Family plans and other subscriber deals are causing tension between the company and creators.
At Spotify, "Our continued focus is on reaching more listeners, as ultimately this will translate into long-term value for our investors," said CEO Daniel Ek on an October 2020 earnings call.
The company's strategy has always been that growth comes before everything else — to the occasional frustration of creators, who are sometimes more interested in today’s royalty payouts than tomorrow’s valuation. On the same call, CFO Paul Vogel said, "For us, it has historically been about really thinking about growing users and subscribers first before worrying about the monetization part."
Some rights holders don’t like that. They’re less focused on how many subscribers a music service has than on how much money it takes in from each. That number is the average revenue per user, or ARPU, and it’s closely watched because of its direct relationship to royalties, which many creators wish were higher. In 2020, Spotify's global ARPU was $5.25 a month, of which it paid out about $3.90 a month to rights holders. That number is down 39.4% since 2015, when it was $8.66 due to a number of factors, including expansion in countries with lower prices, telecom bundling, student deals and family plans. When Spotify makes less per user, of course, so do creators.