Renewal of global licensing deals, an uptick in premium sub-counts, 50% growth in podcast audience and 15 million new listeners are the highlights of the latest Spotify investor letter and here’s everything you need to know.
Renewal of Global Licensing Deals –
Licensing deals are complicated, especially when being executed at a global level. Before Spotify arrived in India, we saw the Swedish streaming company struggling to get the licensing deals in place. Amidst the launch days of Spotify, the company managed to get involved in two separate copyright infringement cases with Saregama Music Label & Warner/Chappel Music Label. Although the Warner music catalogue is still not available in India, the company seems to be in the process of negotiating a global licensing deal with them along with Universal Music Group. Which leaves us with Sony, the third Major music label which happens to own more than 5% of the company and already has a deal in place which is now up for renewal. Along with that, it seems like Spotify has also managed to strike a deal with Merlin Network, the global digital rights agency for independent record labels. While Merlin isn’t really considered as a “major” in the industry, Spotify has decided to go ahead and portray it as one in the investor letter stating “We have reached agreement with two of our four major label partners on the renewal of our global sound recording licenses, and are in active discussions with the other two. This is the sixth round of label negotiations we’ve worked through in our 13-year history and, while it is typically a long-drawn-out process, it has become part of the normal cadence of the business.”
An uptick in paying subs –
Last month, Spotify’s chief rival, Apple Music went on to announce that it has passed the milestone of 60 Million paid subscribers but looks like Spotify is much ahead in the subscription battle, as the company just revealed that it has gained over 8 million paid subs in the last 3 months, closing the quarter with over 108 million subscriptions in total. This means the company managed to grow at almost twice the rate of its next biggest competitor. Besides the paid subscriptions, the company went on to exceed speculations by reaching the monthly active user count of 232 million accounting for a 29% year-on-year growth. Although, the company did admit that it slacked on certain fronts and didn’t capitalize on certain opportunities involving a student promotional program that wasn’t materialized due to certain shortcomings on the marketing side of things.
Emerging on top of the podcast game –
Earlier this year, we saw the streaming giant acquire multiple podcast companies for an estimated cost of $400 Million and looks like all the hard work has finally paid off. Along with all the other impressive numbers that got revealed in the second calendar quarter report, the company saw a spectacular 50% growth in the global podcast audience. In other exciting news revolving around the podcasting business, Spotify also recently teamed up with the legendary American filmmaker, Quentin Tarantino to push out an amazing podcast starring Tarantino himself talking about the creation of his upcoming film “Once Upon A Time…In Hollywood” along with a massive playlist to go along with it featuring some of his favourite tunes from the previous Tarantino movies.
Following the release of quarter 2 reports, Spotify shares are trading at $152 as of 31 Jul, 3:00 pm (GMT-4) and according to Jon Markman’s thoroughgoing report on Forbes.com, this stock price could take a jump to $265 in two years. Rihanna ahead of her much-anticipated album release, also reportedly has unfollowed Tidal, another one of Spotify’s competitors and has started following Spotify on Instagram which could be a hint towards a partnership between the megastar and the company. Spotify has managed to snag the spot of these popstars’ favourite platform and seems to be playing its cards right. Given that it stays on the right track, it has the potential of turning things around and finally become a profit-earning corporation in the years to come.