Higher prices and yet more subscribers: this is how Spotify makes a profit

Music streaming service Spotify has again recorded a profit in the first quarter of 2024. Thanks to a major round of layoffs, price increases for its music offering and a growing number of subscribers.

The quarterly results were music to the ears of CEO Daniel Ek: “We are realizing our ambitions,” he shouted. While the streaming giant suffered an operating loss in the first quarter of last year, it now achieved an operating profit of 168 million euros. Total turnover increased by 20 percent to 3.6 billion euros. Investors sent the stock 14 percent higher on Tuesday, above $307

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The Swedish company owes these figures to the fact that, despite the increased prices, more customers subscribed in the first quarter. The number of paying premium subscribers rose 14 percent year-on-year to 239 million, while the number of active users, including those with advertising between music and podcasts, rose 19 percent to 615 million. A premium subscription costs 10.99 euros per month in our country.

The company points to several popular innovations it implemented in different countries for its success, such as the option to watch music videos, new subscription plans for audiobooks and ‘Song Psychic’, a feature in which you can ask questions that are answered with songs. The extras are not yet available in our country.

At the same time, Spotify announced a round of layoffs in December that resulted in the loss of around 1,500 jobs, accounting for 17 percent of its workforce. That move, combined with the reduced marketing budget and a more profitable podcast section, had a positive impact on the balance sheet. Net profit climbed to 197 million euros, compared to a loss of 225 million euros a year earlier.

CEO Daniel Ek is also optimistic for the current second quarter: he hopes to win even more customers and is aiming for 631 million subscribers. Ek wants to book approximately 250 million euros in operating profit between April and the end of June. New price increases for this are already in the pipeline. “I feel good about the changes we are making and remain confident that we can deliver on the ambitious plans we have outlined.”