Spotify Premium Subscribers grew 21% Y/Y to 158 million in the quarter, hitting the top end of the company’s internal guidance range. The company generated $2590 USD, growing 16% Y/Y in Q1 (22% Y/Y on a constant currency basis). For Spotify, it was more than just earning revenues. The platform added more podcasts to its inventory compared to Q4 2020. It had 2.6 million podcasts at end of Q1, compared to 2.2 million podcasts by the end of Q4 2020. Consumption in terms of hours also spiked through the Q1 metrics.
Here’s more to what Spotify declared.
In its recently announced Q1 2021 financial statement, leading audio streaming platform Spotify declared it added nearly 4 million subscribers in Q1. The growth in Spotify Premium membership, in particular, ensured the company maintained its healthy quarterly run, driving a double-digit Y/Y growth across all regions. The result was strong relative to a tough promotional comparison from Q1 last year.
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North America Remains a Strong Market for Spotify Premium
The subscriber outperformance was fairly broad-based and led by North America, where the company saw a stronger than expected performance of Trials & Campaigns and faster than anticipated growth in their Standard product.
The performance in Latin America improved with the wider subscription base for the Spotify Family Plan product. Even the new market contributions, such as South Korea, were positioned as the biggest driver.
Speaking to us about Spotify’s financial results, Aaron Goldman, CMO, Mediaocean said, “Spotify’s ad-supported revenue grew 46% year-on-year to €216 million in Q1, showing the strength of its platform connecting brands and consumers. Compared with digital media publishers that rely on cookies to resolve identity and target ads, Spotify has a massive advantage thanks to its logged-in subscriber base. Spotify has also diversified its content beyond music into podcasts and now live audio with its acquisition of Locker Room. These developments help Spotify offer a wider range of ad formats to a wider range of advertisers. Looking ahead, Spotify will play an increasingly important role in omnichannel advertising.”
Boost from Spotify Audience Network
In February, the company had announced the Spotify Audience Network. Spotify Audience Network is a first-of-its-kind audio advertising marketplace that connects advertisers to listeners across Spotify Owned & Exclusive (“O&E”) podcasts, podcasts from enterprise publishers via Megaphone, podcasts from emerging creators via Anchor, and ad-supported music.
The Spotify Audience Network bundles multiple shows for advertisers to buy specific audiences using our proprietary SAI technology. We believe this shift will provide advertisers much greater reach and efficiency while creators gain a much greater monetization opportunity.
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The ‘Betty’ FACTOR
Spotify acquired the creators of Locker Room – Betty Labs, to further consolidate on its position as a premium audio streaming service. Locker Room is a live audio app that’s changing the way insiders and fans talk about sports. This acquisition pushed the podcast benchmarks higher with an aim to create “future formats of audio” that will accelerate Spotify’s entry into the live audio space. Spotify intends to promote Locker Room into an enhanced live audio experience for a wider range of creators and fans. Through this new live experience, Spotify will offer a range of sports, music, and cultural programming, as well as a host of interactive features that will enable creators to connect with audiences in real time. The B2B customer base is pretty solid as it aims to collaborate with professional athletes, writers, musicians, songwriters, podcasters, and other global voices opportunities to host real-time discussions, debates, ask me anything (AMA) sessions, and more.
Chris Beer, Market Intelligence Manager, GWI, said –
“Between Q2-Q4 2020 Spotify grew its user base from 27% to 30% of the online population in 43 countries, and its growth looks likely to continue. During the same time, some TV streaming services have seen drops in subscribers.
Depth of content is one of the big reasons for this. Film/TV services rely much more on exclusives, whereas almost all music streaming services have access to the same content library – meaning their users don’t tend to become fatigued with them. But Spotify has also invested heavily in podcasts to differentiate from its competitors and retain users as it seeks to become the home of all things audio.
Music services are also less affected by supply issues. While some highly-anticipated TV shows have seen filming delays, albums have been less disrupted.”
What’s More: Content and Upgrades
Spotify is only a handful of audio experience platforms to have understood the user’s need for a great content experience. During the quarter, Spotify launched multiple upgrades, including a new Desktop App and Web Player redesign that makes the user experience and navigation easier than ever by combining a modern scalable web player together with a cohesive Spotify design. Additionally, Spotify’s web platform includes 36 new languages (62 in total), which also will be rolled out to the mobile app, allowing Spotify to reach more audiences.
Spotify i also testing Podcast Topic Search in the US, which enables listeners to search for podcasts by theme and topic in an effort to make discovering new content easier than ever.
WordPress Opportunities
In February, Spotify announced a new partnership between Anchor and WordPress to generate opportunities for content creators to evolve their work and reach new audiences through the power of audio.
With this new tool, bloggers can publish their written content as a podcast with just a few clicks—and podcasters can create a website for their podcast just as easily. This offers a whole new group of creators—those who have historically focused on the written word—to access an entirely new audience via audio and share their voices on Spotify.
It has also expanded support for video podcasts on AppleTV (including AirPlay2), LG, and Comcast. At the end of Q1, users in 10 additional markets, including Sweden, Australia, and Chile, can now ask Alexa to play podcasts from Spotify.
Additionally, PlayStation’s PS4 and PS5 consoles now support Spotify in 5 new markets, including Russia, Ukraine, Croatia, Slovenia, and Israel.
And then, there’s Car Thing, a smart player that allows users to more seamlessly engage with Spotify music, news, entertainment, talk, and more in the car.
It also launched a joint partnership with Facebook to create an integrated ecosystem with a mini player experience driven by the social discovery that allows listeners to enjoy audio from Spotify directly within Facebook, without switching between apps.
Other Key Insights
Sponsored Recommendations have shown strong growth and are becoming an essential part of new release marketing strategies for artists and labels.
The company is testing a new commercial tool called Discovery Mode with a small group of labels that enables artists to better reach new audiences on Spotify.
All artists now have access to our popular feature, Canvas, through Spotify for Artists.
Spotify launched Noteable — a global platform for songwriters, producers and publishers which is a central space to access all the resources that Spotify has made available to the songwriting and publishing community, including Spotify Publishing Analytics, SoundBetter, Songwriter Pages and Song Credits, the Songwriting Hub, and more.
Q2 Targets
Given the current COVID-19 situation, Spotify has provided a preview of what their targets for Q2 2021 look like:
Total MAU – 366-373 million
Total Subscribers – 162 – 166 million
Total Revenue – USD 2.61 billion – USD 2.85 billion
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