Spotify Experiments May Cause Rethinking of What's a Subscription, CEO Says
Spotify is experimenting with paid service terms, which could “lead us to rethink the definition of subscriptions,” said CEO Daniel Ek on a Q1 call Monday. It gravitated to shorter subscriptions in newer markets as “people come in and out…
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quickly,” he said. Now in trials is Premium Duo designed for two people under the same roof -- in Colombia, Chile, Denmark, Ireland and Holland. The company is encouraged by early response, and believes the plan will be “accretive” to monthly average user count (MAU), and subscriptions, if it expands elsewhere. Management believes family and student plans will lead to less customer churn. Forty-two percent of Q1 gross subscriber additions were former customers, said Ek. The company had a 36 percent rejoin rate, twice gross subscriber additions, he said. The company expanded its premium user base 32 percent to 100 million, and ad-supported listeners increased 21 percent to 123 million, it reported. Revenue jumped 33 percent to $1.68 billion. It projects Q2 revenue $1.68 billion-$1.8 billion. Ek called voice speakers “a critical area of growth," and the company expects to pursue opportunities there. "We want to be on all major platforms.” He tempered enthusiasm for voice control, saying while the growth rate is impressive, it's very small compared to mobile. After course correcting, Spotify is having “strong growth” in Q2 ads, said Chief Financial Officer Barry McCarthy.