wordpress blog stats
Connect with us

Hi, what are you looking for?

Spotify has even more of an advantage during the pandemic than Netflix. Here’s why.

Daniel Ek Spotify

Digital subscriptions are showing remarkable growth during the COVID-19 pandemic. Netflix made twice as many subscribers as it had initially projected in that quarter, and Disney Plus has 50 million subscribers mere months after releasing, of which 8 million are paying for Hotstar in India. But Spotify hasn’t seen that kind of a dramatic single-quarter growth – the company had forecasted 126–131 million total paying subscribers for this quarter, and it has reached 130 million. One would think that as far as the Swedish music streamer is concerned, there wasn’t even a pandemic. And that’s exactly why the company is in an enviable position.

The company has an advantage that is in tremendously short supply: predictability. Video streaming services like Netflix might have to suffer a slowdown later this year because many subscribers who would have signed up later are doing so right now; and some might drop out later as lockdowns and stay-at-home orders phase out. Netflix even acknowledged that risk in its earnings call. But music streaming is not bound by time and space in the same way that video is — you can listen to music anywhere as long as you are not talking to someone else. Video streaming services have only recently started making portability a priority, with Netflix and Prime Video introducing a download feature as recently as 2017.

  • No reduced productivity: Since only a small share of Spotify’s revenue comes from ad-supported users, the company has been able to absorb the shock of reduced ad spending. This particular quarter’s gross profit is pretty much the same as the last. “Our business remains very healthy with more than €1.8 billion in liquidity and we expect to be free cash flow positive for the year,” the company said in its letter to shareholders. The company said that its entire employee base had started working from home without reduced productivity.
  • No layoffs, but slower hiring; currency impact: While industries across the board are laying employees off, Spotify says they will merely cut down on hiring, a strategy that could boost the company’s liquidity in the coming months, assuming its targets for subscriber growth keep being met. The company is also seeing foreign exchange hitting its growth. “We have some pretty major currencies that are year-over-year down close to 20% relative to the euro,” CEO Daniel Ek said, noting that the situation had improved since the forecast for Q2-20 had been finalised.
  • Changing listening behaviourJust because Spotify is less impacted than others doesn’t mean it hasn’t seen changes in user behaviour. “For example, while listening in the cars declined, listening on gaming consoles is exploding. And we continue to see increased listening on home speakers and through TDs,” CEO Daniel Ek said in the company’s earnings call. The coverage of these devices will be key to keeping Spotify activity going in the coming months.
  • Deals in India: Ek touted the deal with Warner Music Group in India, which filled a gaping hole in the company’s India catalogue this month. Ek indicated that the company has other deals lined up with labels for India, but did not go into detail. The company has released a few original podcasts in India, like 22 Yarns with Gaurav Kapur, Bhaskar Bose, Love Aaj Kal, The Big Fat Indian Ghotala, Maha Bharat With Dhruv Rathee, Off Script With Salil, and Special Mission With Gul Panag.

Press Release/Shareholder Letter | Prepared Remarks | Earnings Call Transcript

Written By

I cover the digital content ecosystem and telecom for MediaNama.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

India and US come to terms on how to deal with the equalisation levy in light of the impending Global Tax Deal.

News

Find out how people’s health data is understood to have value and who can benefit from that value.

News

The US and other countries' retreat from a laissez-faire approach to regulating markets presents India with a rare opportunity.

News

When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

You May Also Like

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