Spotify Grows Subscription Base; Touts New Revenue Streams

Spotify reported earnings for Q1 on Wednesday (April 28), and while its numbers were solid for subscriber growth, its announcements focused on new products and properties that will tee the company up for the balance of the year.

By the numbers monthly active users (MAUs) grew 24 percent over 2019 to 356 million in the quarter. Spotify added 11 million MAUs, mainly from international markets such as Mexico, Russia and India. However, growth was lower than planned in Latin America and Europe. Total premium subscribers grew 21 percent to 158 million in the first quarter. But the spotlight was reserved for the new expected source of Spotify’s growth: advertising.

According to the company’s release statement, ad-supported revenue outperformed forecasts, led by its Podcast and Programmatic channels. The company is setting itself up for more growth in that area, with its Spotify Ad Studio, and it began beta testing podcast inventory ad buying on Spotify Ad Studio in the U.S. Additionally, in April, Spotify expanded Streaming Ad Insertion (“SAI”) from the U.S., Canada, United Kingdom and Germany to also include Australia and Sweden.

The company also took the occasion of the earnings call out the potential of its Spotify Audience Network, an advertising marketplace which connects advertisers to listeners across Spotify Owned & Exclusive (“O&E”) podcasts, podcasts from enterprise publishers via Megaphone, podcasts from emerging creators via Anchor, and ad-supported music. “The Spotify Audience Network bundles multiple shows for advertisers to buy specific audiences using our proprietary SAI technology,” the company’s statement said. “We believe this shift will provide advertisers much greater reach and efficiency while creators gain a much greater monetization opportunity.”

Spotify is also taking a page from Patreon and other artist creation platforms as a promise for non-subscriber revenue growth. In Q1 it announced a new partnership between Anchor and WordPress to generate opportunities for content creators and build new audiences. “With this new tool, bloggers can publish their written content as a podcast with just a few clicks — and podcasters can create a website for their podcast just as easily,” the statement said. “This offers a whole new group of creators—those who have historically focused on the written word — to access an entirely new audience via audio and share their voices on Spotify.”