SPOT additionally added 18 million month-to-month lively customers within the interval to succeed in 696 million, whereas whole income grew 15% year-on-year on a relentless forex foundation.
All of which wasn’t sufficient to make Wall Avenue pleased.
Partly because of share price-connected compensation payouts, SPOT posted a internet quarterly loss and lowered Q3 revenue forecasts – leading to its market cap worth sinking by over $16 billion right now. Oucha.
Nonetheless, Q2 contained plenty of vital milestones for Spotify, together with surpassing 100 million subscribers in Europe, its largest area.
In actual fact, on its Q2 earnings name right now, SPOT shared some outstanding market share statistics that underscore its dominance in world music streaming.
Listed below are seven key issues we realized from that decision…
1. Over 3% of the world now subscribes to Spotify – but it surely desires way more
Spotify Co-President Gustav Söderström threw up a number of brain-busting stats on right now’s name, together with: “Excluding China and Russia, 45% of people that pay for a music streaming service subscribe to Spotify, in line with Midia Analysis. And that share has been steadily rising through the years.”
Much more putting: Spotify’s share of whole music consumption. “In response to 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 information confirmed whole world 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 development potential.
“Over 3% of the world’s inhabitants subscribes to Spotify,” famous SPOT’s Chief Enterprise Officer, Alex Norström, right now.
“That’s fairly astounding, but in addition actually encouraging when you consider how far we are able to 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 straight requested about it (once more)
Regardless of months of trade hypothesis about Spotify’s ‘tremendous premium’ tier launch – dubbed ‘Music Professional’ – the corporate supplied few concrete particulars when straight questioned about it throughout right now’s name.
When Financial institution of America analyst Jessica Reif Ehrlich (pictured inset) requested about “introducing a tier, whether or not it’s ‘superfan’ or one thing else throughout your platform globally,” Norström supplied a considerably evasive response.
“We’re actually enthusiastic about participating ‘superfans’, as you recognize, 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, but it surely’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 direction of these very high-value requirements, and we’re making progress [on ‘Music Pro’] for positive, but it surely’s taking time.
“And in music, in fact, we’re reliant on our companions to a sure diploma.”
As an alternative of offering extra specifics concerning the music-focused tremendous premium tier, Norström as an alternative highlighted an audiobook add-on subscription at present obtainable 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 trade initially anticipated.
3. Spotify takes a ‘portfolio strategy’ to pricing… and not too long ago raised costs in 4 European markets with no uncommon churn
When LightShed Companions analyst Wealthy Greenfield (pictured inset) requested why Spotify doesn’t elevate costs extra often, the corporate supplied insights into its pricing philosophy.
This may increasingly disappoint these music rightsholders hoping for stable information on common future fee hikes.
“We take a portfolio strategy. So in a way, you possibly can say that we elevate on a regular basis,” defined Norström. “As an illustration, 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 unusual for Spotify.”
Nonetheless, Spotify emphasised right now that its strategy prioritizes long-term subscriber retention over short-term income positive aspects. “[Internally] we… obsess over the value-to-price ratio. We’ve all the time put subscribers on a pedestal,” mentioned Norström.
CEO Daniel Ek bolstered this philosophy: “At scale, the subscription enterprise is de facto 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 elevate costs sooner given its excessive engagement, Norström reiterated: “We are going to elevate worth 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 supplied in depth insights into how generative AI is revolutionizing Spotify’s understanding of consumer preferences, with doubtlessly vital implications for music discovery and which tracks acquire traction.
“There’s a elementary distinction that occurred with generative AI versus the earlier AI,” defined Söderström. “We had been [previously] confined to consumer indicators… reminiscent of skips, performs and saves. These are fairly blunt indicators. A ‘skip’ could possibly be a tune that you simply love, however you’re uninterested in it… [or] you’re not uninterested in it, but it surely’s the incorrect state of affairs.”
He mentioned this limitation is being overcome with generative AI. Spotify’s AI DJ characteristic exemplifies this transformation, with consumer engagement almost doubling during the last yr.
The DJ can now deal with complicated requests like: “Play me that tune 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 also 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 might have been unimaginable for us to grasp from listening information”.
For instance, customers can now problem 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 probably made attending analysts query a life spent learning the monetization of human loneliness.
Solely joking!
5. Spotify’s multi-format technique is driving larger engagement – however is it additive, or cannibalistic for music?
Spotify’s audiobooks enterprise continues to broaden shortly, with Söderström noting that Spotify now has “over 400,000 books” and not too long ago launched in Germany, Austria, Switzerland, and Liechtenstein.
In the meantime, the platform can also be seeing dramatic development 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 larger and better, rising 20x soonerthan audio-only consumption since 2024.
“Greater than 350 million customers have streamed video podcasts on our platform – a 65% enhance 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 info clearly reveals that the extra content material codecs that we ship for our customers, the extra engaged they grow to be,” argued Söderström.
“That is very true with the ‘tremendous customers’ who should not solely spending extra time but in addition extra days on Spotify.”
Spotify’s executives constantly framed this multi-format strategy as additive fairly than cannibalistic to music.
6. Spotify hints at increasing its controversial “market” mannequin that expenses 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 components together with “how we monetize {the marketplace} in music”.
This could possibly be a reference to Spotify’s Discovery Mode, a program that permits artists and labels to simply accept decrease royalty charges in change for elevated algorithmic promotion.
This system has confronted criticism from artist advocates and not too long ago gained consideration when it was talked about in Drake’s lawsuit in opposition to Common Music Group, with Drake’s workforce framing this system as a “pay-to-play” scheme.
Underneath 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 simply accept decrease funds to compete for visibility.
If Spotify is certainly planning to broaden its “market” mannequin, it may characterize a major shift in how the platform monetizes music past conventional subscription and promoting income.
Nonetheless, the corporate supplied no further particulars right now about what such an growth may entail.
7. Spotify, which killed iTunes with streaming… has determined it fairly likes paid-for downloads in any case!
Wanting forward, Daniel Ek sees vital potential in à la carte transactions, which may create new income streams for creators.
“You may think about à la carte transactions being a really huge potential driver for future income development,” mentioned Ek.
“We performed round with that in terms of books, as an illustration, the place it makes loads of sense for those who’re an writer for us to have the ability to promote books – however you can even think about new digital merchandise that we may doubtlessly introduce sooner or later as effectively.”
“We expect that the massive 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 standard music obtain – for instance, as a pre-streaming, solely windowed entry merchandise – could possibly 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 are able to additionally add a 3rd driver, which is à la cartetransactions.
“We expect that the massive 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.
In fact, it may additionally prolong to different unique content material and merchandise, too.
All eyes tilt in direction of that still-absent Spotify ‘Music Professional’ tier… and whether or not its arrival will come this yr, subsequent yr, or a time but to be decided.Music Enterprise Worldwide
