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Music streaming giant Spotify on Thursday said that it ended its third quarter with 144 million premium, or paid, subscribers and 320 million total active monthly users as of the end of September. The figures were at or above the high end of the company’s forecast range.
That was up from 138 million premium users as of the end of June and from 299 million total users. In the third quarter of 2019, it had added 5 million premium and 16 million total users.
For the third quarter, Spotify management had predicted monthly active users to grow to 312-317 million, with premium subscribers to reach 140-144 million.
“From a content consumption standpoint, global consumption hours surpassed pre-COVID levels during the quarter, and all regions have fully recovered,” the firm said.
Premium subs grew 27 percent year-over-year, with the company saying: “We saw strong subscriber growth across all regions, with added benefit from our new market launches in Russia and surrounding territories. Russia has been our most successful new market launch to date and represented the largest portion of subscriber outperformance for the quarter. Additionally, we saw strong performance from the global rollout of our Duo product, with the Duo subscriber growth exceeding our expectations.”
Overall user gain included “accelerated” growth in North America and Europe, “while Latin America and Rest of World continued to see the fastest growth, growing 30 percent and 51 percent, respectively,” the company said.
Spotify, led by CEO Daniel Ek, said advertising revenue returned to growth, with ad-supported revenue rising 9 percent, or 15 percent in constant currency terms, after posting declines earlier this year due to the coronavirus pandemic.
Stockholm-based Spotify reported a third-quarter operating loss of €40 million ($47 million) after a year-ago profit of €54 million. Quarterly revenue of €1.98 billion ($2.32 billion) grew 14 percent, while operating expenses increased 37 percent, less than management had forecast. Among other things, “certain marketing expenses came in lower than expected due to campaign timing shifts” and movements in foreign exchange rates, the firm said.
For the current fourth quarter, Spotify forecast it would reach 340-345 million total monthly active users and 150-154 million premium subscribers.
Spotify on Thursday also touted its growing podcast business. “We continue to lean into our goal of becoming the world’s number one audio platform through compelling new music releases and exclusive creative non-music content,” it said. “As of the third quarter, we had 1.9 million podcasts on the platform (up from more than 1.5 million podcasts in the second quarter). Of note, 22 percent of our total monthly active users engaged with podcast content in the third quarter (up from 21 percent in the second).”
Concluded the company: “The third quarter was a standout quarter for our podcasting efforts, beginning with the July launch of The Michelle Obama Podcast, an original and exclusive podcast that became the #1 show globally on our platform in July and August, making it our top summer podcast. In September, The Joe Rogan Experience arrived on platform with video capability and became the #1 show in all of our English-speaking markets while outperforming our audience expectations. We look forward to the start of our exclusivity period for this podcast by the end of this year.”
Ek during a morning analyst call discussed the recent controversy around guests Joe Rogan has had on his popular podcast — including hosting far-right conspiracy theorist Alex Jones on The Joe Rogan Experience — and protests among Spotify employees to those appearances.
Ek made no mention of censoring Rogan or barring any guests from his podcast, and instead pointed to content policies that apply to all Spotify creators. “We obviously review all the content that goes up and it doesn’t matter if you’re Joe Rogan or anyone else, we do apply those policies,” he told analysts.
Ek added the content policies needed to be “evenly applied,” whatever opposition Spotify faced inside or outside the company. “We are a creative platform for lots of creators. And it’s important that they know what to expect from our platform. If we can’t do that, then there are other choices for a lot of creators to go to,” he said.
Oct. 29, 7 a.m. Updated with comments by Spotify CEO Daniel Ek over controversy surrounding The Joe Rogan Experience podcast.
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