Spotify is going public next month, and today is the Spotify investor day where its key executives outline its pitch to potential shareholders ahead of the listing. Unusually, Spotify is streaming the event live to anyone who wants to watch.

The event is expected to last two hours, starting at 1pm Eastern-time. Music Ally is here with a keyboard, a cup of tea, and Lady Gaga’s 2009 Poker Face royalties* in case we need to order pizza in (small, no extra toppings or garlic bread) to fuel our liveblog of the key points. (*since debunked)

Read on, and refresh for new updates, which will appear at the top.

2.50pm: The final question: how important is growing the ad-supported tier for Spotify? “I’d be thrilled if we could double the revenues as a percentage of total. It remains to be seen if we can do that,” says McCarthy. “There’s an $18bn ad market in the US and it’s bigger globally. And in the US, the labels get paid nothing for radio play. Someone in streaming is going to eat that marketplace, and the labels are going to make a lot of money,” he says.

“We need to have a better user experience for free, which we’re working on constantly, both from an R&D perspective and a licensing perspective. And we need to continue to be forward-leaning from a tech perspective, which we have done.” And that’s a wrap!

2.49pm: A question about Spotify’s partnership with Chinese company Tencent: could the two companies go together to the labels to negotiate, and drive down the licensing terms? Ek says not. “Our view is that the Chinese market isn’t necessarily very favourable to western companies… so our view was we wanted to get exposure to that growth,” he says. “We viewed it strictly as a financial investment. Of course we’re trying to learn from that business, as they’re trying to learn from what we do… but that’s the extent to which there’s a partnership.”

2.46pm: Ek is talking again about Spotify’s future margins. “The path to achieving greater gross margins in the future is the platform business,” he says, denying that it’s about a two-yearly ‘Hail Mary’ moment in licensing negotiations with rightsholders.

“The platform is large enough now that we can systematically start building tools and services that labels, publisher and everyone else in this ecosystem will want to use. That drives efficiencies for them, which in turn is a business opportunity for them and for us… The music industry today is quite inefficient when it comes to breaking artists and promoting artists… We think there’s a tremendous opportunity in connecting these three million artists that we have today with these 160 million-plus users that we have.”

Meanwhile, McCarthy suggests that the music-streaming opportunity is “incrementally larger than video”.

2.43pm: The next question asks about raising prices: something Netflix has done but Spotify hasn’t. Could that be part of its future strategy? “I disagree with the premise. I don’t mean to be so argumentative!” says McCarthy. He says that between 2002 and 2010 there were a couple of price decreases for Netflix, and one increase that was swiftly withdrawn.

“I would argue that effectively there was a price decrease, because there was constant pricing with frequent improvements in the quality of the service,” he says. “Early in the life of a new market, and particularly because of the scale advantages… the smart strategy for us, and I think Daniel and I are aligned here, is to play the market-share game.”

Will there also be any Netflix-style direct relationships with artists to create and release music? Ek says it’s a “fallacy” that Spotify has to go down that path. “Our view is that this is not about negotiating leverage. It’s about creating a platform… It can be used by major labels, independent labels, do-it-yourself artists. And when presenting that vision to labels, they’re very excited.”

2.40pm: We’re nearly there! It’s Q&A time with McCarthy and Ek for 15-20 minutes. The first one asks about churn – which is around 5% a month – and why that’s so high, even if half of them come back within the next 12 months? Ek returns to the youthful age of Spotify’s subscribers: “When you look two, three, four months down the road, we see a good chunk of them returning to the service. And a lot of this is reasons like insufficient funds,” he says, noting that this is particularly the case in some emerging markets, like south east Asian countries.

McCarthy chips in: “I reject the premise that it’s so high,” he says, suggesting that Spotify’s quarter-to-quarter churn rates match and even surpass what he saw in his last job at Netflix. he also talks about payment issues: “There’s a lot of recycling of churned subs… I think the model works pretty well.”

