SPOT additionally added 18 million month-to-month energetic customers within the interval to achieve 696 million, whereas complete income grew 15% year-on-year on a relentless foreign money foundation.
All of which wasn’t sufficient to make Wall Road blissful.
Partly on account of share price-connected compensation payouts, SPOT posted a internet quarterly loss and lowered Q3 revenue forecasts – leading to its market cap worth sinking by over $16 billion right this moment. Oucha.
Nonetheless, Q2 contained quite a lot of important milestones for Spotify, together with surpassing 100 million subscribers in Europe, its largest area.
In reality, on its Q2 earnings name right this moment, SPOT shared some outstanding market share statistics that underscore its dominance in world music streaming.
Listed here are seven key issues we discovered from that decision…
1. Over 3% of the world now subscribes to Spotify – however it needs rather more
Spotify Co-President Gustav Söderström threw up just a few brain-busting stats on right this moment’s name, together with: “Excluding China and Russia, 45% of people that pay for a music streaming service subscribe to Spotify, in accordance with Midia Analysis. And that share has been steadily rising through the years.”
Much more putting: Spotify’s share of complete music consumption. “In accordance with Luminate, 65% of world audio music streams now occur on Spotify,” stated Söderström.
“Over 3% of the world’s inhabitants subscribes to Spotify… it’s not implausible to think about us reaching 10% and even 15% of the world’s inhabitants.”
Alex Norström, Spotify
To place this in perspective, Luminate’s newest H1 2025 knowledge confirmed complete world audio streams reached roughly 2.5 trillion within the first half of 2025.
This means that Spotify alone accounted for round 1.6 trillion streams throughout that interval.
Such figures assist clarify CEO Daniel Ek‘s confidence about future progress potential.
“Over 3% of the world’s inhabitants subscribes to Spotify,” famous SPOT’s Chief Enterprise Officer, Alex Norström, right this moment.
“That’s fairly astounding, but in addition actually encouraging when you concentrate on how far we will nonetheless develop from right here. And it’s not implausible to think about us reaching 10% and even 15% of the world’s inhabitants.”
2. Spotify stays notably cagey on its long-awaited ‘Music Professional’ tier… regardless of being instantly requested about it (once more)
Regardless of months of business hypothesis about Spotify’s ‘tremendous premium’ tier launch – dubbed ‘Music Professional’ – the corporate supplied few concrete particulars when instantly questioned about it throughout right this moment’s name.
When Financial institution of America analyst Jessica Reif Ehrlich (pictured inset) requested about “introducing a tier, whether or not it’s ‘superfan’ or one thing else throughout your platform globally,” Norström offered a considerably evasive response.
“We’re actually enthusiastic about participating ‘superfans’, as you realize, and we’re constructing one thing nice for them,” stated Norström.
“However what buyers really want to grasp is how we construct out our merchandise at Spotify. So long as I’ve been right here, which is now near 15 years, we’ve had very excessive worth requirements round what – and when – to launch product.”
“we’re making progress [on ‘Music Pro’] for certain, however it’s taking time. And in music, after all, we’re reliant on our companions to a sure diploma.”
Alex Norström, Spotify
He added: “We’re working in direction of these very high-value requirements, and we’re making progress [on ‘Music Pro’] for certain, however it’s taking time.
“And in music, after all, we’re reliant on our companions to a sure diploma.”
As an alternative of offering extra specifics concerning the music-focused tremendous premium tier, Norström as a substitute highlighted an audiobook add-on subscription at present out there in 13 markets: “Proper now, we’re in market with an audiobook add-on subscription, which is about getting extra hours for [hardcore book fans versus what Spotify offers in its standard] Premium allocation.”
The shortage of concrete particulars suggests the much-anticipated ‘Music Professional’ tier should still be additional away than many within the business initially anticipated.
3. Spotify takes a ‘portfolio method’ to pricing… and just lately raised costs in 4 European markets with no uncommon churn
When LightShed Companions analyst Wealthy Greenfield (pictured inset) requested why Spotify doesn’t increase costs extra ceaselessly, the corporate offered insights into its pricing philosophy.
This may occasionally disappoint these music rightsholders hoping for stable information on common future price hikes.
“We take a portfolio method. So in a way, you could possibly say that we increase on a regular basis,” defined Norström. “As an illustration, within the final quarter, we raised in France, Belgium, the Netherlands and Luxembourg. And I can report back to you that on churn, we didn’t see something out of the bizarre for Spotify.”
Nonetheless, Spotify emphasised right this moment that its method prioritizes long-term subscriber retention over short-term income positive aspects. “[Internally] we… obsess over the value-to-price ratio. We’ve all the time put subscribers on a pedestal,” stated Norström.
CEO Daniel Ek bolstered this philosophy: “At scale, the subscription enterprise is absolutely round retention, not new buyer acquisition… So much higher to maintain the client round for an extended time than to lose the client again at a later level.”
When pressed by Greenfield about whether or not Spotify might increase costs sooner given its excessive engagement, Norström reiterated: “We are going to increase worth when it’s applicable for the enterprise.”
4. Generative AI is revolutionizing music discovery in ways in which might reshape which songs get heard
Söderström offered in depth insights into how generative AI is revolutionizing Spotify’s understanding of consumer preferences, with doubtlessly important implications for music discovery and which tracks acquire traction.
