Spotify stock jumped 19% in Monday trading as the company released its third-quarter statement. In the statement, the company reported an unexpected operating profit of 54 million euros, said the Verge.
This is the second time ever for the company to have a quarterly operating profit. Initially, experts predicted the company will have another operating loss in the third quarter.
How Spotify stock went up drastically
The company now has approximately 248 million monthly active users and 113 million of them are on the subscription program. This, plus the less money they spent in marketing might be the main reason for the unexpected profit.
Spotify has minimized the promotion of original content this quarter. And it has new features such as sponsored recommendations for artists that boost up its revenue from the other side.
The music streaming service is also planning on wider expansion. It is starting to enter the Indian market. For its Latin American and European users, Spotify has a new subscription plan called Duo. It is similar to the family plan where it requires users to be residing in the same address, but only for two.
These discounts and cheaper subscription plans are both potential and dangerous. While it can bring more revenue from the users for it, it also means another problem in the royalty payments for songwriters.
For Spotify which doesn’t have a fixed rate for per stream, the number of subscribers and how much they pay mean a lot. And it is not impossible for songwriters to pull off their music from the platform and choose other platforms.
Just like Netflix and other streaming services, Spotify is not the sole player in the industry. It is competing hard with other services such as Apple iTunes and Joox.
In addition, countries such as South Korea are almost impossible for Spotify to enter to. Furthermore, Samsung is also launching its own music streaming platform for Galaxy users.