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(Credit: Freguesia de Estrela)

Music

Spotify stops Car Thing production and incurs €31million charge

Since the entire debacle with Joe Rogan and the protests against Covid-19 misinformation, many users have decided to boycott Spotify, while others are tracking the emergence of alternative options. Recently, the company made headlines once again by choosing to stop the production of its in-car streaming service called Car Thing.

Although CEO Daniel Ek had described Car Thing as a “massive opportunity” last year, Spotify has halted the service’s development, resulting in a hefty €31million charge. This was revealed in the Q2 reports, where the company had an operating loss of €194million.

Initially, Car Thing was conceptualised as a stereo designed for streaming music and podcasts through Spotify. After multiple trials and public testing, Car Thing had a wider release in February, but the company has already decided that this service is not a viable option and has chosen to halt production instead.

While explaining the decision, Daniel Ek said: “We just can’t get it to an attractive economical profile. So we decided to terminate this program in light of that.” Another reason behind the downfall of Spotify’s Car Thing was the severe competition from other services offered by tech giants such as Apple.

CFO Paul Vogel commented: “First, we tested a number of price points, and we frankly haven’t seen the volume at the higher prices that would make the current product financially viable. Second, rising inflation and component costs, coupled with the expanded lead time needed to order parts, has significantly altered the risk-reward of continuing to lean into further product development.”

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