The Swedish tech giant Spotify has been the music streaming service leader for the last years, leaving market competitors such as Apple Music or Amazon behind. Since its foundation in 2006, the Stockholm-based company has provided a platform for a large variety of music content, as well as audiobooks and podcasts, establishing itself as the “go-to” option for many. As one of the main podcast providers Spotify saw itself involved in a controversy in early 2022. The most popular podcast host and Spotify exclusive “The Joe Rogan Experience” hosted a controversial anti-vaxxer and sparked a debate on the spread of false facts on the coronavirus, which caused music legend Neil Young as well as Jony Mitchell and other artists to request for their music to be removed from the platform of the streaming giant. With Spotify reacting to this by adhering to their request without releasing a statement, they seemed to have sided with Joe Rogan while many argue that this is due to the influence and profit Joe Rogan provides for the Swedish tech company. Even though Spotify has announced that they will now put warnings before Covid-19 related content, it will be interesting to see how the growing power of podcasts will influence how companies deal with the spread of fake news.
Competing for streams
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, Ed Sheeran, The Weekend or Justin Bieber, 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.
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 early 2022, the number of paid Spotify subscribers surpassed 182 million worldwide for the first time. Paying subscribers account for close to half of Spotify’s monthly active users, with the number rising from 286 million subscribers in the beginning of 2020 to 422 million at the beginning of 2022. At the same time, the premium average revenue per user has been steadily decreasing over the years, amounting to only 4.29 euros per user in 2021 compared to 6.84 euros in 2015.
Spotify’s revenue amounted to over 9.67 billion euros in 2021, and the company also reported a net loss of over 39 million euros. This result is strongly influenced by Spotify’s cost of sales, which mostly comprises licensing expenses toward record labels, distributors, and artists. The company spent 912 million euros on research and development in 2021, has invested heavily in podcasts in recent years, and also grown its global cohort of workers: Spotify’s number of employees surpassed 6600 in 2021. All of this has allowed the company to ensure future growth and maintain its position, and although 2022 will be a hard year for many businesses, with so many strings to its bow, Spotify will likely remain the most successful music streaming service in the market for years to come.
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