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Spotify Continues Brawl With Apple

Spotify’s second ever quarterly report is strong for investors while also showing the battle scars of going against Apple and EU regulations.

Reported growth in users above projected rates gave investors confidence in the Swedish music streaming service.

Paid subscriber numbers for the past quarter rose to 83 million, one million more than projected and more than double Apple Music’s 40 million strong user base, representing subscription growth of 10 per cent.

Those numbers are on top of the service’s roughly 97 million free users bringing total subscription numbers to 180 million.

Despite never making a profit, Spotify’s domination of the music streaming market still has a fighting chance against Apple Music.

Apple has the home advantage in the United States, where they claim to be outperforming the competition with 40 million US subscribers versus Spotify’s 25 million.

Emphasising family plans has allowed Spotify to absorb more people quickly, though it has lowered the dollar value per customer by 12 per cent to 4.89 euros per customer.

Emerging markets have proved difficult for Spotify due to lower subscription fees in those areas.

The music streaming service had anticipated slower growth than they ended up recording, with revenue growth of 26 per cent to 1.27 billion euros.

While revenues are looking up, earnings per share took a beating, dropping 2.20 euros per share – significantly worse than the projected 0.68 euros per share.

Slumping share prices resulted in a net loss of 394 million euros and operating losses of 91 million euro.

Spotify pointed the finger at European data privacy rules that require explicit consent for using subscribers information as a limiting factor on revenue growth, though they were adamant that the costs associated with the transition are now behind them.

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