Spotify’s business model is still all verse, no chorus



Spotify’s business ears are widely tuned to podcasts these days, but even if they weren’t, the exact rates of growth of its active user base never seem like a perfect echo of fortunes. of the music industry. For the thorny issue of whether artists reach listeners, music labels are a better study.

The Stockholm-based audio streamer now has 172 million premium subscribers and 381 million monthly active users in total, he reported in a market update yesterday, as advertising revenue rebounded after the pandemic, bringing its total quarterly revenues to a nifty € 2.5 billion. It even made a rare quarterly net profit – only the sixth time it has achieved this since its listing in 2018.

Still, Spotify’s finances can feel a bit like a song that’s stuck on a verse and never quite hits its chorus.

Universal Music Group, on the other hand, hits the right chords. One of the Big Three music labels alongside Sony (Adele) and Warner Music Group (Ed Sheeran), Universal also released a quarterly update on Wednesday, the first since its split from former parent company Vivendi.

The label behind stars like Taylor Swift, South Korean phenomenon BTS and a Swedish crowd called Abba have reported a 16% increase in their quarterly earnings to € 2.15 billion, which is not too far behind. Spotify in the grand scheme of things, and it is indeed surging streaming revenue that has kept Universal in the champagne lately.

New versions

Universal’s adjusted profit before interest, taxes, depreciation and amortization (its adjusted ebitda) stood at 461 million euros, with a little help from new releases from Billie Eilish, Drake and the Japanese group King & Prince and continued sales of BTS and Olivia Rodrigo. He expects Adjusted EBITDA to increase by more than 20 percent this year.

Spotify, however, is much more reminiscent of a fleeting, investment-loving tech stock, which further proves its business model to be more than just fleeting success. Its net profit for the quarter is, ahem, 2 million euros. Founder and CEO Daniel Ek noted that the company “is just getting started.” What Universal’s results show is that the music labels that control the supply of music are not quite done yet. Spotify’s business model is still all verse, no chorus

Business Today

Get the latest business news and commentaryREGISTER HERE



About Author

Leave A Reply