‘Every day now looks like the weekend’: Spotify has noted a change in listening habits during the Covid-19 pandemic.
On Wednesday (29 April), music streaming platform Spotify released its financial results for the first fiscal quarter of 2020, showing that its number of paid subscribers rose by 31pc year on year to reach 130m.
Despite the impact that the coronavirus pandemic has had on the wider music industry, Spotify said that its business “remains very healthy” with more users now streaming music from home.
The company’s total revenue in Q1 grew by 22pc year on year to €1.8bn, with revenue from premium subscriptions growing 23pc to €1.7bn. Although there was a decline in ad-supported revenue, the company has more than €1.8bn in liquidity and said that it expects to be free cash-flow positive for the rest of the year.
‘Every day now looks like the weekend’
While usage in cars, wearables and web platforms dropped last quarter, Spotify said that its TV and game console audience has grown in excess of 50pc over the same period.
“It’s clear from our data that morning routines have changed significantly,” the company said. “Every day now looks like the weekend.
“This trend was seen more significantly in podcasts than in music, likely due to the fact that car and commute use cases have changed quite dramatically.”
The company said that there has also been an increase in users listening to music that is likely to help manage stress, with a rise in searches for ‘chill’ and ‘instrumental’ content. There has also been an uptick in consumption of podcasts related to wellness and meditation.
Spotify CEO Daniel Ek said that notable music releases during this quarter included The Weeknd’s album After Hours, which debuted at the top of the Billboard albums chart, as well as Dua Lipa’s Future Nostalgia.
Impact of Covid-19
Looking ahead, Spotify expects to see premium subscribers in the range of 133m to 138m in the next quarter.
However, in light of the ongoing pandemic, the company has now reduced its revenue target for 2020 from between €8.08bn and €8.48bn to between €7.65bn and €8.05bn.
In March, the company saw deceleration across all sales channels as previously booked business was cancelled or paused, with programmatic buyers pulling back their spending.
Spotify added that it is “fortunate” to run a business that can operate with very little disruption, and its entire employee base has been working remotely. Although the company managed to hire in line with expectations for the latest quarter, the company will be slowing down hiring for the remainder of the year.
In its letter to shareholders, Spotify said: “We will continue to grow, and believe we are in a great position to invest in product and innovation. We also recognise it may be more challenging to effectively recruit and onboard given the inherent uncertainty moving forward.”
When Europe first began to feel the impact of Covid-19, Spotify said that it was affected in the Italian and Spanish markets with a “notable decline” in daily active users and consumption. This was followed by a rebound in many markets and the company said that “consumption has meaningfully recovered”.