Spotify Presents An Evening With Trevor Noah, Celebrating 'What Now? October 18, 2023 in New York ... [+]
Spotify beat first-quarter earnings and revenue estimates this week, returning the 18-year-old company to profitably. Following mass layoffs in 2023 and increased service prices, the audio giant reported 3.6 billion euros ($3.9 billion) in first-quarter revenue and a gross profit of 1 billion euros ($1.08 billion).
Immediately following the first-quarter earnings morning announcement, Spotify’s stock rose nearly 17% to $318 per share by the afternoon. As the publicly traded company draws increased attention, sustainable growth through product innovation, equitable people management and creative marketing will be essential.
Spotify now has 615 million total monthly active users and 239 million premium subscribers, For context, the company had 96 million paid subscribers four years ago — delivering on the promise to make 2024 the year of monetization.
“Now as we’ve shifted to focus on strong revenue growth and margin expansion, we see a clear opportunity to ensure we are also continuing to grow the top of our funnel,” said Spotify co-founder and CEO Daniel Ek during the earnings call. “I feel good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we’ve outlined.”
In 2019, after Spotify heavily invested in an audio-first growth strategy with a focus on the podcasting business, the company also doubled down on its technology roots, iterating on product offerings and enticing new audiences through personalized playlists: Your Daily Drive and the Disney Hub, while ramping up strategic media podcasting partners.
Audiobooks Give Users More Listening Options
Outside of music on Spotify where mega-artists like Taylor Swift are breaking records with 1 billion streams in a week, the other side of the audio business stays active. The latest paid offering: audiobooks, launched in November as a win to some–an alternative to Amazon’s
With over 200,000 audiobooks on the platform, the company saw 25% of paid subscribers in Australia, Canada, and the U.S. try the audiobook feature which comes with 15 hours free per month. There are plans in the works to charge more for the audiobook feature in the future.
Podcasting Sees Some Improvement
With improved podcasting ad revenue, Spotify’s early bet on audio seems primed for growth although it does not come without consideration for the human side of doing business. Sizeable decreases in headcount across the podcasting organization in 2023 (and across the wider technology industry) slowed down podcast product development and marketing efforts, putting more pressure on podcasters and celebrity hosts to drive interest while pushing remaining teams towards more creative storytelling.
Spotify for Podcasters, the creator-facing brand resource for podcasters, worked to demystify analytics, onboard more creators, and maintain a calm and collected social presence.
Spotify Further Embraces The Video Format
Video is taking a front seat as a way to innovate and compete with other creator-centric platforms like YouTube. Music videos launched this year on Spotify which is not surprising after the 2023 TikTok-style discovery feed revamp and many top-billing podcasts like Call Her Daddy hosted by Alex Cooper and What Now, hosted by Trevor Noah, also have complimentary video.
A compelling feature if used effectively and in lock step with user behaviors, video could breathe new energy into the audio streaming platform if marketed in an authentic way to niche audiences. YouTube, the leader in streaming video has a chokehold on the video category due to the amount of content available and its over 2 billion monthly users.
As Spotify continues to strike a sustainable rhythm in the streaming landscape with its new found profitably, staying true to innovative technology roots, prioritizing thoughtful people management and finding authenticity through marketing may edge out competition.
