Spotify had its first ever profitable year; may have been assisted by Apple U-turn

Spotify achieved its first full year of profitability since launching in 2008. The company has previously had occasional profitable quarters, but consistently lost money each year.

Apple may have played a role in the company’s turnaround, thanks to a change introduced last year …

Spotify had long told investors that it was prioritizing growth over profitability, but switched tack in 2023 as it strove to turn a profit. Today’s earnings report reveals that the company has finally done so.

Today, we announced our fourth quarter 2024 earnings, closing Q4 stronger than ever by outperforming across key metrics and celebrating our first full year of profitability.

The company reported strong growth in both usage and premium subscribers.

Monthly active users grew 12% year-on-year to 675 million […] net additions of
35 million marked the largest Q4 in our history. Premium Subscribers grew 11% to 263 million.

One profitability factor may have been Apple’s decision to allow Spotify to display pricing within the iOS app within Europe, and to direct users to the Spotify website to sign up – avoiding Apple’s 30% cut.

In a major u-turn, Apple is now allowing Spotify to display pricing in the app – including promotional offers – and to direct users to its website to sign up.

The move comes three months after the iPhone maker rejected a a Spotify app update which did just that, and four months after the EU fined the company $2B for anticompetitive practices in its treatment of its streaming music competitor.

It was never clear why Apple blocked this given that it appeared to be permissible under the company’s music entitlement.

Photo by omid armin on Unsplash