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Spotify, launched in Sweden in October 2008, offers to legally listen to the music of the world's largest copyright holders online or without a connection to the Web.
You can listen to music for free, but with advertising. For those who want to access music without advertising, it is proposed to pay for a subscription (in the USA it costs $10 per month, in Europe - 10 euros).
Performance indicators
2022
Loss of 600 thousand subscribers after leaving Russia
In the second quarter of 2022, Spotify lost about 600 thousand Russian users with a paid subscription after the music service decided to leave the Russian Federation. This is stated in the financial statements, which the company published at the end of July 2022.
At the same time, the total number of Spotify premium subscribers around the world in April-June 2022 increased by 14% - to 188 million people. The total number of registered users increased from 422 million at the beginning of the year to 433 million in the second quarter of 2022.
In the second quarter of 2022, the service's revenue increased by 23% compared to the second quarter of 2021 - to 2.86 billion euros, but at the same time the loss amounted to 125 million euros compared to 20 million euros last year. Subscribers brought the service 2.5 billion euros in revenue. Advertising gave revenue of 360 million euros, which is 31% more year-on-year. The average income per user increased from last year's figures from $4.44 to $4.6. On the news of subscriber growth and revenue volume, which turned out to be more than analysts expected, shares of the Swedish streaming service rose by 15% on the Nasdaq exchange following trading on July 27, 2022.
On April 7, it became known that Spotify would stop working in Russia.
 | After a thorough analysis of the current situation, we made a difficult decision to completely suspend Spotify in Russia from April 11, 2022, the company said in a statement. |  |
The reason for the departure was the new law on fakes on the special operation of Russia in Ukraine. On April 18, 2022, the application was removed from the Russian App Store and Google Play. Q2 2022 Update
Loss of 1.5 million premium subscribers after leaving Russia
Spotify lost 1.5 million premium subscribers after leaving Russia. The service left Russia in April 2022 amid Russia's special operation in Ukraine - less than two years since it was launched in the country.
2021: Revenue growth 22.7%, to $9.688 billion, loss - $34 million
In 2021, the revenue of the music service Spotify increased by 22.7%, to $9.688 billion, in 2020 the figure was $7.88 billion. The company remains unprofitable - $34 million compared to $581 million in 2020.
The number of active monthly users increased by the end of 2021 compared to the end of 2020 by 18%, to 406 million.
The number of premium subscribers during the same period increased by 16%, to 180 million, in particular due to the high efficiency of advertising campaigns. Advertising income by the end of 2021 reached a record 15% of total income.
On December 1, 2021, the company successfully launched Spotify's seventh annual Wrapped campaign for users in 103 markets. The campaign spread worldwide, with Spotify Wrapped cards sent nearly 60m times, resulting in a significant increase in consumption of the company's two personalized playlists ("Your Best Songs" and "Your Artists"), which accounted for nearly 8% of the total number of hours of content consumption on the platform in 2021 within 48 hours of launch.
The company's revenue growth in 2021 was affected by the continued introduction of paid tools. So, in October, Spotify announced a new integration with Shopify, which allows artists to connect their Shopify store with their Spotify for Artists account and publish products on their artist profile for fans around the world.
In 2021, the company entered into several large advertising partnerships, including with Xiaomi (Spotify preloading on the world's second-largest phone maker), Shopee (offers 3-month trials), Visa (offers 3-month trials in India for credit and debit card holders) and TecToy (Spotify preloading on TecToy mobile devices in Brazil and a 3-month trial is available for TecToy customers who purchase an audio or technology product). In addition, the company has renewed its partnership with KPN, the Netherlands' leading telecommunications operator.[1]
Business in Russia
Main article: Spotify in Russia
History
2023
Dismissal of 17% of employees due to lack of money
On December 4, 2023, streaming platform Spotify announced a new phase of reorganization aimed at lowering costs and improving its financial situation. This time, the headcount will decrease by approximately 17%.
