Spotify took a $41 million loss in podcast-related write-offs—principally on account of contract terminations.
The music firm informed buyers it took steps to shrink its actual property footprint and rationalize sure areas of its podcasting enterprise. “We additionally exited our Soundtrap Market enterprise. We count on all of those strikes to have a optimistic influence on our price of profitability on a go-forward foundation,” Spotify informed buyers throughout its earnings name. “Nonetheless, they did lead to roughly EUR135 million of internet prices within the quarter, with EUR44 million flowing by means of gross margin and EUR91 million flowing by means of our working expense.
When requested to offer additional particulars on its podcast content material technique, Daniel Ek elaborated on Spotify’s focus. “I feel the most important shift in our technique is basically across the extra streamlined operations and that we’re being extra cautious about, now that we have now much more information round, doubling down and renewing the issues that did work and cease doing the issues that didn’t work. And I feel that’s the first consideration that we’re going by means of.”
Ek was additionally requested about podcast content material licensing that’s up for renewal in 2024. “Not solely are we in a distinct local weather, however I feel additionally to set expectations the place we had been 4 years in the past—we had little or no information to back-up our choices on. So an important factor is to contextualize it for buyers. We had been able the place we thought podcast general was under-monetized and underutilized by shoppers and we had an actual probability of breaking into {the marketplace}.”
“Now, we have now much more information. Now we have much more information throughout the tens of millions of podcasts we have already got about what that does to new person acquisition, to retention, to conversion, to subscribers, et cetera. And never surprisingly, what we’re discovering is that a few of these reveals work very well with our viewers. A few of them don’t work properly. A few of them work properly, however throughout a distinct value construction as we in all probability overpaid relative to what we must always have executed.”
“And so we’re coming at this with the method of rightsizing some offers, doubling down on a few of the issues that labored actually properly after which stepping out of some offers and relationships that hasn’t labored out.”