Spotify’s focus on premium pays off

Image credit: Chartr

As if more evidence were needed that paywalls and premium content are the way forward for many digital media companies, Spotify has provided another strong use case.

The graphic from the Chartr newsletter shows how much more profit the audio-streaming giant earns from its smaller number of premium subscribers than from free users.

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Just about 40% of Spotify users pay for the service, but since 2017, they have provided 97% of the company’s gross profit.

Premium users have accounted for 11.9 billion euros (US$12.9 billion) of gross profit, compared to just 400 million euros (US$434 million) from advertising to free users.

No wonder the Swedish company is reportedly doubling down on its premium offering with a more expensive tier.

Spotify recently laid off 200 employees as part of an attempt to pivot how it approaches podcasting.

Currency converted from euros to US dollars: 1 euro = US$1.08