The latest company update from Spotify shows that paid user numbers have not grown as much as expected and in an attempt to turn that around management will be spending more on development of the platform.
With growth slowing to only 1.33m new paid users per month, for the last three months, things could be getting tough as Apple catches up with their pay-only service.
Spotify hit 84m paid users by Septemeber this year but Apple is catching up fast with 50m as reported in April this year.
It took 12 years for Spotify to reach 84m and only 3 years for Apple to reach 50M.
It will be interesting to see how numbers compare on Apple’s next results.
Spotify’s revenue didn’t hit their estimates in the fourth quarter and projected slower growth in paid user numbers. Spotify is yet to make a profit and is facing more and more competition from Apple who appears to not care about making money for the time being. Spotify also has much less of a runway in terms of cash.
Spotify didn’t comment on the growth of its ads business but industry insiders don’t seem to be too interested in spending to promote songs they get little return from.