Marie Charlotte Götting
Research expert covering audio media
While Spotify is clearly a leader in audio consumption it is not immune to market fluctuations. The Swedish tech giant has been the music streaming service leader for the last years, leaving market competitors such as Tencent, Apple Music, or Amazon behind. In 2023, Spotify’s share of the market based on subscribers was close to 32 percent. However, since the end of that year, following a global trend where prominent businesses were restructuring their workforce, the company has a rather troubling lead in a ranking of major media industry layoffs. It remains to be seen if the terminations helped Spotify’s financial situation.
The future of Spotify lies in growing their subscriber base by exploring the ad-supported potential. Many media companies are now betting on advertising as an alternative revenue source, and Spotify has the space to do so with music and podcast offering.
Spotify financials
Spotify’s revenue amounted to over 13 billion euros in 2023. However, that same year the company also reported a net loss of over 500 million euros. This result is strongly influenced by Spotify’s cost of sales, which mostly comprises licensing expenses toward record labels, distributors, and artists. Yet, the company continues to increase its spending on research and development, mostly investing heavily in podcasts in recent years. Today, Spotify is competing with YouTube for the podcast market domination, which implies the need for further investments into the format, and expanding its offering and functionalities to accommodate video podcasts.Artists competing for streams on Spotify
With Spotify being the go-to streaming service for most people, the top artist spots have become a major indicator of how popular artists and their songs are and how commercially successful they have become. While certain names remain at the top of the most streamed artist charts, including all-time popular artists like Taylor Swift and The Weekend, we can observe a bit more variability when it comes to other musicians, who briefly make an appearance and then quickly fade away. In recent years, the world of music has seemingly become more diverse, with international breakthrough artists such as BTS topping the charts with English and non-English songs. More Spanish and Korean tracks have started to make their way into the charts, with a variety of genres being represented as well. While the names of the most streamed artists are somewhat stable, the same can’t be said about the most streamed songs, which change weekly if not daily with new releases mixing with popular older tunes.Spotify users
While podcasts have become an increasingly popular format, Spotify is still making the biggest share of revenue through their premium subscribers rather than ad-supported content. In late 2023, the number of paid Spotify subscribers worldwide surpassed 230 million. Paying subscribers account for close to 40 percent of Spotify’s monthly active users, with the latter figure rising from to over 600 million at the end of 2023. At the same time, the premium average revenue per user has been steadily decreasing over the years, amounting to only 4.39 euros per user in 2023.The future of Spotify lies in growing their subscriber base by exploring the ad-supported potential. Many media companies are now betting on advertising as an alternative revenue source, and Spotify has the space to do so with music and podcast offering.
