The world's main streaming music platform, Spotify, has just achieved the second largest increase in its history: 574 million users (23 million more than in 2022), 3.4 billion euros in sales (11% more than in 2022) and an operating profit of 32 million euros (in 2022 it registered losses worth 228 million). The platform, based in Stockholm, but listed in New York, currently has 9,000 employees and has Spain as one of its main markets.
After 15 years in Spain, can Spotify now give us a snapshot of what its customers are like in Spain?
For more than a decade, in Spain people listen to more music in Spanish than in English. If we talk about other categories, podcast consumption among Generation Z in Spain has grown by 20%, according to Spotify data from April 1, 2022 to March 31, 2023. In addition, more than 50% of Generation Z have listened to at least one podcast in the last year on Spotify and we see that they engage both women and men equally. Overall, it is interesting to note that the Spanish language and sounds are having a strong cultural impact around the world.
Spotify is the largest streaming audio subscription service in the world, with more than 574 million users. What percentage does Spain represent in terms of users?
Europe is the market with the highest percentage of monthly active users, 28%, according to the financial results for the third quarter of the year. And if we talk about Spain, it is one of the first markets worldwide.
They have just presented the figures for the third quarter and the growth is notable.
We have exceeded our forecasts. Monthly active users grew 26% to 574 million, beating forecasts by 2 million, the second-largest net increase ever in the third quarter. In addition, the number of subscribers grew by 16% annually, up to 226 million. Total revenue grew 11% year-on-year to €3.4 billion and gross margin was 26.4%, also above forecasts. An operating result of 32 million euros was achieved thanks to a higher gross margin, as well as lower personnel and marketing expenses than expected. Of the total income, 2,910 million euros corresponded to income from premium subscriptions, which grew by 10%, and 447 million came from advertising income, which grew by 16% annually. All of this sustained growth is a testament to the exceptional value that Spotify continues to deliver around the world.
What does Spain represent in the business as a whole and how has it evolved in these 15 years?
Spain is a market in which we are growing both in the consumption of music and podcasts, with Spotify being the market leader. Audiences around the world consume digital audio at a record rate and 60% of Spaniards over 15 years of age consume digital audio content, according to the IAB Spain Digital Audio Study 2023. There is no doubt that audio has become a key source of entertainment in the market. Furthermore, streaming is the main music consumption format in Spain: since 2008, with the launch of Spotify, Spain has experienced an increase in reproductions of 3,800% (an increase of 37% annually).
They started with just music, but now they offer podcasts and audiobooks. What does each business segment represent?
When Spotify launched in Europe in 2008, the music industry changed forever, as did the artist-listener relationship and global consumer habits. At the time, few could predict that a Stockholm-based startup would grow beyond Europe to become the largest audio streaming service in the world. It's no secret that podcasting has exploded in recent years. We've gone from having a limited market share to being an industry leader, growing our podcast listeners to over 100 million, all in just a few years.
Is it the segment that is growing the most?
In recent years, Spotify has established itself as a leader in podcast listening, with a catalog of more than 5 million titles in more than 170 markets, of which more than a million are in Spanish. From pioneering tools and features to investing in original and exclusive podcasts, the company's efforts have seen podcasting grow at an incredible rate over the past 5 years. In our country, according to recent data from Spotify, almost a third of users listened to at least one podcast in the last month. And at a global level, Spotify has gone from having just over 10 million podcast listeners in 2018 to more than 100 million currently worldwide, managing to grow 10 times its initial figure.
Spanish users prefer comedy and entertainment, well-being and mental health, as well as educational content, being the three most listened to podcast topics since the format was launched in our country.
And now the audiobook.
Last year we announced that users would be able to purchase and listen to hundreds of thousands of audiobooks on the platform, advancing our vision of making Spotify a one-stop destination for all things audio. And this month we're starting a whole new chapter in our audiobook offering by making more than 150,000 audiobooks available in Australia and the UK as part of subscriptions.
Now we're working to leverage that massive audience, best-in-class recommendation engine, and innovative ad technology to help creators grow their audiences and increase their monetization.
What are your prospects for the coming years?
We want to continue promoting creativity, talent discovery and personalized experiences more than ever, providing the best resources, support and interactivity so that our platform continues to be the best home for creators and continues to be the best user experience on the market. However, to stay here for another 15 years and beyond, we also need to operate in an ecosystem where fair competition is guaranteed. For example, five years ago, we began addressing the issue of Apple denying updates to the Spotify app and issuing a new set of restrictions that would further limit our ability to do business in its App Store.
It is an issue that they had reported to Europe. Any resolution?
Unsurprisingly, the European Commission recently designated Apple as a gatekeeper under the Digital Markets Act (DMA). Apple will now have to end its blatant anti-competitive practices in the EU, stop forcing developers to pay the unfair and discriminatory fee in the App Store, and allow developers to communicate directly with customers about new offers and promotions. EU consumers and developers count on the Commission to effectively implement the WFD, protect European consumers and boost technological innovation for European businesses.
Is it the end of a war that has lasted more than five years?
We sincerely believe that regulators will make the necessary changes for a better internet. There is a lot at stake and it goes beyond music, apps and even the companies that exist today. This fight is about shaping the future of the internet and we are working closely with regulators around the world.
It is speculated that Spotify will have a super premium subscription that is being prepared with generative AI.
We are constantly creating and ideating to improve our product offering and deliver value to users. But we don't comment on speculation.
