Struggling streaming Company Spotify who appear to be reluctant to deliver ‘premium CD quality music’ has delivered a $491 million dollar loss hours after announcing significant price rises for their lower quality audio streaming service.
The losses were put down to the axing of woke podcasts that forced job cuts.
Despite the losses the business did deliver a record number of new users signed up during the last quarter despite the Swedish Company refusing to outline a plan to deliver lossless CD quality audio similar to Tidal.
During a recent financial briefing Spotify CEO Daniel Ek was relatively mum on any new details for a “lossless CD-quality” streaming option which they actually announced in February 2021 but have so far failed to deliver.
During the company’s second-quarter 2023 earnings call, Ek did at least string together some words in response to a question about the possibility of a higher audio quality.
“HiFi remains something that we think has value,” Ek said. “But it has value to more aficionados in the streaming market. And we’re interested in, obviously, how we can use that as one tool to, in the future, increase our value even further.”
In plain English his statement appears to indicate that Spotify has abandoned taking on Tidal or even bothering to deliver premium quality audio or what they said they were going to deliver back in February 2021.
Spotify believe that there is little appetite for premium lossless CD quality audio.
There is a market for it — Spotify just has to make it make sense in terms of a business strategy claim observers.
Spotify is one of the few major services that lacks any sort of high-fidelity option.
Amazon Music has HD and Ultra HD options.
Apple Music uses its own Apple Lossless Audio Codec.
Tidal (albeit a much smaller service) has MQA and is working on FLAC.
Spotify says it finished the second quarter with 551 million total monthly active users, 220 million of which they claim are Premium subscribers.
The problem for the Company is that Podcasts were a fad with demand declining.
After investing heavily in an ambitious push into podcasts during the coronavirus pandemic, Spotify has retreated over the past year as investors have grown impatient with the strategy.
The podcast hit contributed to an overall loss of $491 million in the three months to the end of June, more than double what it lost in the same period last year.
The group’s revenues rose 11 per cent from a year ago.
Shares in Spotify closed down more than 14 per cent overnight in New York.
It remains under pressure from shareholders to curb costs.
Activist investor ValueAct in February purchased a stake in Spotify, arguing that costs at the music service had “exploded” as it built out its podcast business.
Chief financial officer Paul Vogel told the Financial Times earlier this year that podcasts were a “big drag on our business in 2022” and that “when things aren’t working, we will be quicker to pull the plug”.
