Spotify losses surge after getting ‘carried away’ with podcast spending binge

Music streaming app’s boss admits to overinvesting in expensive hosts as it plunges €231m into red

THE boss of Spotify has admitted he got a “little carried away” as a spending binge on new podcasts and expensive hosts drove the streaming service to a deeper loss at the end of last year.

Daniel Ek said his response to whether he regretted the investment drive was “no and yes”, insisting: “I still believe it was the right call to invest and I would do it again.”

But he added: “In hindsight I probably got a little carried away and overinvested relative to the uncertainty we saw in the market.”

The comments came as the Swedish company posted an operating loss of €231m (£203m) in the fourth quarter. This was far deeper than the €7m loss recorded in the same period in 2021, though it was less severe than the €300m previously forecast.

Spotify has poured billions of euros into its podcast operations in recent years, signing up stars including Joe Rogan and the Duke and Duchess of Sussex for lucrative multi-year deals.

But it is now battling a slowdown in the sector, while a looming advertising recession threatens to squeeze its margins further.

Spotify is racing to cut losses and has vowed to improve efficiency. Last week it said it was shedding 6pc of its workforce and announced the departure of Dawn Ostroff, chief content office.

Mr Ek said Spotify was exploring increases in subscription prices in 2023, following similar moves by both Apple Music and Amazon Music. Despite this, the platform reported strong subscriber gains at the end of the year, with its total monthly active users jumping by a fifth year on year to 489m.

This came after a 33m gain in the last three months of the year – its biggest ever increase in the fourth quarter. Premium subscribers – the company’s primary source of revenue – beat expectations to rise 14pc to 205m.

Overall, revenue in the fourth quarter grew 18pc to €3.2bn. Shares rose 12pc, taking Spotify’s market value to more than $21bn (£16bn).

Spotify forecast modest subscriber growth in the first quarter, with total monthly active users rising to 500m and 207m premium subscribers.

The company expects revenue of €3.1bn in the first three months of the year and an operating loss of €194m, including a charge of up to €45m from severance payouts.

It came as new figures showed the number of live music gigs in the UK has dropped by a sixth over the last four years as the sector reels from the impact of the pandemic and a deepening cost of living crisis.

There were 177,000 live performances last year, down by almost 17pc compared with 2019, according to the Music Venue Trust.