2.33pm: McCarthy says the “acid test” of Spotify’s business is the LTV to SAC ratio: the lifetime value of a subscriber to the subscriber acquisition cost: if they are €25 and €9 respectively, then the LTV/SAC ratio is 2.77.

He moves on to operating goals. “Between growth and profit, you should expect us to manage for growth,” says McCarthy, suggesting that this strategy will enable Spotify to get the scale to – and this is a phrase he used several times – beat rival services “like a drum”.

2.30pm: McCarthy talks about the freemium model’s impact on Spotify’s economics. “Some of you are looking at me thinking ‘Okay dude, are you kidding me?’… It took me a while to realise that the free service is also a subsidy program that offsets the costs of subscriber acquisition,” he says.

50% of Spotify’s monthly active users become paying subscribers, he adds. “Once a free user converts, it takes us an average of 12 months to recoup the cost of acquiring that subscriber. The longer they stay, the greater their lifetime value to Spotify,” says McCarthy, outlining two key points. “One: the faster we grow new subscribers, the more money we lose when they join the service, particularly in seasonally-fast periods of growth. Two: the longer they stay, the more profitable we become.”

2.25pm: Now it’s time for chief financial officer Barry McCarthy, formerly of Netflix, to talk about Spotify’s finances: the first time he’s spoken publicly since leaving the video-streaming service. He begins with a basic reminder of the stats: still a mostly US and European business, with 32% and 37% of its listeners in those territories respectively.

“Growth of course has pressured our operating margins, and you should expect us to continue to invest in growth,” he warns analysts, while showing a slide of Spotify’s growth to €4.09bn in revenues in 2017. Gross margins are improving too: thanks to new licensing deals with music rightsholders, gross margins rose from 14% to 21% in 2017. “The labels were acting in their own self-interest to shore up Spotify’s economically-challenged margins,” he admits. But also: “Scale can be a great enabler of margin expansion.”

2.20pm: She describes Spotify as a “credible and brand-safe platform” for advertisers – phrasing that surely isn’t accidental in its contrast to brands’ recent collywobbles over some of the content on YouTube.

Then Brian Benedik, global head of ads monetisation, replaces her, to talk about Spotify’s 92 million free users. “Mobile streaming is what’s fuelled our audience growth: it’s eclipsed desktop as our greatest streaming platform,” he says. Mobile and connected devices are now generating 73% of streams for Spotify, up from 45% in 2014.

3.15pm: Danielle Lee, global head of partner solutions, is now on-stage to talk about Spotify’s free, advertising-supported tier. “Music is like a mirror: it provides a rich and textured data set, because it’s personal, uniquely reflecting how you’re feeling and what you’re doing… It matters because context is everything to advertisers,” she says.

3.13pm: “Premium users stream on average more than 80 minutes of content per day,” adds Norstrom, who also talks about users’ willingness to recommend Spotify to friends and family, and the overall cycle on the service. “New free users explore the product, habits are formed, engagement goes up, and at some point they join premium, then with more control and even more personalisation, engagement goes up again. This results in satisfaction and word-of-mouth that in turn drives new user intake. And BOOM… This cycle enables us to grow quickly.”

Now some more on potential growth ahead. “There are 1.3bn payment-enabled mobile phones in use, yet only 12% subscribe to a music subscription service… Spotify owns half of that existing 12%. I think you can see the potential… We estimate our total addressable market to grow to three billion in the future… The wind is at our back… And nobody else, nobody, has our scale.”

3.08pm: It’s now time to talk subscriptions with the head of Spotify’s premium business Alex Norstrom. “We are the only streaming service that is truly platform-neutral,” he says, before talking premium growth. “We have been adding 10 million net subscribers every six months in the last two years… but we’re just getting started.”

