While Spotify shifted its focus to podcasts, it seems to be paying off. Not only are Spotify profits up and growing, paid subscriber counts are up too.
After investing more than $300 million into Podcasts, Spotify also recently moved the Spotify for Podcasters tool out of beta. Such changes and investment in the Podcast industry seem to be paying off. With over 500,000 Podcast titles hosted on Spotify, podcast streaming grew nearly 40% compared to last year. Even the number of paid subscribers increased more than expectations, from 108 million to 113 million. Quarterly revenue for Spotify grew 28% to $1.9 billion. The stock is now up 25% for the year.
Spotify Stakeholders Letter Announce Growth
In a public letter to shareholders last week, Spotify provided some insights into their recent growth. While reaching 248 million monthly active users, Spotify strategically shifted its focus from promoting original content to tools for artists as well as podcasts. Some of these tools included Spotify For Podcasters and Spotify for Artists (which is up 465,000 monthly active artists) and beyond. The letter also shares Spotify’s confidence against its major competitor, Apple Music:
WE CONTINUE TO FEEL VERY GOOD ABOUT OUR COMPETITIVE POSITION IN THE MARKET. RELATIVE TO APPLE, THE PUBLICLY AVAILABLE DATA SHOWS THAT WE ARE ADDING ROUGHLY TWICE AS MANY SUBSCRIBERS PER MONTH AS THEY ARE. ADDITIONALLY, WE BELIEVE THAT OUR MONTHLY ENGAGEMENT IS ROUGHLY 2X AS HIGH AND OUR CHURN IS AT HALF THE RATE. ELSEWHERE, OUR ESTIMATES IMPLY THAT WE CONTINUE TO ADD MORE USERS ON AN ABSOLUTE BASIS THAN AMAZON.
As Spotify continues to grow, one can only hope the growth is sustainable and not short-lived, but the recent investment in podcasts seem to be paying off big time. Is Spotify taking the edge on other streaming competitors such as Apple and Amazon?