In its latest quarterly earnings, Spotify has revealed that it currently has 108 million paying subscribers. That’s approaching 2x the number who subscribe to Apple Music, which is around 60 million at present.
That’s an increase of 31% year-on-year, although it’s slightly below what the streaming music giant had been aiming for.
As Spotify notes in its earnings report, the increase is, “below the midpoint of our guidance range of 107-110 million.” It continues that:
“Intake from our bi-annual campaign was in line with our expectations, monthly churn declined both sequentially and Y/Y to a record low 4.6%, and our winback percentage on gross ads reaccelerated Q/Q. However, intake into our Student product was below plan… [Our] goal is to perform at roughly the 70th percentile of our guidance range and we missed on subs. That’s on us. The good news is that the shortfall was execution related, rather than softness in the business, and we expect to make up the lost ground before year-end.”
On the business side of things, Spotify still isn’t a massive profit-generating company, despite its lead in streaming services. Nonetheless, it notes that revenue is growing more than 2.5x faster than operating expenses, meaning that operating margins were around break-even for the quarter.
Overall monthly active users grew 29% to 232 million. This outperformed Spotify’s guidance. These figures are impossible to compare with Apple, however, since Apple Music does not offer a free tier.
To try and grow its service, Spotify is hoping its Spotify Lite service can be of some help. It is also focusing on podcasts, as an original content alternative to original TV content a la Netflix and Apple.
A two-horse race
Currently Apple and Spotify are the two biggest players in streaming music. Amazon is also making very rapid gains. As today’s numbers show, Spotify still has the global advantage. Things are more even in the U.S., where more people currently pay to listen to Apple Music than they do Spotify.
However, just like looking at market share for mobile operating systems, subscriber numbers don’t tell the whole story. Tim Cook has previously said that Apple isn’t in the Apple Music game to make money. That may not be wholly true, but it does reveal a crucial difference. Where Spotify needs to monetize streaming music to make itself a success, Apple can treat it more like an added extra. Apple Music subscriptions help keep people in the Apple ecosystem and, in turn, can drive other sales. That gives Apple a big advantage.
Which streaming music service, if any, do you subscribe to? Let us know in the comments below.