The 60% stat gets another airing – the percentage of Spotify subscribers who started on the free tier: “This freemium model is a key differentiator. Not one of our major competitors have a free product like this,” he says. Deezer may have something to say about that, although how Spotify defines ‘major competitors’ is the key, of course.

Norstrom talks about Spotify’s $4.99-a-month student plan, which he says has been a roaring success in terms of retention. Meanwhile, the $14.99-a-month family plan “also has exceptional retention: and just as important, when paying customers add family members, typically they go straight to premium. And many of these users are younger users who then grow up using Spotify, and have high lifetime value”. Even if they are bringing the average revenue per user (ARPU) down.

3pm: He plays the exclusive vertical-video that Sam Smith shot for Spotify, as well as showing the billboard ads that Spotify paid for in London to promote the release of his last album. But Carter is keen to stress that Spotify is also “breaking artists at the speed of the internet”, citing examples like Gashi, who has 2.1 million monthly listeners, with 70% of his new fans having first heard him on Spotify’s programmed and algorithmic playlists.

“Our editorial process is a unique meritocracy in an industry that was once controlled by just a handful of gatekeepers. And it’s a win for both sides… Artists and labels are beginning to realise that we’re much more than just distribution,” says Carter.

He also returns to the data aspect. “We know which audiences want to hear which music, and how to get it to them,” he says. “Genres like K-Pop are no longer just restrained to Korea.” K-Pop band BTS now have 4.5m monthly listeners on Spotify, including in countries like Brazil. “Our editors took their Korean language and set it next to some of the biggest pop songs in the world, and exposed them to millions of new listeners,” says Carter.

Note, YouTube has also claimed credit for BTS’ global growth in recent times: they’re far from a single-platform success story.

2.50pm: Troy Carter takes the stage, having shifted from his work in management with artists like Lady Gaga and John Legend to a role as global head of creator services at Spotify. “The first era of Spotify was really about the consumer experience… but on the creator side, the experience wasn’t quite understood,” he says, showing a slide including a headline from Taylor Swift pulling all her music from Spotify.

“We really didn’t do a great job at explaining to the industry that the labels and the artists how important Spotify was. To me this was really just a misunderstanding that could be fixed through direct dialogue and some relationship building,” says Carter. “Today, most of the artists’ reservations about Spotify have been addressed… These days, superstars, major labels, independents, developing artists, they all work with us. And they’ve really found a committed partner in Spotify… In some instances we’re even serving as their creative partner.”

The ‘reservations have been addressed’ quote may be one that sparks some debate in the coming hours:

2.45pm: Hellman talks about Spotify for Artists, with its analytics tools showing artists and their teams how they’re being listened to, and the ability to highlight songs and playlists on their profiles. He talks about British artist Lucy Rose touring Brazil after seeing her listenership grow there; about US artist SZA’s International Women’s Day promotion; and Lil Pump’s on-platform mobile ads promoting his debut album, which popped up on fans’ smartphones.

“Over 30% of everyone who saw the promotion clicked through, driving over a million streams for a debut release,” says Hellman. He also talks about the ‘Fans First’ program where artists can offer pre-sale tickets to concerts to their keenest fans on Spotify. “Through these targeted campaigns, in 2017, artists sold more than one million concert tickets.”

Hellman also flags up Spotify’s acquisition of online-studio Soundtrap, which it’s continuing to invest in as a tool for musicians to make “professional-sounding content”, as well as its work on new visual tools for artists. “We’re building new formats that exist only within Spotify. We’re starting to give artists the capability to add visual layers to heir music. Not just cover art, but a dynamic experience that they program for their fans as the music plays.” We reported on this recently.

2.38pm: Ek is replaced by Troy Carter and Charlie Hellman from Spotify’s artist relations and tools teams. Hellman first, with his pitch for “a music meritocracy, where an artist’s success depends on how they connect with fans, not how they connect with gatekeepers.”

