Spotify suffers loss after substantial investment in podcasts | Tech

In July, August and September, 456 million people listened to Spotify every month, a fifth more than a year earlier. This resulted in a 22 percent growth in turnover for the company to 2.6 billion euros, also aided by favorable exchange rate effects. But the operating result, ie before tax and interest payments, was 228 million euros negative. A year earlier, the operating profit was 75 million euros.

The gross margin was also lower than previously expected due to the difficult advertising market, especially in the European countries hit by the energy crisis. Spotify also expects pressure on margins in the fourth quarter.

Spotify spends a lot to attract a lot of listeners in the fast-growing podcast market. The streaming platform also wants to become a major provider of audiobooks. In order to further expand these relatively new activities, the company is making a lot of extra investments.

Operating costs rose by 65 percent in one year. In addition to the non-music-related activities, a lot of money is also spent on marketing personnel who have to sell Spotify in new countries where the company becomes active.

Those cost increases may be partially offset by a price hike for Spotify subscribers in the US, a move Spotify is reportedly considering now that competitors Apple and YouTube have recently done the same, the website Deadline reports. “If our competitors raise their prices, it’s good for us,” founder and CEO Daniel Ek said in response to the quarterly results. According to Ek, previous price increases in other markets have hardly led to a loss of subscribers at Spotify.