Spotify published their final accounts for 2022. This is not a text for the faint-hearted. They made a huge loss. This comes as no surprise. Spotify presented losses in every quarter. The operating loss amounted to €659m ($706m). The accumulated deficit amounts to €3 647m ($3 908m). You have to wash a lot of dishes to cover this bill. According to the annual report Spotify has 205 million paying (premium) users of a total of 489 million users, which makes 42 percent. The share of paying users has never exceeded 50 percent. Moreover, the tech market analysts have missed that the share of premium users is decreasing (it was 44 percent in 2021 and 45 percent in 2020). The freemium users grows faster than premium users. This isn't sustainable since costs grows faster than revenues. The conversion strategy (by providing freemium, users will upgrade to premium) is nothing more than a mantra. Who wants to invest in Spotify nowadays? Not many. The business share price has plummeted since the introduction in 2018. The annual report provides the following laconic comment in the fine print "We have incurred significant operating losses in the past and may not be able to generate sufficient revenue to be profitable or to generate positive cash flow on a sustained basis. In addition, our revenue growth rate may decline." In any other business the top management would be whipped, keelhauled and then forced to walk the plank. Not in this case. The management takes the opportunity to enrich themselves before the whole shithouse goes up in flames. In fact, their salaries gives the concept of overpaid a new and deeper meaning. Spotify management team is placed no 1, 2 and 7 on the list of the 10 people with highest salaries in 2022 (Sweden). Alex Norström, Chief Business Officer ($30m), Gustav Söderström Chief R&D Office ($28m) and Katarina Berg CHRO ($10m). Spotify have always prioritized growth before revenues. Now everything has come to a grinding halt. Spotify has found out that a company, sooner or later, must operate with efficiency. CEO Daniel Ek said: "I take full accountability for the moves that got us here today." Then he fired six percent of the staff in an insouciant way. In reality this means that he holds his staff, and not himself, accountable. This will not go down in history as a moment of inspiring leadership. Personally, I don't feel sorry for the people being laid off. They chose to work for an unethical and evil company that rips off musicians. Arithmetic is an elementary part of mathematics that consists of the study of the properties of the traditional operations on numbers. The four mathematical operations are addition, subtraction, multiplication and division. The key metrics speaks for itself. Top management needs to do the math.
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"Spotify key metrics and arithmetics"
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