2.36pm: Ek: “Spotify is really a very different service than it was even just a few years ago. Until recently Spotify was more like a search box. Listeners had to come to us and know what they wanted to listen to… Today, Spotify is much more powerful.” And he cites the 30% of listening coming from Spotify’s playlists stat again.

He talks about this “putting Spotify in control of the demand curve” – that’s quite a phrase for labels to parse, isn’t it? – that’s having a “staggering” impact. 10bn ‘discoveries’ – artists listened to for the first time by a listener – happen every month, and 5bn of those are driven by Spotify’s programming.

“Making it onto one of our playlists can literally change an artist’s life, and the global appetite for Spotify’s playlists is only increasing,” continues Ek. He compares Spotify’s big playlists’ audiences to traditional radio stations.

“We don’t believe in gatekeepers. We’re simply providing more outlets for artists and labels to build their audience,” he says. There’s an interesting subject to explore here: can you be “in control of the demand curve” with your programming without becoming a gatekeeper?

2.30pm: Daniel Ek is back on-stage, talking about perceptions of the music-industry as controlled by a few “gatekeepers… There really isn’t a clear roadmap: there’s no transparency, there’s really no guide to help artists unlock the keys to success. At Spotify, we really don’t think it has to be this way,” he says. Oof!

“We believe the solution is pretty clear, but it’s a goal that would not have been possible in the old industry. To succeed, we have to help more artists connect with more fans… The solution is software. And we excel at software.” He says this is an ecosystem is accessible, transparent and democratic, and not about “picking winners”.

“The general perception of Spotify is that it’s only a few artists and a few big labels that matters. Bit something very powerful is happening: its ‘top-tier’ artists – the ones who account for the biggest streams and revenues – have grown from 16,000 to 22,000 between 2015 and 2017. “My goal over the next few years is to increase that to hundreds of thousands of creators who have material success on our platform,” says Ek.

2.11pm: Time for a ten-minute break. Some thoughts on the event so far:

  • Spotify will go public on 3 April, and will announce its latest financial guidance a week before that on 26 March.
  • Daniel Ek confirmed that Spotify is working on launches in India, Russia and Africa.
  • The repeated stress on Spotify being ‘discovery’ and its rivals just ‘access’ is interesting. It was one of Jimmy Iovine’s key criticisms of Spotify (and, indeed, all non-Apple streaming services) when Apple Music launched: that it was just a ‘utility’ providing access to music rather than true discovery. Spotify is now turning that back on Apple and the other services.
  • Data is also a key part of the pitch: boasts about having “over 200 petabytes of data…more than five times the amount of music data that our nearest competitor does” thanks to Spotify’s sheer scale, and that “the distance to the competition is actually only increasing” on this front.
  • Spotify’s lack of its own hardware can be seen as a weakness: it’s a hostage to the policies of Apple, Google and Amazon when accessed through their smartphones and speakers. But the company is enthusiastically pitching it as an advantage: that in a world where people have multiple devices from multiple manufacturers in their hands and home, a service running across all of them has an advantage.

2.01pm: An interesting stat from Spotify’s 2017 Wrapped campaign, where people were given some stats on their listening plus playlists based on their habits. It generated more than 1bn streams in 10 days, but also (according to Spotify) drove 6.1m new premium subscriptions.

Farbman also talks about the evolution and expansion of the RapCaviar hip-hop playlist. “We are turning the playlist into a lifestyle brand, with artist-focused video content, live concerts and experiences, and a targeted marketing plan,” he says. The Viva Latino playlist is going to play a similar role for Latin music, complete with TV ads to promote it.

“Spotify is different. We’re not just about access to music. We’re about discovery. We connect artists and fans to each other, and to culture. We have a product that is best-in-class and getting better every day, and we have a meaningful data advantage,” he says, summarising the pitch to investors.

