Spotify CFO Paul Vogel said the streaming service aims to reach well beyond its origin in music to become the world’s top audio app, enriching its offerings in such features as podcasts, audiobooks and live music.
“We want to be the No. 1 global streaming audio player, and that means having everything as much as you could possibly think in audio,” Vogel said Thursday during the MIT Sloan CFO Summit, noting that Spotify has $3.5 billion in cash on its balance sheet available for expansion.
“In the next five to 10 years there’ll be 3 [billion] to 4 billion smartphone enabled phones — why shouldn’t every one of those phones have a streaming audio app on it?” Vogel said. “And if they’re going to have a streaming audio app, let’s make ours the best.”
Spotify during the third quarter increased its base of monthly users by 19% over the prior year to 381 million, the company reported last month. Its paid “premium” subscribership also rose 19% compared with the third quarter of 2020 to 172 million. Advertising revenue during the period surged 75%, boosted in part by a growing podcast business.
“We believe over time that the ads business will continue to grow,” Vogel said, noting advertising appears in Spotify’s free listening service. “I don’t see any reason why the ads business can’t be as good and as healthy as a premium business in the long term.”
In its most recent expansion, Spotify said this month it will acquire Findaway, an audiobook company.
The company’s acquisition strategy “leads to user growth, better engagement, more time span, higher lifetime value,” Vogel said. “We can invest a lot in things — we want to take risks.”
Spotify plans to push further into media disruption, Vogel said, cautioning against underestimating its impact.
“What you’ve seen over time, particularly in the media space, is I think people try to use old paradigms to understand where the business and markets are going,” he said, noting the shakeup in entertainment streaming caused by Netflix.
“Opportunity is limitless — it’s limited to your imagination,” Vogel said, adding that the podcasting business is especially promising and ripe for improvement.
“Podcasting was this business that for 20 years didn’t change — it was a simple RSS feed — no way to do anything different,” he said. Now, Spotify brings listeners “discoverability” in podcasts.
“When you listen to podcasts, we’re going to recommend to you additional podcasts that you didn’t even know you wanted to listen to,” he said.
Meanwhile, Spotify will press on with innovation in music streaming, Vogel said.
“We invested heavily in R&D and infrastructure to create an experience where when you go on Spotify, it gets better,” he said. “Your playlists get better, what we show you gets better, your experience gets better, so you hear new and unique songs.”
The company’s ambitions extend beyond consumers, he said. It also aims to improve the experience for musicians and other creators of audio.
“What we want to become also is the best platform for creators to create and distribute their art,” he said. “Whether that’s music, whether that’s podcasting, whether that’s anything else, if you come to Spotify and we make it easier for you, we help you monetize, and we help you get discovered, you’re going to want to work with us more.”