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Spotify’s latest financial results are out, covering the fourth quarter of 2020, and thus the full calendar year.

The streaming service ended the year with 345 million monthly active users, including 155 million premium subscribers. That was year-on-year growth of 27% and 24% respectively, with ad-supported (free) users up 30% to 199 million.

Spotify’s quarterly revenues grew by 17% year-on-year to €2.17bn, although the company remains in the red with a quarterly operating loss of €69m, and a net loss of €125m.

In 2020 as a whole, Spotify added 74 million net new monthly active users, and 30 million premium subscribers – thus averaging 2.5 million new subscribers a month on the latter front.

Spotify’s average revenue per user (ARPU) for subscribers continues to fall, however. Last quarter its ARPU was €4.26, down 8% year-on-year. However, in its financials release, Spotify cited positive results from its recent experimentation with higher prices.

“In October, we raised the price of the Family Plan in 7 markets (Australia, Belgium, Switzerland, Bolivia, Peru, Ecuador, and Colombia) alongside Duo in Colombia. Early results of the price increases have been highly encouraging, as we have seen no meaningful impacts to churn or customer intake in these markets,” explained Spotify.

That has led to the company upping its family plan price in 25 more countries this week, but also “full portfolio price increases in Sweden, Norway, Finland, and Iceland”. Music rightsholders will be keen to see Spotify match that in other key markets, although also for rivals to follow suit.

Spotify also offered some updates on its non-music business. 25% of its monthly active users now listen to podcasts, up from 22% the previous quarter. That means Spotify’s podcast audience is now more than 86 million people. The company also said that podcast listening hours nearly doubled between Q4 2019 and Q4 2020.

Spotify called out the performance of The Joe Rogan Experience in particular, as it topped the company’s podcast charts in 17 countries by the end of 2020.

“While it remains early days, we are very encouraged by the performance of this content since its arrival on our platform, as it has stimulated new user additions, activated first time podcast listeners, and driven favourable engagement trends, including vodcast consumption.”

Spotify’s ‘two-sided marketplace’ – its tools and paid promotional services for artists and labels – also has some new figures.

Spotify said that in Q4 it saw a more than 50% increase in the number of campaigns compared to Q3 – although this surely reflects the industry’s traditionally heavy release quarter – and said that over half of those campaigns were from “new buyers”.

More stats: Spotify’s ‘canvas’ looping videos feature was used by more than 180,000 artists in the month after Spotify opened up access to it last year. The company’s year-end ‘Wrapped’ campaign, meanwhile, was engaged with by more than 90 million Spotify users.

Spotify also moved to reassure any remaining doubts over the Covid-19 pandemic’s impact on music subscriptions.

“In 2020, we believe the pandemic had little impact on our subscriber growth and may have actually contributed positively to pulling forward new signups,” suggested the company. That said: “From a revenue standpoint, advertising was negatively affected in the back half of Q1 and persisted throughout the rest of the year.”

Spotify warned that forecasting how 2021 will go is difficult given the “unknown duration of the pandemic and its ongoing effect on user, subscriber, and revenue growth”, but the streaming service expects to end this year with between 407 million and 427 million monthly active users, and 172-184 million premium subscribers.

Will it be profitable? Not this year: Spotify is predicting an operating loss of between €200m and €300m in 2021. The company will be holding an earnings call today, which we’ll report on for our bulletin tomorrow.

Music Ally’s next Learn Live webinar will help you understand what’s required for artists to thrive in new international markets!

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Stuart Dredge

Music Ally's Head of Insight

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