Spotify (un)Wrapped
If you’ve been on social media in the last 48 hrs, you’re now no doubt familiar with the listening habits of your nearest and dearest.
The music tech company’s Wrapped — one of our favorite uses of data storytelling that gets widespread coverage — is a good reminder of Spotify’s dominance in the industry. Despite competing with a trio of tech giants in Apple, Amazon and Google (through YouTube), the Swedish company remains the world’s largest music streaming service, counting more than 450 million users at the end of its latest quarter.
Freemium forever
60% of those users, 273 million in total, remain on Spotify’s free service. Those users get access to Spotify’s enormous music library at the cost of being bombarded with 15-30 second adverts every few songs. But, as frequent as those ads may feel for listeners, they are a tiny part of Spotify’s business. Spotify’s paid users brought in nearly €2.7bn in revenue in the latest quarter, ads brought in roughly one-seventh of that.
It would be hard to call Spotify a startup, given the company is in its 16th year of operations (with 4 as a public company), but on some measures it still looks like one, having not converted progress into steady profits. After payments to artists, labels, publishers and agents, Spotify makes a 25% margin. That margin then goes on overheads, research & development, sales & marketing and admin costs — in fact Spotify has lost ~€1.1bn since 2019, with the company ending up in the red for 10 of the last 15 quarters.