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Spotify is going all in on a bevy of new audiobook offerings. Noam Galai/Getty Images for Spotify
A staggering 3 percent of the world’s population now subscribes to Spotify. But the Stockholm-based streaming giant isn’t satisfied. Besides revamping its struggling advertising business and enhancing its music offerings with A.I. features, Spotify is betting that non-music content—like podcast videos and audiobooks—will help drive further growth.
The company’s shares fell more than 11 percent today (July 29) after it missed Wall Street’s expectations for its second-quarter earnings. Spotify reported $4.85 billion (4.2 billion euros) in revenue, up 10 percent from a year ago, though growth was hindered by unfavorable currency exchange rates. It also posted a net loss of $99.25 million (86 million euros) for the quarter, a sharp reversal from its $316 million (274 million euros) profit during the same period last year, citing elevated costs tied to personnel, professional services, and marketing.
Advertising revenue failed to provide a boost, dipping 1 percent year-over-year. “We’ve simply been moving too slowly, and it’s taking longer than expected to see the improvements we initiated to take hold,” said CEO Daniel Ek, attributing the advertising struggles to execution issues rather than flaws in the company’s broader strategy.
Spotify confirmed that the recent departure of Lee Brown, its former head of advertising—who this week joined Doordash as chief revenue officer—was part of this executive shake-up. “We felt it was the right time for leadership change,” Ek told analysts, adding that Spotify needs to “accelerate the transformation of this business.”
Still, soaring demand for streaming services continues to fuel growth elsewhere. Premium subscription revenue rose 12 percent in the quarter, with Spotify reaching 276 million subscribers and 696 million monthly active users—up from 246 million and 646 million, respectively, in 2024.
Spotify’s new A.I.-powered features are also proving popular. In May, the company launched Spotify DJ, a personalized A.I. assistant that offers music suggestions and takes user requests. Engagement with the feature has nearly doubled over the past year, thanks to improvements in how the technology interprets user prompts. For example, a query like “that song where Bruce Springsteen invites up that fan onstage in the music video” will now correctly cue up Dancing in the Dark, said Gustav Söderström, Spotify’s chief product and technology officer, during today’s earnings call.
Can Spotify find success outside of music?
Despite its dominance in music streaming, Spotify is doubling down on non-music content to drive future growth. “With video and books added on top of this, it just expands the opportunity even further,” said Alex Norström, Spotify’s chief business officer, during the earnings call.
Video consumption on the platform is now growing 20 times faster than audio, said Norström, who noted that 350 million users have watched video on the platform.
Audiobooks are another major focus. More than 350,000 titles are now available to eligible subscribers. During the past quarter, Spotify expanded its audiobook service to four additional countries. It also introduced Audiobooks+, a new subscription add-on that gives users extra listening hours each month.
Norström said these investments are critical to Spotify’s ambition to expand its global footprint. “It’s not implausible to imagine us reaching 10 [percent], or even 15 percent of the world’s population,” he said.
Though best known for audio streaming, Spotify says its broader content strategy has always been driven by user behavior. Its audiobook efforts began after it noticed that users were uploading books to the platform themselves. Similarly, the company’s move into video followed a rise in demand for video podcasts. “What Spotify has always done is we’ve just followed our users around,” said Söderström.
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