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May 3, 2018

Spotify touts 75 million subscribers in first quarterly earnings report

by John_A

Spotify made its New York Stock Exchange debut last month, and today the streaming service announced its first earning report as a public company. As part of its pre-filing paperwork, we already knew the company had amassed 170 million monthly users, but as of now Spotify touts 75 million paid subscribers. That’s up from 71 million earlier this year. For comparison, Apple Music recently hit the 40-million mark, though recent reports indicate Apple may catch Spotify by the end of the year.

Despite a growing subscriber base, one that Spotify says could hit 96 million by year’s end, the company is still spending more than it’s taking in. For Q1 2018, Spotify’s operating loss was down from Q4 2017 (€41 million down from €87 million). The company explains that number would’ve been even less, but it missed on revenue for the quarter which lead to a higher gross margin than expected. Spotify says the reason for this is “primarily related to changes in rights holder liabilities booked in the quarter.”

Even as it continues to work on closing that gap, the challenge will likely get tougher. The music industry is so reliant on streaming now that when it comes time to renew licensing deals, the stakes will likely be higher (and pricier) for both sides. Of course, a business model where the rights to the content aren’t owned by the company isn’t exactly the most solid investment, so Spotify will need to prove it’s worth the risk.

Spotify’s recently announced revamp for free users added more personalization to the ad-supported tier. While that may not go far in terms of converting free listeners to paid ones, the company is banking on things like new markets, partnerships and things like its bundle offer with Hulu to help lure even more paying customers.

We’ll update this post with any additional information from the company’s earnings call later today.

Source: Spotify

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