Spotify’s latest financial results reveal that it ended 2021 with 406 million monthly active users (MAUs) and 180 million premium subscribers, having added 25 million and eight million respectively during Q4.
“Our largest quarter of MAU growth in Spotify’s history,” as CEO Daniel Ek told analysts in the company’s earnings call.
Spotify’s quarterly revenues were up by 22% year-on-year to €2.69bn (around $3.04bn) including growth of 22% in subscriptions and 40% in advertising revenues. Ads have now crept up to 14.7% of Spotify’s overall revenue, although bear in mind Q4 is a bumper quarter for advertising.
Other stats of note: Spotify saw “a double digit increase in the number of MAUs [monthly active users] that engaged with podcast content relative to Q3” although the company stopped publishing the actual numbers for that metric some time ago. “Podcast share of overall consumption hours on our platform reached another all-time high,” announced the company.
Ek’s prepared speech for investors is worth reading and thinking about. “To become the preferred destination for audio creators, we will accelerate the move from a one-size-fits-all model to a much more dynamic and open platform,” he said. “And we will give them greater flexibility and the power to be more entrepreneurial, which will, of course, unlock the extraordinary potential of their business and communities.”
“We will provide greater reach. We will provide tools and access to diverse revenue streams that can be personalised to meet the needs of each creator,” added Ek. Thus far, it has been podcasters rather than musicians who have been the focus for many of these moves: creator-level subscriptions, for example, or access to their keenest listeners’ email addresses.
We’re not ignoring Spotify’s work around merch, ticketing and its first dabbling in a tips economy with its Artist Fundraising Picks. But if it builds on this by launching even more features giving artists parity with podcasters in their ability to be “more entrepreneurial” on Spotify’s platform, it could be an important development.
For now that remains an ‘if’ – complicated by Spotify’s ongoing need to dance around the sensitivities of rightsholders when expanding its direct efforts with artists. However, later in the earnings call Ek returned to this topic.
“We really believe that the more we can act as a true platform where these creators can engage directly with their audience, go from casual listeners to fans to superfans, that’s going to unlock the next wave of growth in the music economy,” he said.
“So far, right now, we’re kind of monetising everyone with a one-size-fits-all model. Yes, we do have free and we have this paid subscription. But I think the evolution here will be about unlocking through superfans. That’s where the real dollars comes in.”
Unsurprisingly, Joe Rogan’s name came up early on in the Q&A section of the call. “The important part here is that we don’t change our policies based on one creator nor do we change it based on any media cycle,” said Ek.
“Our policies have been carefully written with the input from numbers of internal and external experts in this space. And I do believe they are right for our platform. And while Joe has a massive audience – he’s actually the number one podcast in more than 90 markets – he also has to abide by those policies.”
The Rogan row is still rumbling both internally and externally though. The Los Angeles Times reported on what sounds like a stormy ‘town hall’ livestream where Ek and chief content and advertising business officer Dawn Ostroff were challenged on their belief that Spotify is a platform for Rogan’s podcast, but not his publisher (i.e. with editorial responsibility for what he broadcasts).
The fact that the first question for Ek on the earnings call focused on whether advertisers are leaving Spotify rather than artists offered a clue on how Wall Street views all this. We will have to wait for the company’s Q1 financials to gauge whether the reputational impact of this controversy has spilled over into a financial one.