“There’s a elementary distinction that occurred with generative AI versus the earlier AI,” defined Söderström. “We have been [previously] confined to consumer indicators… resembling skips, performs and saves. These are fairly blunt indicators. A ‘skip’ may very well be a track that you just love, however you’re bored with it… [or] you’re not bored with it, however it’s the incorrect scenario.”
He stated this limitation is being overcome with generative AI. Spotify’s AI DJ characteristic exemplifies this transformation, with consumer engagement practically doubling over the past yr.
The DJ can now deal with advanced requests like: “Play me that track the place Bruce Springsteen invitations up that fan on stage within the music video. And DJ will perceive that you’re requesting Dancing within the Darkish,” stated Söderström.
This expertise can be powering AI playlist creation, which has expanded to over 40 new markets.
Söderström stated that generative AI permits customers to inform Spotify “in plain English what they really need, what’s on their thoughts, and even what they’re doing proper now… issues that may have been not possible for us to grasp from listening knowledge”.
For example, customers can now difficulty requests like “make me a playlist with songs to pump you up on earnings day in late July when your loved ones is on summer time vacation with out you,” quipped Söderström, in a wistful second that probably made attending analysts query a life spent learning the monetization of human loneliness.
Solely joking!
5. Spotify’s multi-format technique is driving increased engagement – however is it additive, or cannibalistic for music?
Spotify’s audiobooks enterprise continues to broaden shortly, with Söderström noting that Spotify now has “over 400,000 books” and just lately launched in Germany, Austria, Switzerland, and Liechtenstein.
In the meantime, the platform can be seeing dramatic progress in video consumption.
“In 2024, we went all in on video, and there at the moment are greater than 430,000 video podcasts on Spotify,” stated Söderström. “Video continues to outperform with consumption trending increased and better, rising 20x soonerthan audio-only consumption since 2024.
“Greater than 350 million customers have streamed video podcasts on our platform – a 65% enhance year-over-year.”
Norström added: “Customers who watch a podcast devour 1.5x extra than customers who simply pay attention.”
“Customers who watch a podcast devour 1.5x extra than customers who simply pay attention.”
Alex Norström, Spotify
But the query stays whether or not all this audiobook and podcast consumption advantages or competes with music consumption.
“The info clearly reveals that the extra content material codecs that we ship for our customers, the extra engaged they change into,” argued Söderström.
“That is very true with the ‘tremendous customers’ who should not solely spending extra time but in addition extra days on Spotify.”
Spotify’s executives persistently framed this multi-format method as additive relatively than cannibalistic to music.
6. Spotify hints at increasing its controversial “market” mannequin that prices artists for publicity
Spotify’s CFO Christian Luiga talked about “market monetization” as a future gross margin driver for music, which might sign an enlargement of Spotify’s controversial Discovery Mode program.
When CitiGroup analyst Jason Bazinet requested about “key drivers of gross margin enlargement after 2025,” Luiga cited a number of elements together with “how we monetize {the marketplace} in music”.
This may very well be a reference to Spotify’s Discovery Mode, a program that permits artists and labels to simply accept decrease royalty charges in alternate for elevated algorithmic promotion.
This system has confronted criticism from artist advocates and just lately gained consideration when it was talked about in Drake’s lawsuit towards Common Music Group, with Drake’s group framing this system as a “pay-to-play” scheme.
Beneath Discovery Mode, artists can flag songs as priorities for suggestion algorithms, however Spotify takes a fee by paying diminished royalties on these streams.
Critics argue this creates a two-tiered system the place artists and labels really feel pressured to simply accept decrease funds to compete for visibility.
If Spotify is certainly planning to broaden its “market” mannequin, it might symbolize a major shift in how the platform monetizes music past conventional subscription and promoting income.
Nonetheless, the corporate offered no extra particulars right this moment about what such an enlargement may entail.
7. Spotify, which killed iTunes with streaming… has determined it fairly likes paid-for downloads in spite of everything!
Trying forward, Daniel Ek sees important potential in à la carte transactions, which might create new income streams for creators.
“You would think about à la carte transactions being a really large potential driver for future income progress,” stated Ek.
“We performed round with that with regards to books, as an illustration, the place it makes a whole lot of sense for those who’re an writer for us to have the ability to promote books – however you too can think about new digital merchandise that we might doubtlessly introduce sooner or later as nicely.”
“We expect that the large media platforms of the long run would be the ones which have promoting, subscription, and a la carte as strategies.”
Daniel Ek, spotify
Does this imply the common-or-garden music obtain – for instance, as a pre-streaming, solely windowed entry merchandise – may very well be set to make a comeback?
Ek articulated a broader imaginative and prescient that would profit artists throughout codecs.
“Our [initial] view was that it merely didn’t make any sense for any media platform to be solely subscriber-based or solely be advertising-based. You want each of those drivers,” stated Ek.
“However now we will additionally add a 3rd driver, which is à la cartetransactions.
“We expect that the large media platforms of the long run would be the ones which have promoting, subscription, and a la carte as strategies.”
This might certainly imply particular person monitor or album gross sales.
In fact, it might additionally prolong to different unique content material and merchandise, too.
All eyes tilt in direction of that still-absent Spotify ‘Music Professional’ tier… and whether or not its arrival will come this yr, subsequent yr, or a time but to be decided.Music Enterprise Worldwide
