Spotify, the market leader in streaming music, has again lost a sizable figure of millions of dollars, despite increasing its customer base, both free and paid.
Spotify lost about $ 118 million in the third quarter of 2020, despite its monthly active users growing 29% over the same period. In the third quarter of 2019, the company earned $ 282 million.
Spotify now has 320 million active users and 144 paying users. According to Spotify, its growth is due to the marketing it carried out in India and launched the service in Russia and 12 other countries.
In the same quarter last year, Spotify had 248 million monthly active users and 113 paying subscribers. Compared to last year, revenue per user has decreased by 10%, which, among other things, Spotify is attracting new customers through discounts and offers on monthly plans.
On numerous occasions we have commented that Spotify is a business (like so many in the tech bubble) based on the idea of permanent expansion, without paying attention to the profitability of the business. Spotify is the company that pays artists the least for reproduced content, and if the British investigation were to bear fruit and force more payments, Spotify's business would be practically impractical: it would be forced to raise the price of the subscription, which would cause a cascade of cancellations, widening the black hole of losses.
In addition, Spotify has recently identified podcasts as a possible additional source of income and has launched a strategy of hiring exclusive podcast "stars" so that their followers have to join the platform if they want to continue having fun. the programs. All in all, according to data from Spotify, the number of users accessing podcasts within the platform grew by 1% compared to the previous quarter.
In contrast, Apple Music had 60 million subscribers last year. Apple Music doesn't have a free option, and with the exception of the free trial period, it usually doesn't have any offers or discounts to keep users. In addition, it has launched new thematic radio stations in recent months, and the Apple One subscription bundle will be available tomorrow.
The slightest turbulence can send Spotify into the sky of technologies that have pioneered but haven't formed a viable business plan.
