Spotify said that about 2 million of its users have been accessing the ad-free version of its music-streaming service by using unauthorized apps, highlighting a potential revenue risk for the soon-to-be public company.
The freeloaders — who represented 1.3 percent of its previously reported total user base — are still using third-party apps to gain free access to Spotify’s premium service, the Swedish-based company said in a regulatory filing on Friday.
Spotify warned that the freeloaders may result in “key performance indicators” being “overstated” which “could cause our stock price to drop significantly.”
The news comes as Spotify earlier this week filed for a non-traditional direct listing of its shares on the New York Stock Exchange. The direct listing, slated for April 3, will allow investors and employees to sell shares without Spotify raising new capital or hiring a Wall Street bank or broker to underwrite the offering.
The company had 157 million active users as of Dec. 31, of which about 71 million were paid subscribers who access ad-free versions of the service, according to its website. (NY Post)