Spotify’s second-quarter financial report shows that the streaming giant hasn’t yet felt the dread hand of a global recession. Unlike Netflix, which had to report a decrease in its overall customer base, Spotify has seen an increase in both free and paid accounts.
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It now has 433 million active users, up from 422 million at the end of the first quarter. 188 million of those pay for Premium, a six-million increase from three months ago, with a further four million signed up on an ad-supported basis.
Despite widespread fears that household budgets would cut entertainment costs in order to free up much-needed cash, Spotify has so far avoided cost-cutting. While keeping an eye on the “uncertain” environment, the company said it was “pleased with the resilience of [its] business.”
That said, the company did spend big to help grow its user figures, with marketing campaigns designed to entice users who let their subscriptions lapse or who wanted to expand to a family plan.
Spotify reported a quarterly loss of €194 million ($197 million) as a result of its marketing spend. The company expects sharp increases in revenue from subscriptions and advertising to help offset the losses.
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Furthermore, its plan to shift toward cheaper forms of audio content, such as podcasts and audiobooks, should reduce the amount of money it pays to record labels to a more tolerable (for Spotify) level — even if recording artists continue to demonstrate that they are being deprived of an income due to the paltry royalties paid out per stream.