“Very well” - the note at the beginning of the announcement to the investors shows: Spotify is clearly satisfied with the course of the third quarter.
At the end of September, the music streaming market leader had 172 million subscriptions and 381 million monthly active users (40 and 34 percent of these are from Europe).
A plus of seven and 16 million respectively.
The number of users of the ad-based free version rose by 10 million compared to the second quarter to 220 million.
Compared to the previous year, all values increased by 19 percent.
The number of monthly active users corresponds to the upper end of the forecast, with subscribers the middle of the previously mentioned range was hit. Compared to the previous year, sales grew by 27 percent to 2.5 billion euros.
Benjamin Fischer
Editor in business.
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The majority of Spotify sales have always been made up of income from subscriptions (plus 22 percent).
But the advertising business again grew strongly with a plus of 75 percent to 323 million euros.
The division now represents 12.9 percent of total sales after having contributed less than 10 percent for a long time.
Last but not least, the high investments in the podcast area - for example in expensive exclusive agreements with prominent hosts and takeovers - and new advertising opportunities contributed to the growth.
The Swedish company recently announced that it would create hundreds of new jobs for the further expansion of the advertising area.
Small profit
The bottom line was a small quarterly profit of two million euros in the third quarter, after Spotify had reported a loss of 101 million euros in the same period of the previous year. In early trading, the share was up almost 6 percent.
Another value that is being watched particularly closely in the music industry is the average revenue per subscriber (ARPU; “average revenue per user”). Spotify pays out around two thirds of its income for the licensing of the more than 70 million works to the rights holders - with the considerably larger part of this going to the music recordings. A point that Abba member Björn Ulvaeus criticized again on Wednesday in his function as president of the umbrella association of collecting societies (CISAC) with a view to the remuneration of the songwriters. This ARPU increased in the third quarter by 4 percent compared to the previous year to 4.34 euros (in the second quarter the value was 4.29 euros), after it had previously fallen successively,due to discounted offers and growth in markets with low price levels. This is "primarily" a result of the recent price increases, so Spotify in the press release. In the important markets of the USA and Great Britain, among others, Spotify recently made the family subscription more expensive. In Germany, prices have so far remained unchanged.
Apple puts pressure on it
Last week, Apple increased the pressure on the market leader with a discounted subscription.
For 4.99 euros there will be a subscription “from autumn” in 17 markets that can be controlled exclusively via Apple's Siri voice assistant.
A regular Apple Music subscription is required for CD quality sound and other sound enhancements.
In May, Apple (and shortly afterwards also Amazon Music) added these amenities to the 9.99 euro subscription at no extra charge.
Until then, a higher price was usual for better sound quality on the market.
Spotify had also announced the introduction of a hi-fi offer in February, when this will start and whether it should cost more despite the steps taken by the competition is still unclear.
Apple, Amazon and Google with its YouTube Music service only publish subscriber numbers sporadically.
Apple last gave numbers in June 2019 (more than 60 million subscribers).
At the beginning of 2020, Amazon declared to have around 55 million users, whereby the users of the free offer, in contrast to Spotify's version, also flow into a fraction of the usual music catalog.
YouTube, on the other hand, reported more than 50 million subscribers in September.