The restructuring was announced by the CEO of the service Daniel Ek. Spotify's main goal, he said, is to build a sustainable, profitable business and grow into a leading global audio company. In 2020-2021, Spotify actively expanded its staff, which was facilitated by the development of the IT industry. However, economic growth then slowed sharply and the company faced a shortage of money. In the current situation, Spotify is forced to optimize business operations. At the same time, two rounds of staff cuts in January and June 2023, when 6% and 2% of employees were laid off, respectively, were not enough.
| | To ensure Spotify's long-term success and ensure it was ready for the challenges ahead, I made the difficult decision to reduce the total headcount by about 17% globally. I understand that for many, a reduction of this scale will seem excessively large. But I am convinced that these measures to adjust our spending are the best option to achieve our goals, says Ek. | |
Employees who fall under the reduction will receive severance pay on average in the amount of five-month salary. In addition, monetary compensation will be provided for unused vacation. Spotify will continue to cover health care costs during the transition period. All laid-off workers will be eligible for employment assistance at the new site for two months. The company will also provide the necessary support to those employees who will be forced to change their place of residence.[2]
How Swedish gangs use Spotify to launder money
In early September 2023, it became known that organized criminal groups in Sweden are actively using the Spotify streaming service for money laundering.
Swedish gangs have for several years used money from drug sales, robberies, fraud and contract killings to pay for specially created streams on Spotify, it says. Information about the scheme was revealed by the Svenska Dagbladet newspaper, whose journalists, on condition of anonymity, managed to communicate with four former members of various criminal groups and police representatives. Attackers began using Spotify to launder money in 2019, that is, around the time Swedish gangster rap began to gain popularity in the country.
The scheme boils down to gangs finding artists willing to collaborate with them. Bandits pay cryptocurrency to performers to create tracks and promote them on Spotify. For watching or listening to streams, the platform pays artists a reward, and the money received is returned to the gangs. For 1 million listens/views of streams, Spotify pays from 40 thousand to 60 thousand Swedish crowns (from $3.6 thousand to $5.4 thousand at the exchange rate as of September 7, 2023).
| | I can say with 100% confidence that this continues to this day. I myself participated in this, - the newspaper Svenska Dagbladet quotes the words of a member of one of the criminal groups. | |
Spotify officials say manipulating streaming streams is an "industry-wide issue." The company is working to resolve this issue, emphasizing that less than 1% of all threads on the platform are generated artificially. Spotify found "no evidence or irrefutable evidence that the service is being used extensively in the manner described."[3]
Dismissal of 2% of employees
On June 5, 2023, the streaming service Spotify announced the next stage of restructuring, during which the headcount will be reduced by about 2%. Previously, approximately 6% of employees were laid off.
Spotify Vice President Sahar Elhabashi announced the reduction. The changes will primarily affect the podcast division. The company has been actively developing the corresponding area for about three years. Since 2020, Spotify has spent about $526 million to acquire podcast assets, according to the US Securities and Exchange Commission (SEC). However, such significant investments led to a sharp increase in operating costs. In addition, macroeconomic challenges and high inflation have a negative impact on financial indicators.
| | We are expanding our partnerships with leading podcasters from around the world. However, in the current conditions, adaptation is necessary. As a result, we made a difficult but necessary decision to strategically redesign our podcast group, which will lead to the reduction of approximately 200 employees. Unfortunately, this means farewell to close colleagues and friends, - wrote Elhabashi. | |
All furloughed workers are noted to receive generous severance pay as well as extended health insurance. In addition, Spotify will assist with employment in a new place. It is assumed that the reorganization will optimize operations in the podcast division and ensure success in the long term. It is said that the podcast listener base on Spotify exceeds 100 million users. Since the beginning of 2019, the consumption of relevant content has grown by more than 1400%. In 2023, Spotify's capitalization rose 92%, reaching $28.9 billion.[4]
6% staff reduction
On January 23, 2023, Spotify announced mass layoffs. Due to the difficult economic environment, the service faced a lack of money, as consumers and advertisers around the world limit their expenses.