1.55pm: Farbman says that Spotify is well-recognised even in countries where it hasn’t launched. “In India, aided awareness of Spotify is 36%,” he says, while it’s 46% in South Africa, where it’s only just launched and has yet to launch a full marketing campaign. Before a video reminding everyone of the comedy LOLs when Spotify offered outgoing US president Barack Obama a job.

“This was a cultural news story and it created massive social engagement. If we were to buy that level of attention, we believe it would be roughly $9m… All of our marketing is designed with earned media, social sharing, and word-of-mouth in mind… It’s no secret that some of our competitors have sizeable media budgets, but we’re not looking to outspend them.”

1.50pm: Chief marketing officer Seth Farbman (did we mention he keynoted our recent conference?) is now on-stage talking fluent brand-ese. “Our audience is young! Spotify was built off the needs and passions of the millennial generation, and we have strong demand with that audience still today,” he says. “We continue to focus on growing this segment globally, especially considering its high potential lifetime value.”

1.46pm: Soderstrom also talks up Spotify’s freemium aspects: from bringing listeners into the streaming ecosystem who aren’t ready to pay (yet) to feeding its insatiable appetite for data. He also mentions the stat from Spotify’s DPO filing: that 60% of its paying subscribers started on the free tier. “The more you play, the more you’re gonna pay.” And yet another little swipe at Apple: “Promotional offers can only take you so far!”

1.43pm: Spotify is collecting three billion “music-related events a day” from its listeners. “Already today, we have more than five times the amount of music data that our nearest competitor does,” he says, comparing this to the world of self-driving cars, where having lots of vehicles out in the world gathering data is seen the key to future success.

“We have by far the most cars on the road in terms of users, but importantly they’re also driving more hours a day than anyone else, so more miles. And we’re putting more cars on the road every day, because of our free tier… This is self-driving music! But the machines haven’t taken over…” Because Spotify has its teams of human curators programming playlists.

30% of Spotify’s streams are “algotorial” adds Soderstrom: a combination of Spotify’s programmed playlists and its algorithm-driven playlists like Discover Weekly and Release Radar.

“We’re not really in the same business as everyone else any more. We’re in the business of discovery, and we think everyone else is still in the business of access. But access isn’t enough any more,” he says. Oh to be a fly on the wall of Jimmy Iovine’s office right now, if he’s tuning in to the livestream…

1.35pm: Soderstrom talks hardware partnerships. “We have more than 250 partners today that help make Spotify a service that you can use on pretty much any connected device or social network,” he says. Apple, Amazon and Google included.

Also connected speakers. “We invested early, we were on the very first Amazon Echo and Google Home speakers ever shipped. As we’re watching the incredible growth of these voice-controlled speakers… we’re watching the home become multi-platform, and more heterogenous, running different operating systems on different devices from different providers. Not these single ecosystems. And that’s exactly why we made this bet on ubiquity.”

“Today more than three quarters of Spotify subscribers are using Spotify on multiple devices,” he adds. Not just smartphones and smart speakers: more than 50 million people are listening to Spotify in their cars, says Soderstrom. Plus another (possible) jab at Apple, with a reference to Spotify’s focus on “doing what is right for the user, not the company” by being available on as many devices and operating systems as possible.

1.30pm: Now it’s time to talk tech, as head of R&D Gustav Soderstrom outlines what Spotify is up to on the product development side. Its R&D team accounts for around 40% of its staff, he says. “Spotify is software. It’s what we do. And we’re good at it,” he says. “Back in 2008 we helped lead a shift from music being hardware, an iPod that you bought, to music being software: an app that you download.”

There’s also some data-boasting: “Today we have over 200 petabytes of music data… And this advantage is now helping us deliver significant value to both fans and creators. We believe that with our larger user base and our higher user engagement, the distance to the competition is actually only increasing.”

