Since 2019, podcasts have been central to Spotify’s development technique and objective of bettering the corporate’s margins. Unique and unique content material not solely entice listeners however may help ease stress from inflexible music licensing prices. On that entrance, Spotify’s spending matches its ambition. Most notably, Spotify paid $100 million to completely license The Joe Rogan Podcast, a constant prime podcast since its arrival on the platform in December. Different offers present Spotify is trying past superstar podcasters to draw smaller creators. Megaphone, acquired in November, inserts audio ads into podcasts. New self-serve instruments for Anchor, the podcast app it purchased in 2019, in addition to new monetization choices introduced Monday, might additionally entice “lengthy tail” podcasters and, ultimately, extra advertisers.
Not everyone is shopping for the expansion technique — no less than not at present valuations. Credit score Suisse analyst Brian Russo pegs Spotify’s worth at simply $315 per share and expects “disappointing” subscriber additions in 2021. However different analysts see alternative forward. Stifel’s John Egbert, with a value goal of $360, sees advantages from geographic enlargement and anticipated value hikes in choose markets. Morgan Stanley’s Benjamin Swinburne, who places the inventory’s worth at $350, likes Spotify’s enlargement potential and management in audio streaming.
For its half, 12-year-old Spotify argues the streaming audio enterprise continues to be in its early levels and that development, not earnings, needs to be its focus. Its subscribers grew to 155 million on the finish of 2020, and it expects to complete 2021 with 172 million to 194 million. “We’re dedicated to constructing the world’s main audio platform,” mentioned Daybreak Ostroff, Spotify’s chief content material officer and promoting enterprise officer, throughout Monday’s occasion. Other than purely promoting impacts, the mix of spoken phrase with music might improve listening time and cut back churn, a very nefarious drawback for subscription providers as a result of buying new prospects will increase gross sales and advertising bills.
An increasing footprint may also assist Spotify develop past its core European and North American markets. A further 80 markets — in unnamed nations in Africa, Asia and the Caribbean — will improve Spotify’s addressable market “to greater than a billion folks … with almost half of them already utilizing the web,” mentioned Ek. It’s already obtainable in most of Asia’s most populous nations, corresponding to India and Indonesia, in addition to Japan, the world’s second-largest music market. Africa is stuffed with alternative, though its nations’ common income per person will probably be lower than the U.S. or European nations. Nonetheless, breaking into markets corresponding to Nigeria (inhabitants 201 million), the Democratic Republic of Congo (90 million) and Kenya (inhabitants 53 million) can quantity to large paydays for streaming providers.