The decrease in staff was announced by Daniel Ek, CEO of Spotify. According to him, the company has made significant progress in developing the business, but at the same time did not pay due attention to improving efficiency. Spotify, according to the head, spends too much time synchronizing different strategies, which slows down the work.
| | In difficult economic conditions, efficiency is becoming more important. In an effort to better control costs and speed up decision-making, I came to the conclusion that our organization was restructured. As part of this effort, as well as in order to optimize costs, we made the difficult but necessary decision to reduce the number of employees, "wrote Daniel Ek. | |
Spotify's workforce will decrease by about 6%. As of January 2023, the total number of employees of the company was about 9,800 people, of which 5,400 people work in the United States and 1,900 people in Sweden. Thus, the reduction will affect a total of approximately 600 workers in these countries and other regions.
Dismissed employees will receive severance pay in the amount of wages for an average of five months. The final amount will be calculated on the basis of local notification period requirements and according to the work experience. Workers will be provided with medical and immigration support. In addition, they will receive compensation for unused vacation. In a statement sent to the US Securities and Exchange Commission, Spotify warned that payments due to state cuts would lead to costs of about €35- €45 million[5]
2022: 9,058 employees
2021
Buying e-book provider Findaway
On November 12, 2021, Spotify announced the purchase of Findaway. The company declined to disclose the financial terms of the deal, which is expected to close in the fourth quarter of 2021, subject to regulatory review and approval. Read more here.
Purchase of the service for conducting audio broadcasts Betty Labs
At the end of March 2021, Spotify announced the acquisition of the developer of the Locker Room application for live audio broadcasts by Betty Labs. The financial details of the deal were not disclosed. Read more here.
2020: Spotify co-founder to invest €1bn in deeptech start-ups
At the end of September 2020, Spotify co-founder Daniel Ek announced that he would invest 1 billion euros ($1.2 billion) from his personal fortune in deeptech startups over the next 10 years. Ek explained that he is interested in startups in the field of machine learning, biotechnology, materials science and power. Read more here.
2019
Purchase of Ringer for $250 million
The largest streaming company, Spotify, bought the podcaster company The Ringer - already the fourth such acquisition in a year. The transaction amount amounted to $250 million. Prior to that, Gimlet Media, Anchor FM and Parcast Spotify spent about $400 million on the acquisition.
In the fourth quarter of 2019, Spotify's monthly audience was estimated at 271 million listeners (+ 31% yoy), revenue was about $2 billion (+ 24%), and podcast listening tripled.
WhatsApp phishing attack via premium Spotify subscription
On June 16, 2019, an international anti-virus company ESET phishing to the attack announced in. The bait messenger WhatsApp is a one-year premium subscription to the popular music service Spotify. More. here
2018
Among the largest IT companies in Europe
Going public
On April 3, 2018, Spotify went public. At the end of the first day, in the status of a public company, its shares jumped by 13%. Spotify shares were listed on the New York Stock Exchange (NYSE) under the ticker symbol SPOT.
Spotify's financial advisers set the estimated price of the company's shares in the IPO at $132, but by the time trading began, the figure was 26% more - $165.9. During the trade, the value reached $169. However, by the close of the exchange, the securities stopped at $149.01, bringing Spotify's market capitalization to $26.5 billion.
Spotify conducted a so-called direct listing, in which the price of shares is set organically, that is, based on supply and demand. In an ordinary IPO, the initial value of securities is indicated in advance. The reason for this decision in the company explained that Spotify does not need new funding.
Spotify's IPO was accompanied by an incident, with the New York Stock Exchange welcoming the Swedish company with the Swiss flag. A flag and banner with the name of the world's largest music service appeared on the building on the occasion of the start of trading in the company's shares on the stock exchange.
The NYSE quickly changed the flag to the correct one and joked about it on its Twitter blog: "We hope everyone enjoyed our brief ode to neutrality in the pricing process this morning."[6]
| | Regarding the fact that the NYSE confused Sweden and Switzerland is a common mistake, it especially complicates the situation that both we and they have famous chocolate, "said Spotify co-founder Daniel Ek, who was sympathetic to what happened. | |
Audience - 159 million people
By the beginning of April 2018, Spotify is the world's largest music service: its audience exceeds 159 million people, the number of subscribers using paid Spotify features is 71 million. The company predicts that by 2019 the number of paid subscribers will exceed 100 million.
