Spotify CEO Daniel Ek shared on Wednesday, June 8 company strategy Swedish for the years to come in order to reassure investors. The shareholders are worried, because four years after the entry of the company on the Stockholm Stock Exchange, it is not yet profitable. The manager affirms that the audio format offers many possibilities to diversify his activity. He notably recalled that the firm has invested a billion dollars in podcasts since 2019 and that it will establish an aggressive strategy in the audiobook sector to compete with Amazon.
Achieve annual revenue of $100 billion
The music streaming giant experienced excellent growth in the first quarter of 2022 with 422 million monthly active users, including 182 million subscribers to its premium offer. The company’s revenue increased by 225% in one year to peak at $2.79 billion. Despite these good results, investors do not believe that the company can become profitable in the short term.
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In response to these fears, Daniel Ek defended the company’s strategy for the current decade. According to him, the size of Spotify could be multiplied by ten by 2030, with an annual turnover of 100 billion dollars for 1 billion active users.
He recalled that Spotify has become ubiquitous by disrupting the distribution of music. The app is available on over 2,000 different devices, from watches to smart speakers to cars. The free trial version of the service also contributes to the growth of the application via advertising revenue.
To achieve its goals, the company plans to diversify its business by investing heavily in podcasts and audiobooks. It has already injected a billion dollars into podcasts since 2019. In 2021, a third of Spotify users regularly listen to podcasts. This generated 215 million dollars in turnover and could, in the future, represent a market of 20 billion dollars for the company according to the leader. Daniel Ek predicts that within one or two years, podcasts will become profitable.
Audiobooks, the future of Spotify?
The streaming platform also plans to step up its investments in audio books. Nir Zicherman, sector manager at Spotify, said that in one year this category of content, available since 2021, has gained 20% in audience. the wall street journal points out that in a book industry that weighs 140 billion dollars, audio books represent 7% of the market.
In 2021, the Swedish firm partnered with Storytel, an audio book service, which offers 500,000 books. Last fall, Spotify announced its plan to acquire Findaway, an American audiobook distribution service, for $125 million. This would allow Spotify to add a catalog of books to its offer, with a view to competing with Audible. Amazon’s service controls 48% of this market in the United States. However, this transaction has yet to be reviewed by the United States Department of Justice’s Antitrust Division.
Daniel Ek explained that the global audiobook market could represent an annual turnover of 70 billion dollars by 2030. In addition to music, podcasts and books, he mentioned the idea of offering more content related to education, sports and current affairs. An enriched offer, for a very audacious 2030 objective.