Spotify has some celebrating to do. The company recently became the first subscription streaming music service to hit the 100 million paying subscribers mark, on a global basis, beating out major competitors like Apple Music, Amazon Music Unlimited, and Google Play Music. Spotify revealed the milestone as part of its first-quarter 2019 earnings report, which also includes such notable stats as 217 million active monthly users and the addition of 2 million users in India since the service launched in that country in February.
Though it doesn’t break down exactly who the active monthly users are, it’s impressive that 97.3% of Spotify’s total users can be counted among that number, which suggest that whether they pay for it or use the ad-supported tier, Spotify members value the service and use it regularly — something which may account for the fact that paying subscribers jumped 32% in the first quarter of 2019 compared with a year ago. Still, the company continues to play a very fine balancing act between what it has had pay out in expenses, versus what it has been able to bring in as revenue: Though profits are up compared to the same timeframe one year ago, they aren’t as rosy as they were at the end of 2018, which suggests Spotify is feeling the effects of recent acquisitions, specifically in the podcasting space, which it is seeking to dominate.
Spotify is also entering into a pivotal — and challenging — period. It continues to lag Apple Music for paying subscribers in the key U.S. market, and both Amazon and Google have announced ad-supported free tiers of their respective music services. Normally, this wouldn’t be a threat to Spotify, except that unlike Amazon’s free tier, you can’t play Spotify on an Amazon Echo device unless you sign up for Premium. This changes the game and makes Amazon Music Unlimited a more attractive choice to the many Echo users who aren’t willing to start paying for streaming music (yet). Spotify free does work on Google Home devices, but this could change, and if it does, it could be a user pipeline killer for Spotify.
These challenges notwithstanding, Spotify’s efforts to give its listeners more and more reasons to keep listening look promising. Its podcasting investments may not attract vast amounts of paying users, but the people it does bring in will likely be highly loyal ones. A recent change to how the company manages its famous playlists might also pay dividends, as it gives artists even more control over how they interact with fans — another potential loyalty booster. It’s also experimenting with a new pricing plan, aimed at couples who have no need of a family plan and find it too expensive.
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