2017: IPO denied
Wall Street denied Spotify an IPO on the basis that the company had accumulated a whopping $1.5 billion in debt. Despite the fact that streaming on Spotify is more popular than with giants such as Apple, Google and Amazon, the company cannot force its business model to bring it money[7]Spotify has twice as many paid subscribers as nearest rival Apple Music. Moreover, Spotify has more customers than all of its top rivals combined. Spotify gives the three biggest labels (Universal Music Group, Sony Music Entertainment and Warner Music Group) more than 70% of their profits, and as the company's massive debt shows, for the streaming giant, this situation is far from ideal.
To somehow compensate for the losses, Spotify in recent years began to take out impressive loans from a pool of investors on unfavorable terms, which separately should have punished the company if it did not go to the IPO. Thus, the company received $500 million from Swedish investors with the condition of entering an IPO by the end of January 2017. For the failure of this period, Spotify will have to provide Swedes with significant discounts on the purchase of shares when the company does get to the IPO. Soon Spotify will approach the $1 billion debt deadline, the fines for which are even more stringent.
2014
At the beginning of 2014, Spotify has more than 25 million subscribers in 55 countries. At that time, the new user received 14 days of free subscription - while advertising was shown to him. Then I had to subscribe to the service - depending on the tariff plan, it costs from $5 to $10 per month (February 2014).
2013:6 million payers
As of August 2013, Spotify's monthly audience, according to the company's own data, is about 24 million users. Of these, 6 million people pay. Since the launch of the service, Spotify has paid authors and copyright holders $500 million.
2011
750 thousand payers
As of February 2011, Spotify has 750,000 paying users, and a total of 10 million. Sales of EMI digital music in Scandinavia increased significantly in 2010 precisely due to Spotify, says Alexander Blinov, CEO of Gala Records/EMI.
Fund purchase of DST Global-2 5% Spotify
In March 2011, it became known that the DST Global - 2 fund buys 5% of Spotify for $50 million. That is, the entire Spotify is valued at $1 billion. According to a person close to the participants in the deal, the deal has not been completed, negotiations are still underway.
Interest in Spotify by DST Global
On February 21, 2011, the authoritative online publication Techcrunch announced that DST Global could invest in Spotify. According to his sources, together with a consortium of other funds, DST will invest more than $100 million in the project, which will be used to develop the company. Negotiations are underway for such a deal, said a manager familiar with its participants.
As part of this round, Spotify could be valued at $1 billion, according to Techcrunch. That's nearly 4 times the amount Spotify estimated a year earlier by The Founders Fund and Sean Parker, founder of file-sharing service Napster and co-founder of Facebook. They invested 82.3 million euros in Spotify, based on an estimate of the entire project of 200 million euros ($273.8 million).
2010: App audience - 100 million users
2009: Revenue $18.1 million, loss $26.7 million
In 2010, journalists were Musically.com able to obtain Spotify reports. It follows from it that Spotify's revenue for 2009 amounted to $18.1 million (60% was brought by a subscription), but minus payments to copyright holders, the company received a $26.7 million loss.
2006: Creating a service in Sweden
Spotify was created in 2006 by Swedes Daniel Ek and Martin Lorenzon.
Notes
- ↑ Spotify Technology S.A. Announces Financial Results for Fourth Quarter 2021
- ↑ An Update on December 2023 Organizational Changes
- ↑ Gängkriminell: Spotify bra för att tvätta miljoner
- ↑ An Update on Changes to Spotify’s Podcast Business, June 2023
- ↑ [1]An Update on January 2023 Organizational Changes
- ↑ Spotify shares jump in record-setting direct listing
- ↑ Spotify owes investors more than $1.5 billion.
Stock price dynamics
| Ticker company on the exchange: | NYSE:SPOT |
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