Spotify loses $23.6 million in Q3, misses total user targets

Posted:
in General Discussion edited July 28
Spotify reaches 365 million monthly active users, just missing forecast targets, yet posted a $23.6 million loss despite strong paid subscription numbers.

Spotify posts $23.6 million loss in Q3
Spotify posts $23.6 million loss in Q3


Spotify has long operated at a net loss with the hope of one day establishing enough paid subscribers and ad revenue to offset its increasing costs. The company sometimes posts a profit in a quarter, but these occurrences are rare.

The Wall Street Journal reports that Spotify has now failed to reach its forecast for total monthly active users. Despite missing its target, the company still increased its active user base by 22% YoY to 365 million.

There are now 165 million paying subscribers, which is 20% higher than the year-ago quarter and a number that meets Spotify's goals. However, the company has lowered its annual growth target to around 400 million active users, and 177 million paid users.

Despite the increase in users and improved ad performance, the company could not post a profit and its cashflow dropped significantly, too. Spotify generated only $40 million versus $48 million in the year-ago quarter.

Controversy has surrounded Spotify thanks to its continual lack of profits. The company has been involved in multiple lawsuits surrounding music distribution and payments.

Spotify's main competitor, Apple Music, is known to pay artists as much as double Spotify's rates per stream. Both companies charge similar rates, however Apple doesn't offer an ad-supported tier.

Spotify has been banking on its push into podcasting to ultimately tilt the financial odds in its favor.

Comparisons are hard to make as Apple doesn't share active user numbers on a regular basis, but the number was estimated to be around 72 million in June 2020. If Apple Music continues to grow at an estimated 30% to 40% per year, the company could cross 100 million paid subscribers in 2021.


Read on AppleInsider
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Comments

  • Reply 1 of 33
    I just cannot feel any sympathy for Spotify.  It is not Apple’s fault they have an ad supported free level to inflate their subscription numbers that is not making any money.  Spotify is a Swedish based operation so they automatically have “Favorite Son” status with the EU. This is and a EU that hates American Big Tech’.  Spotify has been sued for lack of payment, failure to report play count correctly,  and so much more. Between Apple Music, Bandcamp, and SoundCloud I have all of my eclectic musical tastes more than covered. Spotify to me is the “Facebook” of music streaming. 
    edited July 28 Beatsp-dogcornchipjahbladewilliamlondonDnykjpRfC6fnBsviclauyycwatto_cobra
  • Reply 2 of 33
    MplsPMplsP Posts: 3,251member
    ‘We lose money on each subscriber but we make it up on volume…’
    cornchipgregoriusmlorca2770leavingthebiggwilliamlondonapplguywatto_cobra
  • Reply 3 of 33
    BuffyzDeadBuffyzDead Posts: 344member
    Seriously Asking?!

    What can be the business model, when a company has 365,000,000 Monthly users,  ....And LOSES Money !!

    Think about it.   ....ANY Company with that many users, would have figured out by now that, "Keep Monthly Costs Less than Monthly Revenue", ...and Voilá !!     ....Profitability.

    Has to be some crap-ass management, because there cannot be any other explanation.
    p-doglorca2770transmasterwilliamlondonwatto_cobra
  • Reply 4 of 33
    p-dogp-dog Posts: 100member
    It would be great if EU regulators would actually force Sputterfy to pay music artists more…
    edited July 28 watto_cobra
  • Reply 5 of 33
    BeatsBeats Posts: 2,527member
    Embarrassing that Apple hasn’t overtaken Spotify in subscribers. Jimmy and Dre were doing a better job with Apple Music.

    Spotify is a scumbag company. They refuse to pay their artists decently and will even fight against them but will pay non-artists $100,000,000 for exclusive podcasts. They’re like Robin Hood except they steal from the artists!!
    transmasterwatto_cobra
  • Reply 6 of 33
    genovellegenovelle Posts: 1,265member
    Beats said:
    Embarrassing that Apple hasn’t overtaken Spotify in subscribers. Jimmy and Dre were doing a better job with Apple Music.

    Spotify is a scumbag company. They refuse to pay their artists decently and will even fight against them but will pay non-artists $100,000,000 for exclusive podcasts. They’re like Robin Hood except they steal from the artists!!
    Spotify only had a 7-8 year lead in streaming
    and got there by giving other people’s property away. 
    Rayz2016watto_cobra
  • Reply 7 of 33
    dewmedewme Posts: 3,814member
    Spotify is basically Napster driving a Saab.
    MplsPlorca2770mobirdsbdudeSpitbathBeatslkruppviclauyycwatto_cobra
  • Reply 8 of 33
    65026502 Posts: 376member
    Had Spotify premium for my daughter, canceled it last month and switched to YouTube Premium - music and ad-free youtube for about the same price. Got charged again this month for Spotify. Turns out you have to hit cancel on 5 different pages to cancel Spotify. They are worse than a timeshare company. They are scum, will never go back for any reason.
    transmasterRayz2016watto_cobra
  • Reply 9 of 33
    MplsPMplsP Posts: 3,251member
    genovelle said:
    Beats said:
    Embarrassing that Apple hasn’t overtaken Spotify in subscribers. Jimmy and Dre were doing a better job with Apple Music.

    Spotify is a scumbag company. They refuse to pay their artists decently and will even fight against them but will pay non-artists $100,000,000 for exclusive podcasts. They’re like Robin Hood except they steal from the artists!!
    Spotify only had a 7-8 year lead in streaming
    and got there by giving other people’s property away. 
    Not only that, a large portion of Spotify’s customer base is in the free service tier, something Apple doesn’t have. 

