Spotify hits all-time high advertising revenue mark of $538 million in Q4 2023, amid cost cuts
While "The Joe Rogan Experience" is leaving its Spotify exclusivity after three years, the platform will continue managing its distribution and ad sales, expanding its reach beyond Spotify users.
Spotify had a better 2023 Q4 than expected as its premium subscribers increased by 4% over the last quarter to 236 million and its total number of monthly active users rose 5% to 602 million.
The announcement came as part of its fourth-quarter earnings release, which covers the three months ending on December 31st. Throughout 2023, Spotify’s users and premium subscribers grew by 113 and 31 million, respectively, setting records for the company.
Spotify ended 2023 with a mixed bag of financial strategies. The world's largest audio streaming service implemented cost-cutting measures, including laying off 17% of its workforce (over 1,500 people) in December. This marked the third round of layoffs in 2023. Additionally, Spotify raised prices in the US and other markets, most notably increasing the monthly cost of a Premium subscription from $9.99 to $10.99, the first price hike in over a decade.
The streaming giant's quest for efficiency yielded mixed results in Q4. Despite posting a €70 million loss compared to a Q3 profit of €65 million, it marked a significant improvement over the €270 million loss in Q4 2022. However, the annual net loss reached €532 million.
On the bright side, average revenue per user (ARPU) continued to climb, reaching €4.60, up from €4.34 in Q3 and €4.55 in Q4 2022. Additionally, advertising revenue hit an all-time high of €501 million in the quarter, showcasing growth in this area.
Spotify's audio ambitions extend beyond music, with podcasting and audiobooks seeing strategic shifts in recent months. Instead of chasing exclusive podcast rights, Spotify is now aiming for wider distribution to expand its audience reach. This shift is evident in their renewed deal with Joe Rogan, host of the platform's most popular podcast.
While "The Joe Rogan Experience" is leaving its Spotify exclusivity after three years, the platform will continue managing its distribution and ad sales, expanding its reach beyond Spotify users. This new strategy emphasizes growth through wider accessibility rather than exclusivity.
“We have doubled down on the [podcast] deals that worked, and have gotten out of many of the deals that didn’t work,” Spotify CEO Daniel EK said on the earnings call. Ek shed light on their evolving podcast strategy, explaining that exclusive deals weren't ideal for advertising and creators preferred wider reach.
"With non-exclusive deals," Ek emphasised, "we truly align with creators' goals."
