Swedish audio streaming platform, Spotify, plans to reach a target base of 50 million by next year for its audio creators, Paul Vogel, CFO, said, as he spoke about the company’s audio-first strategy. Vogel was speaking at the 2022 Morgan Stanley technology, media and telecom conference. Spotify, which currently has 11 million audio creators, is focusing on creating tools to help creators monetise services through podcast, advertising, merchandise and ticketing.
The audio streaming platform has 406 million monthly active users (MAU), including 180 million premium subscribers, across 184 countries and territories, as per its 2021 annual earnings report. For Vogel, the goal is to touch a billion users. “When it comes to audio streaming, only 50% of the market has been explored in most of the countries, leaving the remaining 50% open. Hence, we still see a big opportunity in North America and Europe. While the category has a miniscule presence in markets such as South-East Asia, LATAM in continents such as Africa, there is zero presence. These markets present a huge opportunity to us, therefore, giving us a long runway for growth in terms of users,” he said, adding that India is a strong market for the company.
Interestingly, premium users account for the majority of the revenue, advertisement revenue has seen an incremental rise last year. According to Vogel, premium subscribers account for nearly 90% of the company’s overall revenue, while the rest 10% came from advertisements. However, this changed in the last year as advertisements as a revenue stream gained momentum and is touching nearly 20%. The ad revenue saw an increment in past years due to a rise in the ad inventory. To give an example, advertisements accounted for nearly 50% of the revenue in Q4 2021. “For us, free/ad supported content was a way to translate users towards a premium subscriber base. However, now as music is growing, and podcasts are gaining traction, we realised that advertising can be a real significant driver of growth for us,” Vogel highlighted.
It is to note that the company clocked €9.6 billion in revenue. Of this, €1.2 billion was accounted by advertisements while the remaining €8.4 billion came from premium subscribers.
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