CEO Daniel Ek says Spotify will invest in experiences via its video function, as the streaming giant looks to “set the pace, not play follow the leader”.
Spotify has named 2025 its “year of accelerated execution”, after the music streaming giant cut marketing spend by 9% in 2024.
The business spent €393m (£326m) on sales and marketing during the three months to 31 December 2024, versus €432m (£359m) during the same period in 2023. Over the full year period, Spotify invested €1.49bn (£1.24bn) in sales and marketing, down from €1.72bn (£1.43bn) over the same period in 2023.
Speaking in July last year, CEO Daniel Ek explained Spotify was “correcting” a decision to pull back “too significantly” on its marketing spend in 2023, with new funds being channelled towards “enhancing” the user base.
At the time, Ek told investors the business had no intention of returning to previous levels of marketing investment, explaining new funds would be directed towards “acquiring and reactivating high value users”.
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Despite the drop in marketing spend, Spotify saw a 12% year-on-year increase in monthly active users to 675 million during the fourth quarter. The number of ad-supported users also rose 12% to 425 million in Q4, with premium subscribers up 11% to 263 million.
Having described 2024 as the “year of monetisation”, Spotify saw its Q4 gross profit rise 40% year-on-year to €1.37bn (£1.14bn). Premium revenue grew 17% to €3.7bn (£3.1bn), with ad-supported revenue up 7% to €537m (£446m). According to Ek, this performance was driven by “a continuous system of innovation”.
Speaking to analysts yesterday (3 February), Ek said 2025’s focus on accelerated execution will involve Spotify “moving even faster” on improvements to the service.
“The landscape is shifting constantly and I want to set the pace, not play follow
the leader,” he said.
Acquisition and retention
Spotify plans to invest in more music experiences on the platform, particularly through its video function. The platform boasts more than 330,000 video podcasts globally and over 270 million users have streamed at least one.
To drive the next wave of subscriber growth, Ek pointed towards increasing engagement in developing markets.
“I feel really good about some of the music things we’re planning across the year, that will drive even further engagement in those emerging markets,” he explained.
“When we have very strong engagement, it typically then always correlates with strong conversion to subscriber growth. You should expect more of the profitability growth to come from developed markets rather than emerging markets. Over time, we feel very confident places like India and others will be substantial businesses to Spotify.”
In addition, Spotify’s annual ‘Wrapped’ campaign drove monthly active user and subscriber growth. More than 245 million users engaged with the campaign, surpassing 2023’s record within the first seven days.
However, co-president and chief business officer, Alex Norström, admitted Spotify did change the experience and despite the successful engagement, the company did receive feedback more creativity is wanted from 2025’s iteration.
