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Checking Spotify's Strategy...

 

Monday, February 6, 2023

 
There's no bigger opponent for music radio than Spotify. Recently they've gotten onboard with podcasts, too. So much so that Neil Young removed all his music from the streamer...
 
CNET believes when it comes to choosing a service, it's a close race between Spotify Premium and Apple Music, but Spotify still wins as the best music streaming service overall. This is thanks to a fun, easy-to-use interface, an extensive catalog and the best device compatibility. They also offer the best free tier: Without paying a dime or providing a credit card number, you can listen to millions of tunes and even stream Spotify Connect to numerous Wi-Fi devices...
 
Spotify is not without its problems, however, especially recently. I thought there was no better time for radio stations to know their competition more thoroughly than now. Radio, it's time to know your main competitor better:
 
Spotify CEO Daniel Ek told investors recently that he "probably got a little carried away and over-invested" in new businesses, including podcasting, during the past few years and that led to last week's announcement that the company would cut six percent of its workforce across all divisions. But Ek also said he does not mean Spotify is changing its strategy. The layoffs may only be just the beginning, however, CFO Paul Vogel said the company is "looking closely at open headcount" to determine whether open positions can remain unfilled... 
 
Ek says last week's management changes, including the exit of Chief Content and Advertising Business Officer Dawn Ostroff, should not be read as a shift in his company's podcast strategy. "It is more about increasing the speed of decision-making and increasing the focus on efficiency across the board because the next era of Spotify is one where we're adding speed plus efficiency, not just growth at all costs, and that is a big shift."
 
Ek conceded that some of the investments that Spotify has made in podcast have been "working greatly" and others "haven't worked out." But he said that is a "sign of maturity" as the company moves beyond growth for efficiency. He said they will "double down" on those projects that have been delivering results...
 
Spotify says its monthly active users grew 20% during the fourth quarter, compared to a year earlier, to 489 million worldwide. That was an increase of 33 million, making it the best-ever fourth quarter increase in the company's history. The gains came in Europe and the rest of the world as a result of its marketing offers and not in the US. Premium subscriber numbers rose 14% from a year earlier to 205 million, which executives credit to the success of its promotional efforts and more household plan sales. Overall, one in five Spotify users during Q4 was in North America. "We had a great Q4 and 2022," Ek said. "We're now in an even stronger competitive position. And I'm confident in our future prospects."
 
Spotify's Q4 financial story was mixed. On the one hand, revenue grew 18% to $3.5 billion. While most of that came from subscriptions, ad-supported revenue increased 14% to $487 million led by podcasting gains. Ek said ad sales were "very up and down" during Q4 and and he expects that will continue through the current quarter...
 
Spotify won't say how much its podcasting business produces, but it says its podcasting revenue grew in the mid-30% range from a year ago, thanks to double-digit growth in ad impressions and pricing. It also invested less in new podcast content than expected, and that helped push its margins up to 25.3% for the quarter...
 
Spotify reported a $231 million operating loss during the fourth quarter, compared to a $7 million loss a year earlier. It blamed the bigger loss on headcount growth and higher advertising costs, as well as currency exchange fluctuations...
 
Ek said the number reflected their previous warnings to investors that investments in podcasting would be "a drag" on margins during 2022 and that 2023 will bring a reversal of that trend. "That's still very much on the top line for us," he explained to analysts saying as podcast ad revenue grows and the make "more efficient" investments, there will be improvements in how much cash the podcast business generates...
 
Analysts think it is only a matter of time before Spotify raises subscription prices. That is not happening yet, however. Ek said Spotify raised prices in more than 40 countries last year, including the US while in others it is still focused on growing user numbers...
 
Spotify's expansion beyond music and podcasting and into audiobooks remains in its "early days," according to Ek. No numbers were released but he said they are seeing "some encouraging signs" as the feature expanded beyond the US and into the UK, Ireland, Australia and New Zealand during Q4...
 
"We're definitely seeing people take up the offering. But we're nowhere done from where we want to be," Ek said. "We think that audiobooks has a massive opportunity and that there are very few consumers that are currently participating in the ecosystem."
 
Did You Know???
  • It's been 56 years since the first Super Bowl game was played. On January 15, 1967 Green Bay beat Kansas City 36-10...
  • In that first game, Packer receiver Max McGee scored the first touchdown in Super Bowl history and finished with seven catches for 138 yards and two touchdowns...
  • Of the 32 most-watched TV programs in US history, 30 of them were Super Bowls...
  • The 2004 Super Bowl halftime show featured Justin Timberlake and Janet Jackson and Janet's wardrobe malfunction...
  • The greatest comeback in Super Bowl history was played in 2017 when New England rallied from a 28-3 deficit to beat Atlanta 34-28...
  • One of the great Super Bowl quotes of all-time was made by Washington lineman Russ Grimm in 1984: "I'd run over my mother to win the Super Bowl". Unfortunately for Russ and his team, Oakland ran over Washington 38-9...
  • Jets quarterback Joe Namath guaranteed his team would beat heavily favored Baltimore in 1969. They did, 16-7...
  • In the 1979 game Dallas linebacker Hollywood Henderson said Pittsburgh quarter back Terry Bradshaw "couldn't spell cat if you spotted him the C and the T". After the Pittsburgh 35-31 win, Henderson was quoted as saying "I didn't say he couldn't play, just that he couldn't spell"...
  • The Super Bowl pre-game show used to run thirty minutes. It now runs about five hours...
  • One of the greatest ads in Super Bowl history ran in the 1980 game. Pittsburgh defensive lineman "Mean" Joe Greene limps into the locker room and a young fan hands him a Coca-Cola. Greene tosses the kid his game jersey ("Hey, kid. Catch!"). The kid says "Thanks, Mean Joe"...

 

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