Stockholm The corona crisis has the Swedish streaming service Spotify not as bad as feared. Nevertheless, the company suffered a higher-than-expected loss of EUR 167 million in the second quarter. In the same period of the previous year, the loss was still 187 million euros, but analysts and Spotify themselves had expected a loss of only 45 to 95 million euros for the now closed quarter.
One reason for the surprisingly strong minus was an incentive program for the employees: the approximately 6,000 employees hold shares in the streaming service. Since the value of the Spotify share has more than doubled since the beginning of the year, the taxes on the increase in value for the approximately 2000 employees in Sweden have risen by 126 million euros.
“Our business was good in the second quarter and is at a high level despite the uncertainties caused by the pandemic,” writes Spotify. Without the levies, which depend on the share price, “all key data would have exceeded our expectations,” it continues.
By far the world’s largest music and podcast streaming service has increased the number of premium customers by 27 percent to 138 million in the past three months. The subscription costs just under ten euros a month. Including non-paying users, the number of customers rose by 29 percent to 299 million. Income rose by 13 percent over the previous year to just under 1.9 billion euros. The subscription income amounted to 1.7 billion euros. By contrast, advertising revenue fell by 21 percent due to the corona crisis.
More independence from labels
In the past few months, Spotify has also started its service in Russia and twelve other countries. Exclusive deals with popular podcasters such as Joe Rogan, Michelle Obama and Kim Kardashian were more important to the company. The Swedish company acquired podcast producer Gimlet Media and podcast platform Anchor last year for an undisclosed amount. This has made Spotify one of the world’s leading podcast platforms with currently over 1.5 million podcasts.
The audio formats enjoyed increasing popularity even before the corona crisis. The pandemic has further increased interest in information and entertainment. With a stronger focus on podcasts, the company is also becoming somewhat more independent of pure music streaming and the major music labels with which there have been repeated discussions in the past.
The big music labels had been annoyed several times about Spotify’s free subscription and threatened to withdraw music rights. Spotify, on the other hand, argues that more than 60 percent of premium subscribers started with a free subscription. This in turn generates license income. Last month, after months of negotiations, Spotify was able to conclude a new multi-year deal with the Universal Music Group.
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