The MBW Evaluation is the place we intention our microscope in the direction of a few of the music biz’s largest latest goings-on. This time, we report on Spotify‘s This fall earnings name, by which Daniel Ek was grilled concerning the agency’s efficiency and up to date Joe Rogan controversy. The MBW Evaluation is supported by Instrumental.
“Stockholm Man you betta / maintain your head / don’t overlook what your / beforehand issued quarterly steerage mentioned.”
MBW had been holding out a whisker of hope {that a} courageous analyst might need warbled the above down the road to Daniel Ek on Spotify‘s This fall earnings name yesterday.
Alas, it wasn’t to be – however there have been loads of attention-grabbing posers thrown Ek’s manner, each about Neil Younger’s protest towards the Spotify platform, and about different essential issues to the streamer’s enterprise.
Spotify revealed yesterday that its subscriptions grew to 180 million in This fall 2021, up by 25 million year-on-year, and up by 8 million versus the earlier quarter.
In the meantime, Spotify ended 2021 with 406 million Month-to-month Energetic Customers (MAUs), up 61m YoY – placing it heading in the right direction for the magic half-billion mark over the subsequent couple of years.
Right here’s 5 of essentially the most attention-grabbing issues we realized from Mr Ek on SPOT’s earnings name…
1. “We don’t change our insurance policies based mostly on one creator, nor do we alter it based mostly on any media cycle.”
As anticipated, one of many essential matters on the minds of analysts tuning into Spotify’s This fall earnings name was the agency’s ongoing Joe Rogan debacle.
Previously week, led by Neil Younger, various artists have requested to drag their music from the service because of content material broadcast by Joe Rogan (aka Spotify’s $100 million poster boy for its billion greenback podcast technique).
Ek was requested concerning the scenario proper out of the gate on the earnings name, and particularly whether or not Spotify’s response to date is a “slippery slope in censoring content material on the platform”.
He mentioned “this can be a very difficult difficulty,” however that he’s “actually happy with the steps we took following the considerations raised by the medical and scientific communities”.
“Whereas Joe [Rogan] has a large viewers – he’s truly the No.1 podcast in additional than 90 markets – he additionally has to abide by these insurance policies.”
Daniel Ek
Added Ek: “The necessary half right here is that we don’t change our insurance policies based mostly on one creator nor do we alter it based mostly on any media cycle or calls from anybody else.
“Our insurance policies have been fastidiously written with the enter from numbers of inside and exterior specialists on this area. And I do consider they’re proper for our platform.”
2. There are 11 million creators on SpoT right this moment… 3m greater than a yr in the past.
That is arguably the largest revelation for the music biz to emerge in Ek’s feedback.
In his opening remarks, the Spotify founder outlined his imaginative and prescient for the platform, and pointed on to the so-called ‘creator financial system’.
He argued that the “fast professionalization of creators” is “one of many largest alternatives on the Web”.
Ek additionally revealed that, on the shut of 2021, there have been 11 million creators (presumably together with artist and podcast/audio creators) on Spotify.
Final February, at Spotify’s ‘Stream on Occasion’, Ek revealed that there have been 8 million creators on the platform on the finish of 2020.
Clearly sufficient, that implies that 3 million new creators uploaded content material to the platform within the final yr.
This development is notching up in the direction of the “50 million lively creators” Daniel Ek mentioned he believes “the Spotify ecosystem” will home in the future.
“Consider it as 50 million small-and medium-sized companies that we will assist by giving them the infrastructure and sources to develop.”
Added Ek yesterday: “Consider it as 50 million small-and medium-sized companies that we will assist by giving them the infrastructure and sources to develop.
“This evolution will take time, however I do know a few of you might be questioning what this implies within the close to time period. And the work there may be already properly underway.”
3. Superfans are “the place the actual {dollars} is available in”
“We always have some deal that’s being renegotiated or negotiated once more and prolonged,” Ek defined about his firm’s licensing agreements with music rightsholders.
When it comes to key priorities for Spotify in such negotiations, Ek mentioned that his firm’s focus is working in the direction of “enabling extra flexibility on the platform”.
Ek additional defined that Spotify needs to “act as a real platform the place these creators can have interaction straight with their viewers, [and] go from informal listeners to followers to superfans”.
Partaking with superfans, argues Ek, is “going to unlock the subsequent wave of development within the music financial system”.
Spotify has already launched paid particular person subscriptions for podcast creators, which permits followers to straight assist their favourite podcasters.
Indie artists have to date been left questioning when the identical device may turn out to be out there to them to straight monetize their very own fanbases.
“The evolution right here will probably be about unlocking via superfans. That’s the place the actual {dollars} is available in. And that was at all times the music enterprise to start with.”
Daniel Ek
Mentioned Ek yesterday: “The evolution right here will probably be about unlocking via superfans. That’s the place the actual {dollars} is available in. And that was at all times the music enterprise to start with.
“Once we unlock that, we’ll unlock the subsequent wave of development within the music financial system. So for me, that’s the No.1 factor that I’m centered on: unlocking extra flexibility, extra methods for creators to make use of their belongings, movies, have interaction with folks, have their content material present up in new sudden methods.
“That may drive engagement and that, in flip, will drive folks to maneuver from informal listeners all the way in which as much as a superfan and allows new types of monetization, too.”
4. Audiobooks are a giant alternative and the West ought to look to markets like China to grasp their potential..
Audiobooks are large enterprise, with international audiobook revenues estimated to high $4.8 billion in 2021.
Spotify claimed in November that it needs to “revolutionize” the audiobooks area and that its acquisition of audiobook distribution firm Findaway would assist it to take action.
Ek was requested yesterday to place the audiobooks alternative into context. He defined that “audiobooks, in our view, is a subset of the general audio alternative” and that it touches on “an important creator group, which is authors”.
“It’s unusual to think about why extra of that sort of innovation [hasn’t] come to lots of the Western markets as properly.”
He then pointed to markets like China to focus on “the innovation” that’s occurring within the audiobooks area. There have been an estimated 560 million-plus audiobook customers in China in 2020.
Mentioned Ek: “For me, it’s unusual to think about why extra of that sort of innovation [hasn’t] come to lots of the Western markets as properly.
“And it’s actually in that vein that it’s best to take into consideration the Spotify platform. There’s going to be much more openness and there’s going to be much more flexibility in how we deal with content material and creators on our platform.”
5. Spotify’s Q1 2022 steerage has irritated some analyst – however Ek says it doesn’t “mirror any churn from the latest Joe Rogan factor”
Spotify revealed some large information about steerage yesterday: it now not plans to difficulty annual forecasts to analysts.
SPOT instructed buyers that any longer it can solely use quarterly steerage “as checkpoints towards our progress”.
As for its quarterly steerage for Q1 2022, SPOT forecasts that, by the tip of March, it can have Whole MAUs of 418 million and whole Premium Subscribers of 183 million.
“Normally, after we’ve had controversies up to now, these are measured in months and never days.”
Ek was requested if that latter quantity displays “elevated churn from the latest Joe Rogan controversy”.
He replied: “[The] simple reply is, we don’t mirror any churn from the latest JRE factor.”
He added: “Typically, what I’d say is it’s too early to know what the affect could also be.
“Normally, after we’ve had controversies up to now, these are measured in months and never days. However I be ok with the place we’re in relation to that. And clearly, high line traits nonetheless look very wholesome.”
