A Crazy Number Of Spotify Users Were Cheating On Ads
Earlier this month, Spotify began cracking down on the unauthorized apps a fair number of members were using to access its services. These hacked apps essentially allowed users to enjoy the benefits of Spotify Premium without paying its monthly fee, which is obviously something Spotify would prefer to avoid. Today, Spotify is sharing just how many users managed to suppress ads while listening, and it isn't a small number.
As outlined in an amended SEC filing (spotted by Variety), Spotify says that 2 million users were using hacked versions of the app to suppress ads on free accounts. Normally, the only way to get rid of the advertisements Spotify injects between songs is to upgrade a free account to a Spotify Premium account, which costs $9.99 per month. These hacked apps did that without requiring an upgraded account, while at the same time opening up access to on-demand mobile playback, another perk of Spotify Premium.
On the surface, it may not seem like 2 million users is very many in the grand scheme of things. After all, Spotify recently said that it had 159 million monthly active users as of the end of 2017, so at 1.3% of its user base, 2 million users skirting the rules seems like a drop in the bucket. However, this discovery means that Spotify has to change its MAU metrics for the year at a crucial time, as it's just a couple of weeks away from going public.
Because of this fraudulent activity, Spotify will drop its MAU count for 2017 from 159 million to 157 million. Total number of content-hours streamed for the year will take a hit too, dropping from 40.3 billion hours of streaming to 39.8 billion – a 1.2% drop. The company notes in its SEC filing that other performance metrics for 2017 may be overstated, admitting that it doesn't have the "requisite data" to adjust them at this time.
Spotify's IPO is currently slated to go down on April 3. While these revisions are certainly a setback on the road to that IPO, Spotify remains the largest music streaming service around, with Apple Music considered its closest competitor. Spotify is hoping raise as much as one billion dollars in funding, and we'll see soon enough if it can hit that goal.