    An Apples to Apples comparison would be Spotify’s paid tier vs Apple’s 
    watto_cobra
  • Reply 10 of 33
    Rayz2016Rayz2016 Posts: 6,957member
    MplsP said:
    ‘We lose money on each subscriber but we make it up on volume…’
    … is basically what they’ve been saying since Day 1
    Beatswatto_cobra
  • Reply 11 of 33
    I'm not a fan of Spotify either. The last straw was Spotify shoving political podcasts in my face every time I opened the app. I left for the simplicity of Apple Music, even if the recommendations are better on Spotify.

    With that said, I'm skeptical that any company can make a profit with the record companies taking so much money from the artists. What value does a record company add anymore. They're a greedy middleman that gets to blame music streaming services as being the problem of artists working for pennies.

    Apple can afford to run Spotify out of business, but until the music industry is completely reworked from the ground up, most artists will continue to scrape by with little to show for their record deals. That's not Spotify's fault.  
    applguywatto_cobra
  • Reply 12 of 33
    mr lizardmr lizard Posts: 279member
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    transmasterwatto_cobra
  • Reply 13 of 33
    lkrupplkrupp Posts: 9,455member
    Seriously Asking?!

    What can be the business model, when a company has 365,000,000 Monthly users,  ....And LOSES Money !!

    Think about it.   ....ANY Company with that many users, would have figured out by now that, "Keep Monthly Costs Less than Monthly Revenue", ...and Voilá !!     ....Profitability.

    Has to be some crap-ass management, because there cannot be any other explanation.
    If they haven’t already, I’m sure Spotify will blame their losing ways on anti-competitive behavior by Apple.
    sbdudetransmasterwilliamlondonArchStantonBeatsviclauyycwatto_cobra
  • Reply 14 of 33
    Rayz2016Rayz2016 Posts: 6,957member
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    applguywatto_cobra
  • Reply 15 of 33
    gatorguygatorguy Posts: 23,168member
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.
    muthuk_vanalingam
  • Reply 16 of 33
    sbdudesbdude Posts: 82member
    dewme said:
    Spotify is basically Napster driving a Saab.

    You win the internet today, imho.
    Beatstransmasterwatto_cobra
  • Reply 17 of 33
    sbdudesbdude Posts: 82member
    gatorguy said:
    Rayz2016 said:
    mr lizard said:
    They've got a gargantuan ton of paying subscribers and yet they still can't turn a profit. Is this a sustainable business model on its own? Sooner or later they'll have to return something to investors. 

    I suspect as a standalone P&L, Apple Music doesn't make a profit either. Difference of course is that Apple sells hardware and services like Apple Music make that hardware more attractive, so for them it's just a cost of a much, much bigger business. 

    Spotify though? They've got nothing else to fall back on. I can see a future where some huge media empire buys them for a significant sum and folds them into their world. There's obviously tremendous value in Spotify, it's just not clear that that value is as a standalone entity. 
    No, it’s not sustainable.  Every subscriber costs more than they bring in. They need to come up with something else to make it worth hiking the fees to cover the streaming payouts. 
    FWIW I've not yet seen anything from any music subscription provider, Apple and Google included, indicating that their service is a sustained profit center that would stand on its own. Lots of revenue, but no statements of profitability.  If someone has 'em please post 'em.

    Music subscription may well be a loss-leader if spotify is any indication. Surely apple music, if it is a money loser, will drive some to purchase apple hardware. And, if it's a race to the bottom, and no alternative revenue source, spotify will be the biggest loser here.
    watto_cobra
  • Reply 18 of 33
    BeatsBeats Posts: 2,527member
    genovelle said:
    Beats said:
    Embarrassing that Apple hasn’t overtaken Spotify in subscribers. Jimmy and Dre were doing a better job with Apple Music.

    Spotify is a scumbag company. They refuse to pay their artists decently and will even fight against them but will pay non-artists $100,000,000 for exclusive podcasts. They’re like Robin Hood except they steal from the artists!!
    Spotify only had a 7-8 year lead in streaming
    and got there by giving other people’s property away. 

    True and with the help of Apple heavily promoting them front page on the App Store.

    But if Apple Music has been around for 6 years how long would it take for them to catch up at this pace? 19 years?

    So by 2040 at best assuming Spotify slows down or even loses subscribers on the way, Apple will finally be 50/50 with Spotify.
  • Reply 19 of 33
    BeatsBeats Posts: 2,527member
    6502 said:
    Had Spotify premium for my daughter, canceled it last month and switched to YouTube Premium - music and ad-free youtube for about the same price. Got charged again this month for Spotify. Turns out you have to hit cancel on 5 different pages to cancel Spotify. They are worse than a timeshare company. They are scum, will never go back for any reason.

    But but but Apple’s way of handling subscriptions is unfair and greedy! We are the fair and ungreedies!

    -Epic and other scumbags
    transmasterArchStantonp-dog
  • Reply 20 of 33
    Now you see way Spotify if suing Apple over side loading.  With Apple Pay handling the subscription moneys there is no fun-n-games in canceling a subscription. 

    If you really want to support artists take a look at BandCamp. There you pay the artists directly for his music. You pay a handling fee to Bandcamp and postage if you are purchasing a hard copy of the music. 
    edited July 28
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