Spotify adds record users, but the “growth at all costs” pod-palooza could be dead
When shuffle plays your fave song… Bingo. Spotify shares popped 12% yesterday after the Swedish streamer reported expectation-beating quarterly revenue and upbeat user growth. Spotify had its largest spike ever in monthly active users, with listeners up 20% to a whopping 489M. Ad-free paid subscribers jumped 14% to 205M.
- Spotify’s top line looks great. Its bottom line, not so much. Despite its green logo, Spotify is still deeply unprofitable, and last quarter its losses widened to $250M.
Put it on mute… Spotify said its big growth was driven by podcasts. But big pod investments have also fueled big losses. ICYMI: Spotify has splurged $1B+ on pod-related purchases like The Ringer and Parcast, plus exclusive shows like “The Joe Rogan Experience” (reportedly for $200M+) and “Call Her Daddy” (reportedly for $60M). Pricey pod-vestments fueled growth, but also burned a hole in Spotify’s pockets.
- Spotify laid off 600 employees last week in a reorg that included the exit of its chief content officer, Dawn Ostroff, who was at the helm of huge pod deals.
- End of the pod-palooza? Spotify execs vowed that 2022 was the year of peak losses (read: they’ll try to get closer to profitability from now on).
- On the mic: CEO Daniel Ek said that pods have been a drag on profit margins and that some shows haven’t performed as well as expected.
“Growth at all costs” comes at a cost… and many aren’t willing to pay it anymore. In this uncertain economy, the focus has shifted from supercharging growth to cutting costs and maximizing profits. Ek summarized it thus: “You go for growth first and then you seek efficiency. Generally, you will see us focus on efficiency… not just growth at all costs.”