Spotify earnings: encouraging podcast and premium growth
Spotify has announced its Q3 results, boasting “high level“ performance including strong MAU and subscriber growth.
Spotify earnings: encouraging podcast and premium growth
The media platform has been driven by the lockdowns, with consumption up and ad-spend recovering to higher than 2019 levels.
The Drum highlights some of the key points from the earnings call.
Premium growth
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Premium subscribers grew 27% in the first half of 2020 and 29% during 2019. Year-on-year growth of premium subscribers grew 27% to 144 million.
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A launch in new market Russia helped drive the growth, while a Google Nest Mini promotion in the UK and Canada also helped.
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Premium churn rate for the quarter fell below 4% for the first time.
User growth
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Analysts expected Spotify to hit 316m monthly active users. Total MAUs grew 29% year-on-year to 320 million, while Latin America and the Rest of World sectors continued to see the fastest growth.
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Netflix just had a slowdown, blaming an early pandemic surge which saw it acquirineg customers en-masse for thinning the pipeline. Taking a leaf out of Spotify‘s book, Netflix introduced a limited free tier to help attract a new line of subs. Similarly, Spotify‘s earnings read: “We believe summer demand may have been pulled forward into the March and April lockdown periods.“
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It saw a 13% increase in new music releases compared with Q2, led by Taylor Swift’s well-received folklore album.
Podcasts
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It has been bundling resource into its podcasts business, exhibiting impressive growth on the platform.
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Acquiring Gimlet, Anchor, and Parcast has helped to build out its first-party production.
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In May, it banked exclusive rights to Joe Rogan’s podcast. Prior to the deal, The Joe Rogan Experience was downloaded 190m times a week. It was the most popular podcast on Apple platforms last year, and his vodcasts on YouTube have garnered over 2 billion views to date. But Spotify now finds itself having to account for some of his regrettable output.
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The recently released Michelle Obama Podcast has been slightly less controversial. It also has a DC Comics partnership, and the first audio show will be Batman Unburied.
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To drive discovery it revamped its podcast charts experience to show users in 26 markets what podcasts are trending. It also announced a video podcast feature.
Revenue
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Total revenue: €200-€220bn.
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Premium revenue grew 15% year-on-year to €1,790m.
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Ad-supported revenue rebounded after the pandemic ad slump and grew 9% year-on-year.
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It said the rebound was led by the podcast and ad studio channels, both exhibiting double-digit growth.
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Gross margin finished at 24.8%.
Looking forward
Stephen Smyk, senior vice president of podcast and influencer marketing at Veritone One, urges attention to be paid to the podcasting business.
He said it is building a long-term solution for podcasting, and will continue to acquire celebrity shows, and genre-specific shows, to build its library.
He said: “Don’t be surprised when Spotify builds content-specific channels akin to terrestrial radio stations or satellite radio services that they stream directly to millions of consumers daily. Their vision for on-demand radio is grand and signifies a notable change to the broadcast consumption model we are used to.“
The platform shared how people behave and feel through their consumption of digital audio.