Spotify loses $23.6 million in Q3, misses total user targets
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 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
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
Comments
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.
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!!
and got there by giving other people’s property away.
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.
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.
You win the internet today, imho.
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.
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.
-Epic and other scumbags