Spotify CEO Daniel Ek stressed his company’s focus “on tightening our spend and becoming more efficient” in the company’s fourth quarter earnings call on Tuesday (January 31) — the first such call since Spotify announced it was laying off 6% of its global workforce.
In a statement following the layoff announcement, Ek wrote that “in a challenging economic environment, efficiency takes on greater importance.” And the idea of “efficiency” was hammered home again and again on the latest earnings call — the word was sprinkled liberally throughout the remarks of both Ek and CFO Paul Vogel. “The next era of Spotify is one where we’re adding speed plus efficiency,” Ek said, not one “just focused on speed or growth at all costs.”
But he also emphasized that “this doesn’t mean that we’re changing our strategy” overall. “We will continue to work to build the platform of the future,” Ek vowed, “and that will take investment in new opportunities that we outlined, like podcasts and audiobooks.”
While Ek acknowledged that Spotify “probably got a little carried away [in 2022] and over-invested relative to the uncertainty we saw in the market,” he said that, given the choice, he “would do it again.” According to Ek, not only did that investment help grow Spotify’s user count — the company added premium subscribers at a higher-than-expected rate — but it helped differentiate Spotify from its competitors.
Responding to a question about how Spotify was working to compete with TikTok, Ek said “we’re in a better position competitively than we’ve been for many many years.” By adding podcasts and audiobooks to Spotify’s music offering, he added, the platform has created “a much more resilient consumer experience.”
While Ek had said Spotify was exploring raising U.S. subscription prices during an earnings call last year, he said “I don’t have anything specific to announce at this point” on Tuesday. But he noted that the platform raised prices in “more than 40 markets around the world” last year and that “our priority is to grow revenue as fast as we possibly can.”
When asked about potential price increases a second time, Ek responded that “we’re thinking how we can grow our business the best possible way.” “Sometimes that is keeping the price low to grow the number of users on the platform,” he continued. “Sometimes it is increasing the revenue per user. Sometimes it’s increasing our margin per user… the important part is that this is something that creates win wins with our label partners too.”
Investors asked Spotify for additional information about two 2022 initiatives, its moves into audiobooks and selling concert tickets, but company executives were scant on specifics. “It’s early days on audiobooks,” Ek said. “We’re seeing some encouraging signs. We’re definitely seeing people take up the offering.” He added that “audiobooks have a massive opportunity and there are very few consumers currently participating in the ecosystem,” echoing his comments from Spotify’s 2022 Investor Day.
When it came to Spotify’s nascent live events business, Ek underscored that his company isn’t aiming to “go compete with the [existing live music] ecosystem.” Instead, he said, Spotify hopes to “enable the ecosystem.” “Users are asking us, ‘help me find more great things to go watch,’” Ek explained. That translated to a “tremendous uptick in the number of people visiting the concerts tab on Spotify in 2022.”
“If we can be a partner to creators and help them sell more of their tickets,” Ek added, “that’s a meaningful increase to many artists’ livelihood, which is great and something we’re focused on.”