Spotify Podcast Consumption Doubled In Q4, Subscribers Hit 155 Million

Andrew Matthews/PA Wire

Streaming audio giant Spotify said fourth quarter podcast consumption nearly doubled, premium subscribers hit 155 million and monthly active users jumped 27% to 345 million in the fourth quarter of 2020 — helping drive a 17% increase in revenue.

Premium subs were up from 144 in the third quarter and 124 the year before.

In an investor letter and conference call, CEO Daniel Ek said the company had 2.2 million podcasts on its platform at year end, up from 1.9 million in the prior quarter. Some 25% of monthly active users engaged with podcast content in the quarter and Ek noted an “increasing conviction in the causal relationship between the growth in podcast consumption driving higher LTV and retention among our user base.”

He gave a shout out to The Joe Rogan Experience, which became exclusive to Spotify in December, for “driving a meaningful uptick in audience.” As of year end, it was the top podcast on the platform in 17 markets and “has stimulated new user additions, activated first time podcast listeners, and driven favorable engagement trends, including vodcast consumption.”

Spotify had also announced a multi-year partnership with The Duke and Duchess of Sussex’s Archewell Audio, releasing a holiday special episode in December. Other U.S. launches included Dare to Lead with Brene Brown (Parcast), 10 Songs that Made Me (Spotify Studios), The Ringer Music Show (The Ringer), and The Get Up Morning Show (Gimlet). Internationally, it released 57 new original and exclusive podcasts.

International launches included Caso 63, our first Original in Chile, a first podcast in Telugu, Lifetime NTR (India), and 123 Segundos in partnership with BandNews (Brazil). Spotify also signed 6 podcasts exclusively to our creator support program in Indonesia.

About 29% of Spotify subscribers are in North America, 40% in Europe, 21% in Latin America and 11% in the rest of the world. The company noted a wave of price hikes that started in October when it raised the price of its Family Plan in seven markets (Australia, Belgium, Switzerland, Bolivia, Peru, Ecuador, and Colombia and said so far it’s seen no meaningful impacts to churn or customer intake. This week, it announced Family Plan price increases across 25 more markets in Latin America, Europe and Canada.

As podcasting grabs the attention of giants like Amazon, which recently acquired Wondery, Ek was asked on the call if Spotify needs to pursue more M&A to compete. “We’re not surprised that something like audio would catch the attention of the big companies. It’s no surprise that this is happening … we look at this as validation that we are heading in the right direction,” Ek said. “We did expect this so have been aggressive with acquisitions,” most recently Megaphone, which closed in December. Ek didn’t rule out more deals but said the company is now focused mainly on ramping up in-house production capabilities. Three years ago, Spotify had about 300 people producing content for the platform, he said, in 2021 it will be close to 1,000. “It’s a tremendous shift in the company.”

Execs were cautious about 2021 given uncertainties triggered by Covid-19. The pandemic brings “more uncertainty than any normal year,” said Ek. It shifted user behavior in 2020 and created a pull-forward effect through the year — including likely from the current first quarter to the fourth quarter of 2020 — as well as impacting new music releases. The company predicted zero to minimal subscriber growth of 155-158 million subs in the first quarter, knocking the stock lower in early trading.

“In 2020, we believe the pandemic had little impact on our subscriber growth and may have
actually contributed positively to pulling forward new signups. From a revenue standpoint,
advertising was negatively affected in the back half of Q1 and persisted throughout the rest of the year. Looking ahead, we are optimistic about the underlying trends in the business into 2021 and beyond, however, we face increased forecasting uncertainty versus prior years due to the unknown duration of the pandemic and its ongoing effect on user, subscriber, and revenue growth,” Spotify said.

Spotify, based in Stockholm, lost the equivalent of $0.79 a share last quarter — narrowed from the year earlier but below Wall Street expectations — on sales of $2.6 billion, up from about $2 billion (Spotify reports in euros).

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