Spotify. It’s Not Just for Music Anymore. - The New York Times
No longer does it aim to be a go-to destination for just music fans. It now sees itself as a provider of online audio, period.
The company’s chief executive, Daniel Ek, emphasized the shift in direction in a blog post on Wednesday. “I’m proud of what we’ve accomplished, but what I didn’t know when we launched to consumers in 2008 was that audio — not just music — would be the future of Spotify,” he wrote.
With the acquisitions, Spotify becomes the latest player to invest in a medium once considered a low-stakes sandbox in the larger media environment. Now that podcasts have become part of the listening routine for millions of people, major companies have recognized them as an important — but still relatively cheap — source of content.
In September, the radio giant iHeartMedia bought Stuff Media, another influential producer, and recently Hollywood has begun buying up rights to popular podcasts. “Homecoming,” an Amazon series starring Julia Roberts, is based on a fictional podcast from Gimlet.
“I don’t think Spotify woke up one day and realized that audio storytelling has some incredible emotional place in the life of their brand,” said Owen Grover, the chief executive of Pocket Casts, a podcast app. “Strategically, if they can get their users to listen to podcasts in place of music, it improves their margins.”
While podcasts are hardly a new invention — they became part of Apple’s iTunes in 2005 — their popularity has surged in recent years. By some estimates, more than 600,000 podcasts are available through Apple, a number that does not include shows that are exclusive to other providers, like Spotify.
But while it may seem as if every other person on earth is either a podcast listener or a podcast host, the money thrown off by the boomlet has been relatively modest. According to a study by the Interactive Advertising Bureau and PwC, the podcast industry as a whole generated $314 million in 2017, though that survey also predicts that by 2020 the number will more than double, to $659 million.
Spotify, which went public in April, announced on Wednesday that it ended 2018 with 207 million active users around the world, 96 million of whom paid for monthly subscriptions. Its revenue for the year was 5.3 billion euros, about $6 billion, an increase of 29 percent from 2017.
And while in 2018 the company lost €78 million, about $89 million, it had a net income of €442 million, or about $502 million, in its fourth quarter. Spotify’s gross profit margin also grew in that quarter, to 26.7 percent, from 25.3 percent in the previous three months.
Despite Spotify’s dominance among music listeners (its chief rival, Apple Music, has 50 million paying subscribers), Mr. Ek, the company’s chief executive, predicted that “over time,” about 20 percent of all Spotify listening would involve something other than music.