It’s been a busy few days of reports involving Spotify: from an immersive live performance movie with Central Cee and Playboi Carti’s record-breaking new album, to revelations that it paid “over $10 billion” to “the music trade” in 2024 – a sum, that Spotify claims, makes it the trade’s single largest contributor.
The determine, revealed final week in its annual music economics report, Loud & Clear, equates to roughly 8.6% of the corporate’s $118 billion USD present market worth – but maybe extra stunning is that it’s the single largest payout in “music trade historical past,” in keeping with Spotify, one which it says is “greater than any single retailer has ever paid in a 12 months, and over 10x the contribution of the most important report retailer on the peak of the CD period.”
It is smart, then, that the 2024-25 fiscal 12 months marked Spotify’s very first worthwhile 12 months as an organization, a reality delivered to mild in its current fourth quarter 2024 earnings report printed simply weeks earlier than its marks its nineteenth anniversary subsequent month. Spotify’s finish of 12 months filings additionally revealed that its month-to-month energetic customers (MAU) grew by 12% to 675 million – a quantity which means its consumer base equates to ”three p.c of the world’s inhabitants,” Alex Norström, Spotify’s Co-President and Chief Enterprise Officer, tells Hypebeast. The corporate moreover noticed development amongst each its subscriber base (customers who select to pay for its providers) that elevated by 11% year-on-year to 263 million, in addition to its complete income which grew to €4.2 billion EUR, a 16% soar on the earlier 12 months, whereas additionally seeing report development in its working revenue that rose to €477 million EUR.
So what does this all imply for Spotify now and within the close to future? In line with Alex Norström, who Hypebeast caught up with in London lately, this implies the model is in “a a lot stronger place to please customers and higher ship for the artists, authors and creators.”
A$AP Rocky with Alex Norström, Spotify’s Co-President and Chief Enterprise OfficerPresley Ann/Getty Photographs
Whereas it could shock some readers than Spotify has operated at a loss for nearly twenty years, Norström – who joined the corporate in 2011 – claims this hasn’t impacted the services it creates. “We’ve all the time been targeted on constructing a fantastic product and now we’ve proven we even have a wholesome enterprise beneath the hood,” he tells us. “That’s why these newest outcomes are an vital milestone for our firm.”
“On daily basis, we take into consideration how we create extra worth for our customers and the creatives who share their work on Spotify. We wish customers to seek out and benefit from the music they love and introduce them to new experiences like watching a video podcast or listening to an audiobook.”
Spotify’s enterprise mannequin has remained comparatively unchanged since its inception – that’s, not less than, so far as we as shoppers can see. There’s a fundamental “free” service with restricted performance that’s propped up by advertisements; and a “premium” service that removes these and provides to the options obtainable to customers, together with offline listening and the flexibility to take heed to songs in a single’s most well-liked. Unsurprisingly, Spotify has been rumored to be testing out new methods to interact its clients for some time now, together with a brand new “super-premium” subscription mannequin as reported by the FT final month. Whereas the corporate has but to formally unveil any main new merchandise, this 12 months would appear to make sense to take action and Alex Norström acknowledges this. ”We all know some followers need much more and need to go even deeper,” he tells Hypebeast, earlier than including, “That’s a chance we’re eager to discover.” Requested what this might appear like, Norström acknowledged: “We’re nonetheless working with our companions on this, regardless that I’d like to share extra, it’s too early to enter particulars.”
The problem of royalties – how artists are paid for his or her music – is one thing that has been a continuing within the Spotify dialog from its inception. Whereas Spotify lately divulged that it paid the “the music trade over $10 billion in 2024”, the precise quantity that artists – particularly smaller artists – take house remains to be hotly debated amongst musicians. So, will the corporate turning into worthwhile have any affect on artists’ pay? We put this query to Alex Norström who clarified that Spotify doesn’t instantly pay artists and musicians; as a substitute, the corporate pays the copyright holders, who then pay the individuals they’re contracted to. “It’s vital to clarify that each one streaming providers pay rights holders, so the labels and publishers, Norström tells us, “every artist or act has their very own association with their label or writer; we don’t have visibility on that. For context although, we pay out roughly two-thirds of each single greenback we make again to rights holders.”
Norström added that “the variety of artists producing not less than $1,000, $10,000, $100,000 and even $10 million per 12 months has tripled since 2017,” a statistic Spotify can glean from its newest information, earlier than happening to say that “a wholesome, rising, worthwhile Spotify means we’re in the perfect place to maintain innovating and preserve investing again into the product. It means we will have knowledgeable native groups working instantly with artists world wide, it means our advertising efforts can proceed to highlight new releases and our playlists can attain new followers. A silent Spotify is mindless, the success of musicians and the enjoyment of followers is what it’s all about.”
Although Norström wouldn’t elaborate, he hinted that Spotify may have some massive information coming later this 12 months. So, keep tuned – we’ll preserve you posted on what the corporate has to supply in 2025 and past.
