Audio streaming giant Spotify’s popularity is surging even as music publishers are demanding that thousands of unlicenced songs and podcasts be taken down from the platform.
On Tuesday, Spotify posted its first-ever annual profit. It reported net income of €1.14 billion (A$1.89 billion) for 2024.
Total active monthly users increased to 675 million, and more importantly its paid subscribers increased 11% to 263 million.
Spotify’s chief executive officer Daniel Ek said that for the first 16 years, the company wasn’t focused on “driving meaningful scale. We did not worry about profitability,” he said on a call with analysts, according to Bloomberg.
“Through cost reductions, but then also through the year of monetisation, I think we’re now proving that we’re a great business too.”
Spotify’s share price has been on a steep upward trajectory over the last year having shot up more than 178% over the previous 12 months, and 35% since the start of this year itself. It’s currently trading at around the U$621 (A$992.44) mark.
Ek noted that this year, Spotify can “pick up the pace dramatically when it comes to our product velocity. We’re going to double down on music, and we’re going to be disciplined doing it.”
But Spotify’s growth could face some challenges. On Tuesday, the National Music Publishers’ Association (NMPA) launched an initiative to force Spotify to take down unlicenced use of music in podcasts on its platform. The NMPA said that notices will be sent to remove thousands of unlicensed uses of NMPA members’ works including those from artists such as Taylor Swift and Kendrick Lamar to Michael Jackson and Prince.
It noted that 2,500 detections of infringement are included in the initial takedown notices, and indicated that there are more to come.
The takedown programme includes 19 NMPA member publishers such as Big Machine Music, Sony Music Publishing, Universal Music Publishing Group and Warner Chappell Music, among several others.
In a strongly worded statement, NMPA President and CEO David Israelite said, “Spotify has thousands of unlicensed songs in its podcasts, which it has done nothing to remedy.
“Podcasts are a growing source of revenue for songwriters and publishers, and it is essential that podcasts provide lawfully produced entertainment. This is not hard to do, and Spotify knows, and has known, how to fix this problem for their users.
“Spotify will stop at nothing to undervalue songwriters on behalf of its bottom line. Look no further than its recent bundling scheme and its ill-conceived appeal of songwriters’ rate increase in CRB III. We will not stop until the platform fixes its podcast problem, and all other areas where songwriters are not earning what they deserve.”
A spokesman for Spotify told the Wall Street Journal that it regularly receives takedown requests as it hosts millions of user-generated material. “As always, we will act promptly and, where appropriate, remove the episodes in question,” said the spokesman.
Spotify forecasts that in the first quarter, it will add 3 million monthly active users and about 2 million premium subscribers. Revenue is expected to rise from a year ago to €4.2 billion (A$6.97 billion) and gross margin will reach 31.5%, backed by its growing premium subscriptions.