According to financial filings for Q2 2022, Spotify has grown to 433 million users, 188 million of which are Premium subscribers, but the company still lost $197 million during the period. Unlike many other entertainment businesses, Spotify hasn’t yet felt the pinch of the slowing global economy and continues to grow. For example, Netflix reported a fall of 200,000 subscribers in Q1 this year, and followed that up with another 1 million less subscribers in Q2.
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The 188 million Premium subscribers Spotify now has is an increase of 6 million in just three months since the last quarter, and also reported 4 million subscribers now on its ad-supported service. Interestingly, Spotify is one of the only entertainment companies, tech or otherwise, that hasn’t announced a slowing in spending, lay-offs of freezing in hiring. The company said that while it was keeping an eye on the “uncertain” environment, it was “pleased with the resilience of its business.”
That being said, it had to spend a lot of money to sustain its impressive growth. They launched several large marketing campaigns in 2022 designed to coax back users who let their subscriptions lapse, or who wanted to expand to a family plan.
All that spending was felt on the bottom line. Spotify reported a quarterly loss of $197 million, but it isn’t too concerned. The company is banking on sharp increases in revenue both for subscriptions and advertising to help balance those losses out. Furthermore, it is planning big changes in strategy that will lead to a pivot toward cheaper forms of audio content, like podcasts and audiobooks. It expects its payments to record labels and music companies to drop proportionally in its total costs. It isn’t clear how they will achieve this saving in costs.
