Specialist
Former Global Head, Content Programming at Spotify AB (Spotify Technology SA)
Agenda
- Spotify's (NYSE: SPOT) pricing power and ARPU outlook
- Data monetisation and margin expansion potential
- Spotify for Artists and Spotify’s evolving proposition for artists
- Relationship and rate dynamics with labels and publishers
- TikTok’s evolving role in the music industry
Questions
1.
The Q1 2021 numbers show that Premium subscribers has risen to 158 million, which is 20-21% growth YoY. How do you think about growth within the Premium subscriber base for the business? What rate might you expect? Presumably there would be a difference between the mature markets and emerging markets.
2.
Do you expect conversion from free to Premium being more challenging in the new markets that Spotify is launching in vs the experience it had in Europe and the US? What is that conversion rate like?
3.
What share of the Premium subscriber base do you think are in mature markets vs emerging markets?
4.
How much of the impact on ARPU would you say is attributable to the mix of markets vs the mix of bundle plans or the penetration of Family plans and student plans in more mature markets driving down ARPUs?
5.
How good do you think the Family plan is in driving MAUs? How important is this?
6.
Do you have a sense as to how many users there are in the average Family plan, typically? Presumably, the ARPU is driven by the number of users and then you’ve got the USD 16.99 divided by what that average is.
7.
What do you think is Spotify’s appetite for price increases and would you expect some of that to come through in the next year or so?
8.
How do you think the cost of content would be impacted by publisher rates potentially increasing? Do you think that will come through directly into gross margins if that happens?
9.
If you take the publisher and label rights separately, my understanding is publisher rights are about 12-15% of revenue on average. It depends on what market, and the rates are slightly different depending on who’s collecting and negotiating for that, but is that about right?
10.
You mentioned all-in royalty rates on the publishing side in the US going from 11% in 2018 to all the way up to 15%, if you take what the CRB are talking about. Presumably that must come through into the content cost in some form. That pushes that up, unless you can offset that cost elsewhere, if you’re just paying out a higher percentage of revenue debt. Is that correct?
11.
Do you think publishers are getting better at extracting more favourable terms from DSPs [digital service providers]? Do you think the CRB could be the incentive for other markets around the world to pursue a similar course, in trying to strike more favourable terms for publishers, as well as artists and record labels?
12.
On the record label side, by market, my understanding is there’s a rate that’s set and then the record labels are paid out based on their market share regarding consumption in that period. Is that correct?
13.
Does the mix of the big three labels vs independent vs non-music audio or podcasts impact the longer-term gross margin potential for Spotify in terms of long-term content costs, or does everyone get paid out the same kind of rate?
14.
Is a higher share of independent labels a good thing for Spotify or a good thing for DSPs generally?
15.
From the streamers’ perspective, is there a difference in the cost of working with independent labels vs the big three? Are they able to negotiate better rates than independent labels are, or is it a standard rate set by the market that varies from market to market?
16.
What share do you think independent labels have on the Spotify platform?
17.
What would happen in the event of artists going direct to Spotify? Do they negotiate their own rate?
18.
You spoke about Discovery Mode. How exactly does this work? What do artists and labels pay to have a higher prominence within Discovery and playlists? What’s the value for labels and artists in this context?
19.
What are the different categories of listening on Spotify? You’ve got Radio, auto play and playlists. How much of consumption do Radio and auto play account for?
20.
You mentioned the most important metric is the direct share of consumption that the platform is able to drive. What is that in the case of Spotify and its active suggestion of content?
21.
Which area of consumption do you think Discovery could be relevant to? Presumably you wouldn’t be able to have a Discovery track for every song that’s consumed as part of that passive consumption from consumers, otherwise the experience would be all over the place.
22.
At what speed what we have discussed on Discovery be potentially deployed?
23.
What are your thoughts on TikTok in relation to Spotify and whether it is a driver of consumption to the Spotify platform or a competitor in the mid-to-long term?
24.
Do you think TikTok could supplant Spotify in new artist discovery?
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