Spotify CEO Daniel Ek says the streaming audio giant is going to be “very diligent” in assessing future investments in podcasting as several of the company’s rich talent deals come up for renewal.
Speaking on the company’s first-quarter earnings call, Ek responded to a question from a Wall Street analyst wondering about the plans for potentially pricey renewals this year and next. During the period when Dawn Ostroff was spearheading content, Spotify spent more than $1 billion acquiring podcast assets and locking up exclusive deals with the likes of Joe Rogan and Dax Shepard. Ostroff left the company earlier this year, and her responsibilities have been taken on by Alex Nörstrom, the exec whose specialty has been the free, ad-supported side of the business.
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“You’re right in calling out the overpaying and over-investing and I can start off by saying that we’re not going to do that,” Ek said. “We’re going to be very diligent in how we invest in future content deals and the ones that are performing we will renew and the ones that aren’t performing, we’ll obviously look at them on a case by case basis on the relative value. We have very sophisticated tools for measuring impact on the platform.” Those tools, he added, help the company determine a reasonable budget for content.
Market share, Ek added, also helps. “Because we’re now the largest podcasting platform, that means that we have an opportunity to amortize across a larger base,” he said. “So, relative to someone that’s smaller, we should be in a better position should we want to renew a deal.”
The podcast business is not yet profitable, though CFO Paul Vogel reiterated his outlook for profitability in the next 12 to 24 months.
In the quarter ending March 31, Spotify more than doubled Wall Street expectations for new premium subscribers in the first quarter, adding 5 million to reach 210 million globally. Analysts had been expecting 2.2 million subscriber additions. The streaming audio company also beat estimates for monthly active users, a larger category including those listening for free, coming in at 515 million.
Spotify reported a 14% year-over-year gain in revenue during the quarter, hitting $3.04 billion, but the top line fell 4% from the fourth quarter as the company coped with softness in the advertising market.
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