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Spotify Reports More Losses Despite Growing Subscribers

Headphones are seen in front of a logo of online music streaming service Spotify in this February 18, 2014 illustration picture. REUTERS/Christian Hartmann/File Photo - D1BETHKCBRAA

Last week, in Spotify’s first ever earnings report the company reports an operating loss of $49 million dollars, roughly 4 percent of their revenue. These losses come despite a growing number of free users and paid subscribers.

The numbers match the estimates, but the company’s stock is still taking a dive, regardless of $1.36 billion in revenue. Spotify recently hit 170 million active users, an increase of 6.9 percent in the last quarter of 2017. The service also hit 75 million paid subscribers. Interestingly, their monthly active user (MAU) data states that 4 million users pay for the service, but don’t listen. To compare, Apple Music has about 40 million paid subscribers.

The company faces a trend of revenue losses. However, their MAU count is up this quarter and their paid subscribers are up by 7 percent. Paid subscriptions are their most lucrative user agreements, and they hope a taste of premium services may push ad-supported users to upgrade.

The company strives for new users by revamping their free service

Spotify hopes to bring in more users with improvements to their free service. They announced last month the revamp of their free ad-supported streaming service, offering fifteen new on-demand and curated playlists.

Spotify also announced making the service more personalized by allowing users to input their favorite artists upon signing up. Other new features allow a like and hide function on each track to save your favorite songs, remove less preferred ones, and make track recommendations.

The service will also allow for users to create playlists easier by searching tracks. The company said in a news release they want “all users to have more control over the listening experience, so everyone can both discover new artists and return to old favorites.” Whether or not the new smart playlists feature has drawn in any new users or convinced anyone to upgrade their service remains to be seen.

What do you think of the company’s strategies? Will they recoup their losses? What do you think of their new playlist functions? Let us know in the comments!

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