Podcasts and New Markets Help Spotify Scoop Up Subscribers
Spotify’s Subscriber Spike
Spotify (SPOT) shared better-than-expected subscription growth data for the fourth quarter of 2020. As the pandemic wears on, an increasing amount of people are turning to audio content for entertainment while they are stuck at home. Spotify had 345 million monthly active users at the end of Q4—a 27% jump compared to the same period a year ago. Paying subscribers hit 155 million for a 24% increase from last year.
Some of this user growth was a result of Spotify offering discounted subscription plans, especially in newer markets like Russia and India. Average revenue per listener fell by 8% during last year’s fourth quarter because of this strategy.
The Podcast Push
Spotify’s user growth can also be attributed to its expanding podcast library. Spotify currently offers 2.2 million podcasts with everything from small, niche podcasts to big titles like “The Joe Rogan Experience” and “The Michelle Obama Podcast.” Though podcast listenership dipped at the beginning of the pandemic as fewer people were commuting, it has come roaring back. The amount of hours people spent listening to podcasts on Spotify nearly doubled between the last quarter of 2019 and the last quarter of 2020.
Spotify has been a leader in the podcast space recently, but it could face more intense competition in the coming months as larger companies ramp up their podcast offerings. Amazon (AMZN) recently purchased the podcast company Wondery, and Apple (AAPL) said it is looking into starting a podcast subscription service.
Uncertainty in 2021
Spotify said it will continue to prioritize growth over profits in the coming quarters. The streaming giant has periodically seen quarterly profits, but it reported a loss of $335 million in 2020 overall.
After a year full of unexpected twists and turns, Spotify’s leadership is now wondering what lies ahead in 2021. As Spotify CEO Daniel Ek put it, “Assuming COVID is beyond us in the latter part of 2021, what’s going to happen to consumption then? Are people going to travel? What habits are changing? That’s a massive amount of uncertainty.”
P.S. Speaking of podcasts, be sure to check out the SoFi Daily podcast on our app, on Spotify, or wherever you get your podcasts.
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