Photo Credit: Alexander Shatov
Spotify gained 11 million monthly active users (MAUs) – including three million paid subscribers – during 2021’s first quarter, but premium revenues increased only modestly from Q4 2020 and the podcast-engagement rate remained essentially flat.
The Stockholm-based company revealed its Q1 2021 performance specifics this morning. MAUs totaled 356 million at March’s end (up from 345 million in Q4 2020), while the music-streaming giant’s paid-user total increased by three million, to 158 million.
For reference, Spotify added 25 million MAUs during the fourth quarter of 2020, including 11 million paid subscribers. Also worth noting with regard to this quarter’s comparatively slow growth is that the service arrived in South Korea (population 52 million) in February – without a free tier – besides embarking on a “sweeping expansion” into over 80 additional countries.
Higher-ups stated in the last quarter’s earnings breakdown that they expected Spotify to have between 354 million and 364 million MAUs at Q1 2021’s end, as well as 155 million to 158 million paid subscribers.
Moreover, the MAU total associated with 2021’s opening quarter represents a 24 percent year-over-year bump but just a three percent quarterly increase, against a 21 percent YoY hike for paid subscribers and a two percent uptick quarter to quarter.
Regionally, 34 percent of Spotify’s MAUs reside in Europe, compared to 24 percent for North America, 22 percent for Latin America, and 20 percent for the rest of the world, which gained the one percent that Europe parted with from Q4 2020.
However, Europe is home to 40 percent of premium subscribers, whereas 29 percent of paid users live in North America, 20 percent live in Latin America, and 11 percent live in the rest of the world. The figures are virtually identical to those of Q4 2020, except that the latter pie chart totaled 101 percent, and Latin America parted with this extra point in Q1 2021.
User “growth was lower than plan[ned] in Latin America and Europe,” according to the earnings report, and “per user consumption grew in developed regions such as North America and Europe, while developing regions showed signs of improvement but remained below pre-COVID levels.”
On the revenue front, Spotify generated approximately $2.34 billion (€1.93 billion) from premium accounts in Q1 2021 – up 14 percent YoY and two percent QoQ – as well as about $261.3 million (€216 million) from ad-supported users, a 46 percent YoY increase but a 23 percent decline from Q4 2020.
After highlighting the acquisition of Betty Labs (and, in turn, Clubhouse competitor Locker Room), the recently revealed Facebook partnership, and the rollout of the “Car Thing,” the analysis notes that Spotify boasts 2.6 million podcasts (up from 2.2 million in Q4 2020) – though “the percentage of MAUs that engaged with podcast content on our platform was consistent with Q4 levels,” which came in at 25 percent.
The total is particularly important because Spotify has invested a substantial sum into podcasting, and more than a few financial professionals cited the programs’ perceived earning potential when setting bullish SPOT target prices. Building upon the point, Spotify – which is preparing to release podcast subscriptions – “saw a strong increase in Q1 podcast consumption hours,” and The Joe Rogan Experience “performed above expectations with respect to new user additions and engagement.”
In terms of its two-sided marketplace initiatives, Spotify emphasized that “Sponsored Recommendations have shown strong growth and are becoming an essential part of new release marketing strategies for artists and labels,” with Q1 2021 having been “the biggest quarter yet” for the paid-promotional options. The entity has also started offering “a self-serve buying experience for Sponsored Recommendations to select artist and label teams in the US.”
As an aside, Olivia Rodrigo’s “Driver’s License” effort set the single-day stream-count record (for non-holiday tracks) on January 11th, generating a staggering 15 million plays (and earning between $45,000 and $75,000).
Rodrigo is signed to Universal Music Group’s Interscope and Geffen Records, and Spotify CFO Paul Vogel acknowledged last year that the Vivendi-owned company was “willing to sort of lean in more aggressively” on promotional initiatives and two-sided marketplace deals. Plus, UMG acts including but not limited to Billie Eilish, Bad Bunny, and The Weeknd performed extremely well on Spotify, in terms of total streams, across 2020.
Finally, Spotify expects to have between 366 million and 373 million MAUs at Q2 2021’s conclusion, as well as 162-166 million premium subscribers and revenues of roughly $2.61 billion to $2.85 billion (€2.16-€2.36 billion).
At the time of this piece’s publishing, Spotify stock (SPOT) was down nine percent ($26.36) from yesterday’s closing value, for a per-share price of $266.56. A Spotify price hike is incoming for several plans in Europe, the UK, and the US, and the company’s recently acquired podcasting divisions unionized earlier this month.
Spotify’s push into podcasting is at the expense of musicians.
How much has Spotify spent on podcast and podcast-related acquisitions in the past few years? It’s definitely over a billion dollars.
Joe Rogan will not have the same impact on Spotify that Howard Stern did to SiriusXM in 2006 or even Rush Limbaugh had on daytime AM radio in the late 80s.
Nobody is going to pay for premium podcasts. Nobody wants to hear lots of ads inserted into podcasts at random times. How well is that working out for YouTube?
MBAs working at tech companies have run out of bad ideas. Executives just can’t build something and be happy with it, especially if they’re hooked on VC money or pleasing “shareholders”.
And who is paying for this stupidity? Musicians and songwriters.