Spotify’s recent earnings highlighted a new challenge facing the Swedish streaming giant: maintaining growth. While the company beat Wall Street expectations for the first quarter — the first fiscal period under new co-CEOs Alex Norstrom and Gustav Soderstrom — sales forecasts fell short of analyst estimates, sending shares down nearly 12 percent today (April 28). As the new leadership plans the next phase for Spotify, it is leaning heavily toward expanding the platform beyond music, betting that the broader content ecosystem can lead to deeper engagement even as growth shows signs of strain.
This strategy was on display yesterday (April 27), when Spotify unveiled a new fitness hub that offers users free and premium access to workout playlists, guided sessions, and more than 1,400 Peloton classes. The move builds on its significant expansion into audiobooks, podcasts and now fitness, with the aim of increasing user retention and time spent on the platform.
The fitness push reflects how users already interact with the platform. “Hundreds of millions of playlists are being created to do yoga, go to the gym, etc.,” Norstrom told analysts on a call today. “This is doubling that trend.”
Spotify users have organically created more than 150 million workout-centric playlists, and 70 percent of paying subscribers work out monthly, according to the company. The new hub builds on existing fitness content, including classes uploaded by independent trainers using Spotify’s ad-free video tools.
“If you think about it, this is really what we’re doing: We’re using our platform to fill demand between creators — like a fitness coach — and users,” Norstrom said, noting that he personally uses Spotify for podcasts, classes, and audiobooks while playing tennis.
In the January-March quarter, Spotify reported revenue of $5.2 billion, up 8 percent year over year. Monthly active users rose 12% to 761 million, and premium subscribers increased 9% to 293 million. But despite these gains, the results were overshadowed by weaker than expected forecasts. In February, the company increased the price of its monthly subscription from $11.99 to $12.99 in the US.
Spotify is within a dual CEO structure
The dual CEO structure divides responsibilities between strategy and product. Norstrom, who has been at Spotify for 15 years, oversees business strategy, while Soderstrom, who has been with the company for 17 years, focuses on product development. Central to their approach is a multi-format content strategy powered by AI-driven features.
Many of these tools are gaining traction. Spotify DJ, which offers personalized, voice-guided music recommendations, is approaching 100 million users. SongDNA, an AI feature that provides contextual information about audio clips, reached 52 million users within weeks of its launch.
More recently, Spotify introduced a feature that allows users to view and edit their “taste profile,” which is an algorithmic snapshot of their preferences. The tool allows listeners to effectively drive recommendations by identifying what they do or don’t want to hear.
“These features point to something bigger: moving from a world where Spotify recommends things to you, to a world where you actively shape, guide, and interact with our platform,” Soderstrom said. “This level of granular control empowers users like never before.”
This increased flow of user input has become a major asset. “Now people tell us, in English, that they’re going for a run and they want this BPM and this rhythm and so on,” Soderstrom said. “We have this treasure trove of data that we capture and train on, and that creates a unique advantage for us.”