Not in terms of subscriber additions though: Apple Music is now matching Spotify at around 2m new subs a month

1.25pm: Ek is talking up Spotify’s tools for artists, labels and managers, and the idea of data as a way to “rebalance” the power dynamics in the music industry. He moves from Metallica to a singer/songwriter called Dermot Kennedy, who’s been streamed by more than 500,000 Spotify users on Discover Weekly, and now is about to reach the milestone of two million monthly listeners. “Some people say that Spotify is disrupting the music industry, but really I think we’re just part of the evolution of the industry. We don’t want to replace anyone. We want to make everyone better. And more efficient.”

More broadsides at Apple and Amazon – it’s clear that these are the two rivals front-of-mind for Spotify in 2018. “We’re not focused on selling hardware. We’re not focused on selling books. We’re focused on selling music, and connecting artists with fans.”

1.20pm: “Our arrival on the scene caused some concern from others who really didn’t understand our intentions. But today, I think Spotify’s impact really speaks for itself,” continues Ek. “The industry declined 40% from 1999 through 2014, but it increased 3% in 2015, and another 6% in 2016. Streaming led this growth, and Spotify is the dominant global streaming platform… The opportunity in front of us is even bigger than we thought when we started off… We think that streaming, and Spotify in particular, has an even greater opportunity to scale, reaching billions of people around the world.”

1.18pm: Ek: “Today, Spotify is the largest music subscription service in the world, and this by a factor of roughly 2x versus our closest competitor… In fact, 72% of our users are under the age of 34, and 43% are under the age of 24.” He outlines what he sees as the three key planks of Spotify: its freemium offering; its “unique embrace of ubiquity across all platforms… we see the world dividing into multiple platforms, and Spotify is really only the only player that can work across them all, globally”; and personalisation.

But wait! A fourth: “A two-sided marketplace strategy: we’re not just serving fans, but we’re also building tools for the entire artist community”. Before moving on to expansion prospects:

“As big as we’ve gotten, and as strong as our leadership position is, there’s still a lot of growth ahead for Spotify.” He talks about the 1.3bn ‘payment-enabled’ smartphones in Spotify’s current markets. “We’re working on launching in some of the biggest markets in the world: places like India, Russia and Africa,” he adds.

1.12pm: Ek fires out some big (familiar) numbers. “We now have more than 159 million active users in 65 markets, and we’ve got 71 million premium subscribers, more than 3,500 employees around the world, and more than 35m tracks. But we’re just getting started… We’re only in the second inning of this game: Spotify is much bigger than you thought, and the opportunity ahead is much, much bigger than you realised.”

1.10pm: CEO Daniel Ek follows Vogel by giving some big-picture detail on Spotify’s history and vision. “For us, going public has never really been about the pomp and circumstance of it all,” he says. “You won’t see us ringing any bells or throwing any parties… the traditional model for taking a company public just isn’t a good fit for us.”

He says that Spotify doesn’t want a shares ‘lock-up’ for employees and shareholders. “The most important day isn’t our listing day: it’s the day after, and the day after that. That’s when we continue the hard work of helping one million artists to be able to live off their art.”

1.07pm: The event begins! Paul Vogel, Spotify’s head of investor relations, kicks things off with some news. “We expect to begin trading on the New York Stock Exchange on April 3rd. On March 26th, prior to trading, we’ll announce financial guidance for the first quarter, and for 2018,” he says.

12.53pm: While you’re waiting for the event to kick off, here’s our take on the points of interest from Spotify’s filing to go public. Or read some of our recent Spotify coverage:

The company’s progress on making its own hardware
Spotify’s CMO’s keynote at our recent NY:LON Connect conference
A current test of auto-mixed playlists
Spotify’s new self-serve ad studio expanding to more countries
Debate about switching to a ‘user-centric’ payouts model

The fact that Spotify is livestreaming the investor day is a welcome note of transparency, albeit also a hint that we won’t be hearing much juicy investors’-ears-only secrets about Spotify’s business or future plans. Ladbrokes isn’t returning our calls about the odds on a Taylor Swift guest appearance either.

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