- Spotify is ‘doubling down’ on its music offering in 2025, says CEO Daniel Ek
- That could include a long-awaited Hi-Fi tier for super-fans and audiophiles
- Critics of Spotify’s payment model say things could get worse for artists
Spotify is planning to “double down” on its music offering after reporting its first-ever full-year profit – but what exactly does that mean for subscribers?
As reported by Variety, Spotify CEO Daniel Ek praised his company’s performance in an earnings call this week, saying that “Spotify is not only a great product — it’s now also a great business,” adding that “We’re gonna double down on music in 2025, and I’m personally very excited about that.”
These days, the music streaming service boasts a total of 675 million active subscribers, 260 million of which are premium subs on the ad-free tier – helped, as ever, by an end-of-year publicity blitz through Spotify Wrapped that added 35 million new active users.
Analyst Jeff Wlodarczak expects Spotify’s operating margins to only increase further this year, too, with increasing subscriber growth alongside the company’s tighter monetization strategies.
Doubling down on music could be a great thing for subscribers, if they finally get a Spotify Hi-Fi tier to access better-quality, lossless audio – matching Tidal or Apple Music – which the company has promised for years.
I’d expect it to be a little pricier than the current Premium plan, which comes in at $11.99 / £11.99 / AU$13.99 for an individual subscription, likely twinned with additional perks and bonuses for big music fans – possibly getting access to certain tracks and albums before other users, or enjoying more personally curated playlists. It’s likely an easy way for Spotify to monetize heavy users while removing one big reason to switch to another lossless audio platform.
Spotify has focused a lot on its podcast business in recent years, possibly to the detriment of its music offering, but this latest pronouncement from Ek suggests the Hi-Fi tier might finally happen in 2025. It could also mean we get a cheaper, music-only tier which was teased back in 2024.
But is that the whole story here?
Where does the money go?
It’s been a big year for Spotify, but not all of its profit success comes down to increased subscribers.
The company also laid off 20% of its workforce in 2024 in an effort to gain tighter control of its finances, and introduced a few other cost-cutting measures that some consider to have been essentially passed on to artists and musicians to bear.
In early 2024, Spotify decided that artists attracting fewer than 1,000 streams per month through its platform would no longer be monetized. Given artists only receive $0.004 per stream, or $4 per thousand streams, it may seem like a small amount per person, but it also represents a huge cash grab away from those already struggling to gain any income from the service.
There was also reporting from last year claiming that Spotify was filling your recommendations with ‘fake artists’ from production companies that didn’t need the same level of royalties – effectively filling out playlists with sawdust so you didn’t notice the lack of bread.
Another feature, called Discovery Mode, also invites artists to reduce their earnings in exchange for being algorithmically pushed to more users.
Measures like these have helped Spotify move confidently into the green, but its plans to further increase its profit margin in 2025 – already built on reduced payouts for artists – are a real cause for concern.
This was the first year that Spotify Wrapped included an AI summary of user’s listening habits, and as AI music becomes more widespread, there’s a very real fear that this could be the next stage of helping to make Spotify more profitable, offering generated music that doesn’t require payment at all as part of various ambient music playlists, replacing streams from artists who need to be paid.
I fully believe that Spotify will “double down” on music – but I hope it means helping me double-down on the real artists I like, not Spotify doubling down on bringing its own low-cost music in to help keep the profits high.
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