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Spotify slipped to a loss of 302 million euros in the latest quarter as the group ramped up costs to cancel podcasts and cut jobs, eclipsing the record number of new users signed up over the period.
After investing heavily in an ambitious push into podcasting during the pandemic, Spotify has tanked over the past year as investors have grown impatient with the strategy.
The company disclosed the cost of the rollback on Tuesday, saying it had incurred €91 million in expenses “related to efficiency efforts” such as depreciating real estate and paying severance pay to employees it fired.
The strike contributed to a total loss of €302m in the three months to the end of June, more than double the €125m loss in the same period last year. Group revenue increased by 11 per cent to 3.2 billion euros over the previous year.
Spotify has canceled a number of its original podcasts over the past year, including several true crime series during the quarter as it merged Gimlet and Parcast Studios.
While Spotify’s bottom line earnings suffered during the quarter, the company added 10 million paying subscribers and 36 million users overall. Over half a billion people – 551 million users – are now subscribed to Spotify around the world.
The strong growth shows that the subscriber slowdown revealed by Netflix, which led to a painful correction across US media stocks, did not materialize at Spotify.
Shares in Spotify fell nearly 15 percent in mid-day trading in New York.
Still under pressure from shareholders to reduce costs. Activist investor ValueAct in February bought a stake in Spotify, arguing that costs in the music service had “exploded” as it built its podcast business.
CFO Paul Vogel told the Financial Times earlier this year that podcasts were “a huge drag on our business in 2022” and that “when things don’t work out, we’ll be quicker to pull the plug”.
On Monday, the group said it was raising prices in the US, UK and several other countries. In the US, a standard Spotify subscription will now cost $11, up from $10 — the first such increase since it launched in the country more than a decade ago. The move comes after rival Apple Music last year raised its subscription price to $11.
On its website, Spotify explained the price hike as a move to help the company “continue to innovate in changing market conditions.”