By publishing its financial results for the full year of 2024, Spotify reached a major milestone: recording its first year of turning a profit. In the first six months of 2024, the streaming service had already generated 471 million euros in net income, raising this to more than 1.1 billion euro for the year.
This profitability is closely connected to the service's premium subscribers. Exhibiting a compound annual growth rate of 61 percent over 14 years, the service reached 265 million paying subscribers at the end of 2024. Based on company data and media reports, the Swedish streaming service came close to becoming profitable on an annual level several times before, for example in 2021. This was most likely due to the coronavirus pandemic and an increasing number of people staying home because of to social distancing rules, turning to digital services like audio and video streaming platforms.
Spotify CEO Daniel Ek claimed that his company improved on monetization due to price hikes in all major markets and expanding "subscription offerings to consumers who might be looking for different types of content". A less positively connotated factor contributing to Spotify's profitability are mass layoffs. In 2023 alone, the Swedish streaming service fired more than 2,300 people according to layoffs.fyi, reducing its workforce from around 10,000 to around 7,400. Spotify mentioned "lower personnel and related costs" as an income driver in reporting. The company is also known as a service that pays less than others to artists per stream.
Spotify's next goal, for the time being, is to reach one billion subscribers by 2030. Spotify has been growing by an average of 24 million subscribers per year since 2018. With huge markets like China unlikely to adopt the platform, TikTok most likely rolling out its streaming service to more markets soon and the world economy only recovering slowly due to ongoing crises, achieving this landmark number seems improbable.
