SPOT additionally added 18 million month-to-month lively customers within the interval to achieve 696 million, whereas whole income grew 15% year-on-year on a continuing forex foundation.
All of which wasn’t sufficient to make Wall Road completely satisfied.
Partly resulting from share price-connected compensation payouts, SPOT posted a web quarterly loss and lowered Q3 revenue forecasts – leading to its market cap worth sinking by over $16 billion at present. Oucha.
Nonetheless, Q2 contained quite a few important milestones for Spotify, together with surpassing 100 million subscribers in Europe, its largest area.
In reality, on its Q2 earnings name at present, SPOT shared some exceptional market share statistics that underscore its dominance in international music streaming.
Listed below are seven key issues we realized from that decision…
1. Over 3% of the world now subscribes to Spotify – nevertheless it desires way more
Spotify Co-President Gustav Söderström threw up a couple of brain-busting stats on at present’s name, together with: “Excluding China and Russia, 45% of people that pay for a music streaming service subscribe to Spotify, in response to Midia Analysis. And that proportion has been steadily rising through the years.”
Much more putting: Spotify’s share of whole music consumption. “Based on Luminate, 65% of worldwide audio music streams now occur on Spotify,” mentioned 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 whole international 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, at present.
“That’s fairly astounding, but additionally 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 at present’s name.
When Financial institution of America analyst Jessica Reif Ehrlich (pictured inset) requested about “introducing a tier, whether or not or not it’s ‘superfan’ or one thing else throughout your platform globally,” Norström offered a considerably evasive response.
“We’re actually enthusiastic about partaking ‘superfans’, as , and we’re constructing one thing nice for them,” mentioned Norström.
“However what traders actually need 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 positive, nevertheless it’s taking time. And in music, in fact, we’re reliant on our companions to a sure diploma.”
Alex Norström, Spotify
He added: “We’re working in the direction of these very high-value requirements, and we’re making progress [on ‘Music Pro’] for positive, nevertheless it’s taking time.
“And in music, in fact, we’re reliant on our companions to a sure diploma.”
As a substitute of offering extra specifics in regards to 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 dearth of concrete particulars suggests the much-anticipated ‘Music Professional’ tier should 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 steadily, the corporate offered insights into its pricing philosophy.
This may increasingly disappoint these music rightsholders hoping for strong information on common future price hikes.
“We take a portfolio method. So in a way, you can say that we increase on a regular basis,” defined Norström. “As an example, 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 extraordinary for Spotify.”
Nonetheless, Spotify emphasised at present that its method prioritizes long-term subscriber retention over short-term income beneficial properties. “[Internally] we… obsess over the value-to-price ratio. We’ve all the time put subscribers on a pedestal,” mentioned Norström.
CEO Daniel Ek strengthened this philosophy: “At scale, the subscription enterprise is absolutely round retention, not new buyer acquisition… Quite a bit 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 may increase costs sooner given its excessive engagement, Norström reiterated: “We’ll increase value when it’s acceptable for the enterprise.”
4. Generative AI is revolutionizing music discovery in ways in which may reshape which songs get heard
Söderström offered in depth insights into how generative AI is revolutionizing Spotify’s understanding of person preferences, with probably important implications for music discovery and which tracks achieve traction.
“There’s a basic distinction that occurred with generative AI versus the earlier AI,” defined Söderström. “We had been [previously] confined to person indicators… reminiscent of skips, performs and saves. These are fairly blunt indicators. A ‘skip’ might be a music that you just love, however you’re bored with it… [or] you’re not bored with it, nevertheless it’s the flawed scenario.”
He mentioned this limitation is being overcome with generative AI. Spotify’s AI DJ characteristic exemplifies this transformation, with person engagement almost doubling over the past 12 months.
The DJ can now deal with advanced requests like: “Play me that music 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,” mentioned Söderström.
This know-how can be powering AI playlist creation, which has expanded to over 40 new markets.
Söderström mentioned that generative AI allows 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 will have been unimaginable 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 doubtless made attending analysts query a life spent finding out the monetization of human loneliness.
Solely joking!
5. Spotify’s multi-format technique is driving greater engagement – however is it additive, or cannibalistic for music?
Spotify’s audiobooks enterprise continues to develop rapidly, 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,” mentioned Söderström. “Video continues to outperform with consumption trending greater and better, rising 20x soonerthan audio-only consumption since 2024.
“Greater than 350 million customers have streamed video podcasts on our platform – a 65% improve year-over-year.”
Norström added: “Customers who watch a podcast eat 1.5x extra than customers who simply hear.”
“Customers who watch a podcast eat 1.5x extra than customers who simply hear.”
Alex Norström, Spotify
But the query stays whether or not all this audiobook and podcast consumption advantages or competes with music consumption.
“The information clearly reveals that the extra content material codecs that we ship for our customers, the extra engaged they turn out to be,” argued Söderström.
“That is very true with the ‘tremendous customers’ who aren’t solely spending extra time but additionally extra days on Spotify.”
Spotify’s executives constantly framed this multi-format method as additive slightly than cannibalistic to music.
6. Spotify hints at increasing its controversial “market” mannequin that costs artists for publicity
Spotify’s CFO Christian Luiga talked about “market monetization” as a future gross margin driver for music, which may sign an growth of Spotify’s controversial Discovery Mode program.
When CitiGroup analyst Jason Bazinet requested about “key drivers of gross margin growth after 2025,” Luiga cited a number of elements together with “how we monetize {the marketplace} in music”.
This might be a reference to Spotify’s Discovery Mode, a program that enables artists and labels to just accept decrease royalty charges in change 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 in opposition to Common Music Group, with Drake’s staff framing this system as a “pay-to-play” scheme.
Beneath Discovery Mode, artists can flag songs as priorities for advice 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 just accept decrease funds to compete for visibility.
If Spotify is certainly planning to develop its “market” mannequin, it may symbolize a big shift in how the platform monetizes music past conventional subscription and promoting income.
Nonetheless, the corporate offered no further particulars at present about what such an growth would possibly entail.
7. Spotify, which killed iTunes with streaming… has determined it fairly likes paid-for downloads in spite of everything!
Wanting forward, Daniel Ek sees important potential in à la carte transactions, which may create new income streams for creators.
“You would think about à la carte transactions being a really large potential driver for future income progress,” mentioned Ek.
“We performed round with that on the subject of books, as an example, the place it makes a number of sense should you’re an creator for us to have the ability to promote books – however you can even think about new digital merchandise that we may probably introduce sooner or later as effectively.”
“We predict that the large media platforms of the longer term 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 – might be set to make a comeback?
Ek articulated a broader imaginative and prescient that might 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,” mentioned Ek.
“However now we will additionally add a 3rd driver, which is à la cartetransactions.
“We predict that the large media platforms of the longer term would be the ones which have promoting, subscription, and a la carte as strategies.”
This might certainly imply particular person observe or album gross sales.
After all, it may additionally lengthen to different unique content material and merchandise, too.
All eyes tilt in the direction of that still-absent Spotify ‘Music Professional’ tier… and whether or not its arrival will come this 12 months, subsequent 12 months, or a time but to be decided.Music Enterprise Worldwide
