Spotify made its debut in the New York Stock Exchange last April, and today the music streaming service published its first earnings report as a public company. As part of the pre-filing paperwork of the company, people already knew that the company had accumulated 170 million monthly users, but currently, Spotify lauds 75 million paid subscribers. That is up from the 71 million earlier in 2018. As a comparison, Apple Music hit the 40-million mark recently, even though latest reports indicate that Apple may catch Spotify by the end of this year.
Despite an increasing subscriber base, one that Spotify says could be able to achieve 96 million by the end of this year, the firm is still spending more than it takes in. For the first quarter of 2018, the operating loss of Spotify was down from the fourth quarter of 2017 (€41 million down from the €87 million). The firm explains that figures would have been even less. However, it missed on revenue for the quarter which lead to a higher gross margin than anticipated. Spotify says that the reason for this is “primarily related to changes in rights holder liabilities booked in the quarter.”
Even as the company continues to strive on closing that gap, the challenge will probably get tougher. The music industry is so dependent on streaming recently that when it comes time to renew deals in licensing, the stakes will possibly be higher (and pricier) for both sides. Of course, a business model wherein the rights to the content are not owned by the company is not exactly considered as the most solid investment, so Spotify will have to prove that it is worth the risk.
The recently announced revamp of Spotify for free users introduced more personalization to the ad-supported tier. While that may not go far when it comes to converting free listeners to paid ones, the firm is banking on things such as partnerships, new markets, and things such as its bundle offer with Hulu to help in attracting, even more, paying customers.