Daniel Ek addressed plans for audiobooks and short form video at during Spotify’s Q1 earnings call. David M. Benett/Dave Benett/Getty Images for Spotify
Spotify (SPOT)’s earnings release on Tuesday (April 23) revealed a few tidbits of the company’s strategy going forward with features like audiobooks, short-form video and its newest change in leadership with the hiring of Christian Luiga as chief financial officer. The audio streamer hit some marks in the first three months of 2023. It surpassed €1 billion ($1.07 billion) in gross profits for the first time, and premium subscribers increased to an estimated 239 million—up from 210 million one year prior—primarily in family and duo memberships. Though monthly active users (MAUs) increased to 615 million, the number was below guidance, which was 618 million.
Spotify CEO Daniel Ek explained this at the beginning of today’s earnings call with investors, listing three main factors: (1) MAU and subscriber growth in 2023 were unexpected and surpassed the company’s “most ambitious forecast,” (2) the layoff of 17 percent or 1500 of Spotify employees at the end of 2023 and (3) an overcorrection when pulling back on marketing spend in 2023.
“New funds are being directed towards acquiring and reactivating high-value users to enhance our base with their deeper engagement and loyalty,” Ek said. “Next year, our focus may return to top-of-the-funnel user growth, but in the near-term, monetization remains our top priority.” Speaking to the company’s financial goals, Ek made space to elaborate on Spotify’s hiring of Luiga, who comes from the Swedish aerospace company Saab AB.
“This is a person who’s been at many different industries and seen many different things,” Ek said about Luiga. “And this is not just someone who’s focused on optimizing on the bottom-line by cutting costs, but actually someone who’s focused on what’s right for the business, even on the top line too.”
Around the time Spotify announced Luiga’s hiring, it reportedly began making movies to raise prices for its service, starting in five international markets, including the U.K. and Australia, and in the U.S. later in the year. Ek did not comment on reports but addressed the steamer’s plan to introduce an audiobook-only subscription tier and a music-only tier excluding audiobooks.
“You will see a lot more sort of tiers that allow for more flexibilities for consumers to opt into the type of deal that they believe offers the greatest value for them in terms of how they’re using Spotify.”
Ek also said that Spotify is focused on “winning discovery.” When asked about the potential ban on TikTok in the U.S., he spoke about Spotify’s plan to compete with short-form platforms regarding search and discovery features.
“TikTok and other companies have improved the user experience that we’re all as an industry, learning about these trends and best practices and trying to improve our products,” Ek said. “That’s what great competition does.”
Spotify also launched music videos in March for premium users in 11 markets, including Germany, Sweden, and Brazil. Ek compared the platform’s video features to those of TikTok and Instagram (META) Reels. These short-form video features, along with A.I. tools, have become the company’s content focus.
“You’re going to see more video on the music side make its way into the product in 2024. And two other things that you’re going to see is more AI products in the music side as well,” Ek said. “And you’re going to see an even more global music ecosystem than any time before in history.”
