Spotify has reported a jump in revenue for the second quarter, exceeding analysts’ expectations. This however has not stopped the Swedish audio streaming giant from discontinuing its dashboard accessory – the ‘Car Thing’.
Spotify saw a 14% jump in paying subscribers, with monthly active users reaching 433 million, exceeding the expectation of 428 million. Numbers are expected to reach 450 million in the third quarter. Premium subscriber numbers also saw a boost, sitting at 188 million, 1 million more than analysts expected.
However, Q3 2022 is worrying investors, as global economic worries may cause advertisers to lower spending, which would put a dent in Spotify’s revenue.
Spotify makes money via subscription fees from premium members, whilst free members are subject to ads between songs. Spotify says that ad revenue is still not the dominant source of income for the company but did report a 31% increase in ad revenue.
“While we do expect advertising to become a much bigger part of our business over the long term … it’s still a reasonably small amount of our revenue at only 13%,” he said.
Spotify reported a 23% increase in revenue as well, hitting 2.9 billion Euros $4.35 billion AUD) instead of the expected 2.8 billion Euros ($4.09 billion AUD.
However, alongside slowing headcount growth, Spotify seems to be culling projects it seems unnecessary to prepare for an economic downturn.
The company’s handy little Car Thing was launched as a cheap solution for those without Apple Car Play or Android Auto in their cars, allowing users to interact with Spotify via touch screen or the ‘Hey Spotify voice command.
“We saw a lot of great demand in the car with existing integrations and car manufacturers are waking up and offering better and better in-car solutions,” said Spotify CEO Daniel Ek.
However, Spotify has just confirmed that the convenient and comparably cheap little gadget is being discontinued, meaning us Aussies will never get our hands on them.
While the device was supposed to make its way down under for a price of $110 AUD, its development was plagued by supply chain issues and chip shortages, which meant it was exclusive to the US.
The device connected to a smartphone via a 3.5mm jack or Bluetooth and clipped simply and conveniently to a cars air vent on the dash.
Spotify has stated that as convenient as the Car Thing was, its intention was never to become a mainstream consumer product, but to help the company understand how users interact with Spotify in the car.
In a statement to TechCrunch, a Spotify spokesperson said, “The goal of Spotify’s Car Thing exploration was to better understand in-car listening, and bring audio to a wider range of users and vehicles.”
“Based on several factors, including product demand and supply chain issues, we have decided to stop further production of Car Thing units. Existing devices will perform as intended. This initiative has unlocked helpful learnings, and we remain focused on the car as an important place for audio.”
Spotify expects that paid subscribers will reach 194 million for the current quarter, and revenue to hit 3 billion Euros ($4.38 billion AUD), above estimates of 2.95 billion ($4.31 billion AUD).
