At the end of 2023, Spotify made big changes to both its podcasting and audiobooks products. On the company’s fourth-quarter earnings call yesterday (Feb.6 ), CEO Daniel Ek fielded questions about the company’s new podcast deals with Alex Cooper’s “Call Her Daddy” and Joe Rogan’s “The Joe Rogan Experience,” as well as its new audiobook selection that gives premium subscribers access to over 200,000 titles for free.
Ek said Spotify is looking to make the platform more appealing to creators by allowing the top ones to distribute their content elsewhere. Alex Cooper had been streaming her podcast exclusively on Spotify since 2021 under a $60 million three-year contract. And Joe Rogan’s show became exclusive with Spotify in 2020 though a deal worth over $100 million. Rogan’s new agreement, which is nonexclusive, is worth up to $250 million. Under the new contracts, these podcasters are allowed to work with competing platforms like Apple Podcasts.
“By broadening distribution, we think we can accomplish a number of different goals. Most notable among them, we are going to be aligned with the creator,” Ek told analysts on yesterday’s call. “The creator wants to be on many different platforms and wants to have as big of an audience as possible.”
In the December quarter, Spotify reported a revenue of $3.98 billion, up 16 percent from the year prior. The company narrowed its quarterly loss to $75 million $290 million. Monthly actives users grew by 23 percent to 602 million at the end of December, and premium subscribers grew by 15 percent to 236 million.
On the call, multiple analysts asked Ek about Spotify’s recent changes to its audiobook selection. Spotify first introduced audiobooks in 2022. Last November, the company made over 200,000 titles free for premium subscribers to access for up to 15 hours every month. In the earnings report, the company noted the cost of changing its audiobooks offering and €4 million in severance payouts had an impact on profitability in the fourth quarter, though the gross margin was 26.7 percent.
Ek noted that there was a trend in audiobooks that did well on Spotify, in that they were atypical of the titles that normally do well. He didn’t provide names of the exact titles, but mentioned that the new audiobook format is particularly conducive to young and emerging authors.
At the end of 2023, Spotify was the second largest provider of audiobooks behind Amazon’s Audible, Ek said, “which is notable given how entrenched the legacy players are.”
“And this is exactly what we set out to do, grow the pie for the publishing industry and expand the interest in audiobooks to an entirely new set of listeners,” he added.