Published: Tue, March 27, 2018
Tech | By Anita Cain

Spotify says two million users depend on unauthorized apps to remove ads

Spotify says two million users depend on unauthorized apps to remove ads

Spotify has restated key usage metrics for 2017 leading up to its IPO next month, claiming it recently discovered 2 million users had been accessing the free version of the streaming-music service using unauthorized apps that blocked ads. The 2 million users are said to be 1.3 percent of the current user base.

But millions of users have been bypassing the monthly fee of $9.99 to enjoy Spotify Premium service effortlessly by using old-fashioned ad-blocking applications. Spotify had around 86 million subscribers at the end of 2017, so two million of those accounts dodging restrictions makes up almost 2.3 percent of Spotify's free users. The music streaming service provider did not reveal the specific ad-blocking apps that are able to let users bypass ads on its platform. Spotify said the accounts are still safe but access from those apps would be disabled.

Spotify planned for direct listing on NYSE on April 3.

A week before its Wall Street debut, Spotify is painting a fairly rosy financial picture for the remainder of 2018, complete with double-digit increases in revenue and paid subscribers to go along with smaller losses.

Legitimate Premium subscribers make up 71 million of those.

Due to the number of "fraudulent" users, Spotify has reduced its monthly active user count from 159 million to 157 million. Content hours streaming a year ago is down by 1.2%- 40.3 billion from the previous data to only 39.8 billion hours of content.

The company has today also issued guidance for the first quarter of 2018 (ie. the three months up to end of March) which you can see below.

Spotify founder and CEO Daniel Ek has said repeatedly that the service's tough business model needs scale to become profitable. Apple last week announced it now has 38 million paying subscribers for Apple Music, a little over half as many as Spotify's reported year-end 2017 total.

We already knew that Spotify was trying to guide public attention to its platform growth rather than profits, as it looks to out-maneuver rivals such as Apple and Google.

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