Streaming music has easily become the biggest form of music consumption over the last decade, with the service accounting for about 80% of all music consumption in key markets like the US. The biggest player in that market, Spotify, has come out with its numbers for the quarter and they are as glorious as you’d expect them to be. The platform now has 271 million MAUs(monthly active users), up by 31% last year, with paid users growing by 29% to 125 million.
The platform generated a revenue of $2 billion in Q4 2019, with a gross margin of 25.6%. This $2 billion number came with a growth rate of 24% over the same time last year.
Still, the company is reporting heavy operational losses, with Q4 2019 numbers coming to about $85 million.
Spotify’s share are up by 1.74% in the pre market trading due to its exceptional performance.
The streaming service also came out with its prediction for the current quarter, stating that it expects MAUs to reach 279-289 million; and premium subscribers somewhere around 126-131 million. However, it expects revenues to drop down to €1.71-€1.91 billion; with gross margins of 23.5-25.5% being steady. The company also speculates operating losses to not change much, with the actual numbers being between of €(65)-€(115) million.
Podcasts on the platform also had an exceptional run in the quarter, with the company reporting that 16% of its monthly active users now listening to them. The feature itself grew by 200% over the course of the year.
Spotify, while the biggest player in the industry, has a lot of competition lined up that will stop at nothing to steal its throne. Amazon reported 55 million MAUs for Amazon Music last month, while Apple also announced 60 million paying users last summer. Moreover, the platform faces tough competition from Gaana in the Indian market, which now boasts 152 million MAUs, thus making it difficult for Spotify to get paid conversions in the area as it attempts to grow.
Still, the platform showed exceptional performance, owing to its premium subscribers, which performed even better than expected, according to the company as the numbers grew to €1,638 million, up 24% an year ago.
The company is also looking to own more podcast start ups, so as to squeeze better profit margins and bypass the royalties that it has to pay to artists. The move is being criticized by artists, claiming that the company is trying to chip away the music part on the platform.