Spotify surpasses 500M monthly active users
As of March 31st, Spotify reported that its streaming service has attracted over 515 million monthly active users, an increase of 22% compared to last year, or 5% compared to the previous quarter. These user growth figures exceeded the company's guidance by 15 million, with CEO Daniel Ek stating that it was the second largest quarter of user growth in Spotify's history. In terms of paid subscribers, the number has reached 210 million, representing a year-over-year increase of 15%.
Spotify reached this milestone during a quarter of streamlining and cost cutting, where the company had announced a reduction of nearly 600 staff, accounting for 6% of its global workforce, in late January, according a The Verge report. Additionally, Spotify has also closed down a couple of its side projects, including the Spotify Live audio app and the Heardle music game, resembling the popular game Wordle. During the company's latest earnings call, CEO Daniel Ek mentioned that Spotify's primary focus for 2023 is to improve its "speed and efficiency."
.@Spotify's strongest Q1 since going public in 2018 and the second largest quarter of MAU growth in our history. Thank you to our teams worldwide for all you accomplished. More here: https://t.co/rkCQ3HWu43 pic.twitter.com/NC8FWGG4sR
— Daniel Ek (@eldsjal) April 25, 2023
In the first quarter of 2023, Spotify reported a net loss of €225 million (around $248 million) in its earnings release. This marks a significant contrast to the €131 million (around $145 million) net income in the same period last year, but an improvement from the €270 million (around $298 million) loss reported in the previous quarter. However, it's not uncommon for a company that values growth over quarterly profits to experience losses like this. Moreover, the average revenue per user declined by 1%, reaching €4.32 (around $4.77), mainly due to the discounted and lower prices offered by Spotify to attract customers in new markets.
Despite the earnings release for the first quarter of 2023, there was no mention of the launch date for Spotify's higher-quality HiFi tier. Over two years ago, the company announced this new service, which would offer CD-quality lossless audio for users. While HiFi is believed to be technically ready, it's speculated that Spotify's original plan to charge an extra fee for HiFi was impacted by rivals Apple and Amazon, who offer lossless streams at no additional cost to users. According to Spotify's co-president, the lossless feature is still in the works and will be launched "at some point," as mentioned in a recent episode of Decoder, but it remains unclear when that might be.
How do competitors stack up against Spotify?
While official figures for competitors like Apple and Amazon have not been released for years, Spotify is widely acknowledged to have the most paid subscribers among all music streaming services, according to Music Ally. In terms of monthly active users, Tencent Music Entertainment's apps reported 567 million monthly active users as of the end of 2022, while YouTube claimed over two billion users for music consumption as of 2020. However, these numbers may not be directly comparable to Spotify, as Tencent Music's user base is divided among three different streaming services (QQ Music, Kugou, and Kuwo), and YouTube primarily functions as a user-generated video streaming service that also features music.Advertisement