-quarter financial release shows the streaming giant has yet to feel the dreaded hand of the looming global recession. Unlike Netflix, which had to report a decline in its overall customer base, Spotify saw both free and paid accounts grow. It now has 433 million users, up from 422 million at the end of the first quarter. 188 million of them are paying for Premium, a jump of six million from three months ago, while a further four million are signing up on an ad-supported basis.
Despite industry-wide fears that household budgets would reduce entertainment costs to help free up much-needed cash, Spotify has so far dodged the cost-cut. The company said that while keeping an eye on the “uncertain” environment, it was “satisfied with the resilience of [its] Business.” That said, the company has been spending heavily to help boost its user numbers, with marketing campaigns designed to entice users who let their subscriptions expire or want to upgrade to a family plan.
That marketing spending helped blow up the company’s finances, with Spotify posting a quarterly loss of 194 million euros ($197 million). The company is banking on a surge in revenue from both subscriptions and advertising to help offset these losses. Additionally, its plan to pivot to cheaper forms of audio content, like podcasts and audiobooks, should see the amount of money it pays out to record labels drop to a more tolerable level (for Spotify) – even though recording artists continue to demonstrate that they’re deprived of an income by the paltry royalties paid on a per-stream basis.
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