2023 was a record breaking year for subscriber growth at Spotify but with sluggish economic growth and the cost of living crisis, how will the music streaming giant continue its solid growth trajectory whilst transitioning to a more efficient, more profitable company?
Speaking at the 2024 Cannes Lions Festival of Creativity Gustav Gyllenhammar, Vice President of Subscriptions and Markets at Spotify said part of the answer lies in connecting with new global audiences - both from the artist and audience side - whilst continuously looking for ways to create value for existing subscribers through new content and more personalisation.
Whilst the Swedish music giant has grown dramatically since its launch in 2008, it has not been immune to the economic downturn faced by many tech companies since the pandemic. In December last year, CEO Daniel Ek announced a 17% cut in the group’s workforce citing economic headwinds and a renewed focus on operational efficiency.
Six months later, the company is pushing forward into new platforms, partnerships and innovation. Gyllenhammar sat down with Euronews to explain how international expansion and world music will help push Spotify into a new stage of global growth.
The music industry is crossing language borders
Gone are the days when non-English speaking music was a small part of the music industry. As the world has become more diversified and connected, Spotify has seen record growth in the popularity of artists from South East Asia, Latin America, and Africa.
According to the 2024 Q1 investor report, of the 66,000 artists who generated at least $10,000 (€9,327) on the Spotify app, more than half are from countries where English is not the first language. Latin music, K-pop and Afrobeats as well as other genres from West Africa are growing in popularity.
Conversely, the growth of international artists is attracting a much more diverse group of listeners and Spotify is honing in on this opportunity - and the first step starts with greater awareness and connection to local artists and communities.
“Spotify’s strategy involves connection with local communities by having teams on the ground all around the world that really work closely with all players within the music industry.
“We want to support young artists in their careers and get their music to grow.”
The company says applying its proven growth strategies from mature English-speaking markets to new regions by focusing first on the freemium model and showing new users the value of the platform is key.
“Freemium really is the cornerstone of our strategy. The advantages of the premium service really comes to life the more engaged the fans are with the free service. Developing the music industry globally is a passion project for us at Spotify.”
One app for multiple audio
As well as reaching new markets, Spotify says growing the value for its existing subscribers is a key part of its future growth and operational efficiency. For instance, new content such as podcasts and audiobooks are already available to premium subscribers in some markets.
Building more into a subscription will help the company weather any economic uncertainties when users look to reduce subscriptions, argues Gyllenhammar.
“We are putting audiobooks into our premium service in a number of markets around the world such as the UK and Ireland, which is really resonating well with consumers. It's part of delivering a better value to price ratio for consumers.”
What is Spotify’s business plan?
Whilst subscribers are already at over 600 million globally, Gyllenhammar said there is still a long way to go and the future of music and audio streaming looks bright.
“I think we're very pleased with the development we've seen over the last couple of years but as we know there are eight billion people all around the world. We see a phenomenal opportunity to grow around the world in more emerging markets. Music has so many roles to play in a consumer's daily life,” he concluded.
Watch the video above to see more from the interview with Spotify.
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