Spotify doubles on podcasts as ad sales soar; Says monthly active user Q2 grow light because of Covid
Daniel Ek, founder and CEO of Spotify, said a sharp rise in ad sales for the three months ending in June aims to refocus on ad-rich podcasts that will become a larger share of overall revenue as he seeks to shift the company’s perception of a “premium subscription music service.” to an audio platform.”
The two have very different business models, Ek noted during a webcast Wednesday to discuss quarterly earnings. They were overshadowed by slower-than-expected growth in monthly active users, or MAUS, up 22% from the year before to 365 million — “ending below our target range and forecast,” he said. Executives attribute it to Covid’s jerkiness, including in hard-hit countries like India, where Spotify has halted all marketing.
Ad-supported revenue, but outperformed internal forecasts, led by podcast sales generating 165% year-over-year gains at existing Spotify studios (The Ringer, Parcast, Spotify Studios and Gimlet) and contributions from the acquisition of Megaphone and exclusive licenses of the Joe Rogan Experience and Higher ground. During the quarter, Spotify announced exclusive licensing agreements with: call her daddy and Armchair expert. It said The Bill Simmons Podcast consumption grew significantly en route to the NBA playoffs.
At the end of the second quarter, Spotify had 2.9 million podcasts on the platform (versus 2.6 million at the end of the first quarter). During the quarter, podcast share of total hours of consumption on our platform hit an all-time high.
Premium subscribers grew 20% in the quarter to 165 million, towards the top of our target reach and modestly above expectations with strength in Europe and North America. The churn rate declined 23 basis points year-over-year, declining “modestly” from the first quarter.
Ek also said Spotify wants to expand its live events, but didn’t provide any details. “I can’t really comment on the product testing we do, but live is something of significance to many of our creators.”
The Stockholm-based company, which reports in euros, lost the equivalent of 23 cents a share on revenue of $2.81 billion for the quarter, exceeding expectations.
More from Deadline