Spotify’s Q2 earnings showed largely positive growth, although the streaming music giant suffered a 21% decline in ad revenue and a 48% rise in operating costs due to deals like its $100 million licensing deal for The Joe Rogan Experience.
Total monthly active users on the platform grew to 299 million, while paid subscribers increased to 138 million. Apple Music, which does not operate a free listening tier (outside of Beats 1 radio), last reported 60 million paid subscribers in June 2019 when it had passed 60 million.
“Our business performed well in Q2 and continues to operate at a high level despite the continuing uncertainty surrounding the COVID-19 pandemic,” Spotify wrote in its letter to shareholders.
Spotify’s total revenue for the quarter was up 13% year-over-year to hit $2.2 billion. However, pricey deals like the Joe Rogan one meant that losses hit $422 million in the quarter. This was also up significantly from this time last year.
The streaming company predicts that, by the end of the year, total monthly active users will be between 328-348 million. It predicts paid subscribers to be in the range of 146-153 million.
Spotify vs. Apple Music
Apple might give some updated guidance on Apple Music during its quarterly earnings July 30. Unless Apple Music has more than doubled its subscriber base over the past year, it seems unlikely that it will have caught up with Spotify’s numbers.
But Apple is playing a different game to Spotify. As Tim Cook has noted previously, Apple isn’t in the streaming music game to make money. While that might sound paradoxical, it refers to the idea that Apple doesn’t have to bring in huge amounts of money from Apple Music on its own. Apple is leaning more heavily on services than ever, but if Apple Music could, for instance, help sell HomePods or iPhones or Macs that will allow Apple to make money from it regardless. Spotify, on the other hand, has only Spotify subscriptions and advertising to make money from.
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