Spotify reports record profits of over €1billion

Spotify has announced record profits of over €1billion (£860m), following staff being laid off, subscription prices rising and costs being cut across the board.

READ MORE: Artists on the challenges of 2023 and hopes for 2024: “I just want to see us getting paid for selling records”

The growth of the company comes as streaming continues to dominate the music industry, and the platform has gone on to offer its subscribers access to podcasts and audiobooks too.

Currently, the Swedish company has around 615million users across the globe, and has invested a huge amount of money in growing the brand since its initial launch back in 2006. However, reports of the profit come following a year of the brand cutting costs and laying off staff.

Late last year, Spotify announced that it was cutting down 17 per cent of its workforce in order to save costs. That was after an earlier decision to lay off another 6 per cent of its staff at the start of 2023, which at the time it said was to promote “speed”.

Chief executive Daniel Ek said he made the “difficult” decision as economic growth has “slowed dramatically”. Spotify employs around 9,000 people, meaning 1,500 jobs were estimated to have been lost in the current round of layoffs.

It also comes following the news that the streaming service had officially demonetised all songs on the platform with less than 1000 streams.

The policy was launched on April 1 and came after the streaming giant released a report last year, Modernising Our Royalty System, in which news of the decision first appeared. The move has been planned by the platform for some time.

The application app of the audio streaming service Spotify can be seen on the display of a smartphone. (Photo by Silas Stein/picture alliance via Getty Images)

The new regulations come following months of speculation about new policies the streaming service would be introducing, including rumours that the company would be making it harder for artists to generate royalties from their music.

Although the platform currently stands with 615million users, this figure is down on its own forecast of 618 million for the quarter (via BBC). By the midway point of 2024, it aims to have 631million.

The outlet also highlighted how the number of premium subscribers rose by 14 per cent in the first quarter (up to 239million) and shares in the company reversed course to rise eight per cent in premarket trading.

Profits reported also come in light of recent news that the service would once again be raising the price of its monthly premium membership.

As confirmed earlier this month, the costs will be expanding by more than nine per cent. It comes after the streaming platform hiked its subscription prices for the first time last summer. At the time, the premium plan went up to £10.99 per month, up from the previous price of £9.99 monthly in the UK. In the US, the premium subscription increased from $10 to $11 monthly.

This time around, the subscription will be increasing to £11.99 in the UK and $12 in the US.

Many artists have been critical of the impact that streaming is having on today’s music scene, and shedding light on how the company is making it harder for artists to generate royalties from their music.

Among those voicing their concerns are Nine Inch Nails’ Trent Reznor, who said streaming has “mortally wounded” many artists, and James Blake, who recently claimed that “the brainwashing worked and now people think music is free”.

Trent Reznor at the Los Angeles premiere of “Challengers” held at Regency Village Theatre on April 16, 2024 in Los Angeles, California. (Photo by Gilbert Flores/Variety via Getty Images)

NME chaired an artist-led ‘Year in Music’ panel at the Featured Artist Coalition’s (FAC) 2023 End of Year Party, where a number of musicians spoke about these same challenges.

Murray Matravers, the frontman of the band formerly known as Easy Life, pointed out that the royalties that artists receive from streaming platforms is also severely hurting musicians’ income.

“I assumed as a naive young man that if we got to where we are now then I would be really, really rich,” he said. “That’s just not the case sadly. I just want to see artists getting paid for selling records. Wouldn’t that be good? That would be a good place to start.”

Many in the industry, including the FAC and the Music Venue Trust, called for a levy on tickets for gigs at arena size and above, and for major labels to pay back into the grassroots scene, amid a “disaster” facing live music.

David Martin, who represents the FAC, a trade union body representing musicians and artists in the UK, wrote to NME to outline the issues and to highlight potential improvements to the current system.

At the start of this month, it was reported by NME that a case had been made for a £1 ticket levy on all arena gigs to help aid the survival of grassroots venues and artists.

“The first impact we need to realise is that 125 communities that have lost access to live music on their doorstep,” Music Venue Trust CEO Mark Davyd told the UK government.

“The impact on those communities and the artists that live in those communities is very dramatic. The closure of a space like Bath Moles obviously has a huge impact on the pipeline, but it also has a huge impact on Bath as a music city. We need to recognise that across the country, we are seeing young people, communities of music fans, finding new music and live music further and further away from them.”

The report continued, revealing the economic impact of losing 125 music venues meant that artists have lost around 16 per cent of all opportunities to perform across the UK (around 30,000 shows) – as well as a loss of around 4000 jobs in total.

The Culture, Media and Sport Committee are considering the evidence, with results and policy advice expected in the coming months.

The post Spotify reports record profits of over €1billion appeared first on NME.

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