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Edition #402
Spotify goes from strength to strength, brands want in Apple News & Time removes its paywall.
You might wonder why I dive into the odd earnings report, I like to keep up to date, but it is where meaningful changes have to be shared with the market. Also analysts prod, and ask questions, ignoring the answers just seeing what they ask tells you something.
During earnings week, they tend to dominate the news, so other stories are a bit lighter. I thought I’d take a peek at Spotify’s.
For this quarter, Spotify noted:
- Reported double digit percentage gains for both monthly active users and premium subscribers. These numbers even surprised them.
- This led a record number of ad-supported MAU. Reporting €329 million in ad revenue last quarter.
- Related, Gimlet being allowed to re-push content to other podcast networks. Smart.
- Apparently they are investing in tech, to help turn broadcast audio into podcasts. From their Megaphone acquisition in 21. This helps publishers better monetize & extend their audience. Win/Win.
- Spotify has surpassed half a billion MAUs.
- Right now, ad-supported revenue is reducing gross margins.
- R&D spend was up 74% this past quarter compared to last year.
- Many podcast deals are up for renewal in 2024, one question was how will you retain without overpaying and underinvesting, the answer was, you’re right to call that out, and we’re not gonna do that. Mentioning more diligence around future content deals.
- ^ They have internal analytics, so feel like they know how accretive any particular piece of content is, to users, retention, revenue growth. Now, as compared to when these deals were done, they do have a larger user base, to spread the cost over.
- ^ Notably, Joe Rogan deal was done Feb last year, monthly active users have grown 26% since Q4 21. So yeah, the same deal on same terms, would be ‘cheaper’ per user.
- The recent user growth has been broad across all geographies and plans. With a slight skew to family & promotional plans, which will convert next quarter.
What can we take away from all of this? Spotify remains a strong cultural platform, and even more so, with the addition of its podcast guests. They mention on the call, they feel comfortable with the ability for Spotify ad driven business to grow.
It really is a platform that seems to build from strength to strength, without overextending itself. Some of the podcast executions were a bit wonky but they have helped to rapidly build out a pillar in the business and stimulated more tools & monetization options for creators.
If you haven’t tried running Spotify ads, you can fairly easily, it’s kind of a nice experience, you run the audio ad, in the app they see the banner, and can click through. It’s a good experience, as you listen, are interested so swap to the app, then get the creative impact, then the click.
From memory, for $250, we got about 9,000 listens, 20 or so clicks, that performed on par with Google Display. Not bad really. I’m not sure on issues with fraud on Spotify, have heard of artists with hacks, to get track listens, that probably contributes some but frequency capping hopefully protects from that too much.
Worth trying. ????????
Notable stories this week
- Brands vie to get their content on Apple News and other aggregators.
- Americans mostly believe news they hear on podcasts.
- Congrats to Mike and team.
- How Roblox is bringing AI to the Metaverse.
- Google’s rumored AI-infused search overhaul has marketers attention.
- Why brands should direct user-generated content.
- Nielsen seems to gain edge after TV networks work to cut its measurement role.
- Why paid search is like shelf space.
- Time removes its paywall.
- BuzzFeed News is dead, who is really to blame? A thoughtful take.
- Google launches new paywall and subscription monetization tools.
- $1.8b Australian start-up LinkTree denies Instagram change makes it redundant.
- Nielsen’s annual marketing report find marketers are all in on streaming despite questions on its effectiveness as advertising platform.
- Meta’s stock soars on revenue, earnings, user growth beat. And Spotify reports strong user gains as margins improve.
- Spotify will open Gimlet podcasts to other platforms.
- Spotify is investing in tech that converts broadcast audio to podcasts.
- CNN’s new, proprietary publishing platform helps reduce tech debt.
- Twitter seemingly now requires all advertisers to have a verified checkmark.
- [Long read] The origins of creativity.
Deals/M&A
- Yahoo is acquiring peer-to-peer sports betting apps Wagr.
Datapoints of note
- Software spending in 2024 should rise 12%.
- 79% of marketers expect marketing goals to increase this year.
- Only 30% of marketers use original research in content marketing strategies.
- Consumers exposed to ads longer than 15 seconds are 23% more likely to purchase the advertised product, compared to 14% for shorter ads.
- The majority of Americans (55%) say they trust news from podcasts as much as the news they get from other sources.
That’s it for this week.
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