It was confirmed that Spotify’s paid subscriptions grew faster than expected in the first quarter of the year. However, the streaming giant continues to lose money.
The good news for the company is that its paid subscriptions increased 15% above analysts’ expectations. But everything does not end there, since monthly users increased even more, specifically 22%. This represents 515 million people.
Paid subscriptions on Spotify, which represent the company’s biggest revenue, increased 14%. While advertising revenue grew by 17%, becoming the second source of income. So, Why is Spotify still losing money?
Reasons why Spotify keeps losing money
Apparently, all the income that we have mentioned previously has not been enough to offset the loss of revenue, said to be $248 million. However, Spotify has always expressed that the loss figure is as expected, and that they continue to bet on growth instead of profitability.
in januarySpotify laid off approximately 600 employees as part of a massive cost cut. The company said severance costs associated with these layoffs added to operating expenses for the quarter.
But, the reality is that it seems difficult for Spotify to generate constant profits at any point. Well, it competes with other music services such as Apple, Amazon and Google, which do not have to generate profit for this, since all three maintain this service as a benefit of their ecosystem. Instead, Spotify has no other source of income.
Movements not very successful
The latest moves the company has made have not been the best either. The foray into podcasts did not turn out as expected. Apparently, the way in which the two completely different services were mixed was not liked by many subscribers
To this we must add the mess of the month of March, when they decided to mix music, podcasts, audiobooks and videos, all in a single source. Maybe, Apple may not have such an impressive subscriber base, but its app focuses only on music. The podcasts have a separate application, as well as classical music.