Spotify’s CFO touted the success of AI DJ, the company’s artificial intelligence-driven personalized guide, during an investor conference on Wednesday and highlighted management’s continued belief in more upside in the podcasting business, while emphasizing an “evolution” in its approach to it.
Calling it one of the company’s most successful service launches, Paul Vogel said during an appearance at the Goldman Sachs Communacopia + Technology Conference in San Francisco, that AI DJ was already available in 50 countries and has been “really well received.”
He added: “Reviews have been amazing, and it’s something that’s very differentiated, that consumers love, that the artists love because it’s getting the content out there, and so we’re going to continue to invest in those types of things.”
Pointing out user growth in newer, more developing markets as well as more mature markets, Vogel touted Spotify’s mix of free and paid-for offerings. “Our funnel of having both a free and ad-supported business and a premium subscriber business has really been the secret sauce to what’s worked for us,” he said. Video streamers have also increasingly been betting on offering consumers different tiers, including ad-supported cheaper service tiers.
Asked about Spotify’s roughly five-year push into podcasting, Vogel said, “we are the largest player in podcasting in many of the countries we participate in,” adding: “We feel really good about where we are in terms of our market share and our growth and our presence in podcasting.”
But he also highlighted that the company has learned what works for it, allowing it to now invest more where it makes sense and pull back where the returns are not as promising. Speaking of an “evolution” of Spotify’s podcasting strategy, Vogel said its key focus was growing advertising on podcasting in a “thoughtful” way and “doubling down on things we see works, investing in new areas and pulling back on things that haven’t been as profitable.”
Later in his appearance, the Spotify CFO acknowledged that “we are signing deals differently than we have in the past,” explaining: “We continue to believe that creating podcasts and having Spotify originals will still be a part of the strategy. We’re also going to think about what’s the best way to produce that content with the business partner with that content. What’s the best way to share in the risk and the reward of that content with our partners?”
Vogel even admitted: “We’ve made some deals that we think were highly, highly beneficial to us, we probably made a few that didn’t work out as well.” He didn’t cite examples, but continued: “And so you learn from that and say, ‘Okay, how can we structure deals differently? What are the right deals to sign that are really beneficial so that the cost structure is in a place that we are actually investing in the right things’?”
The music streamer was one of the big gainers in the broader media and entertainment space during the first six months of 2023, ending the half-year period more than 100 percent higher than the end of 2022.
In late July, Spotify, led by CEO Daniel Ek, reported ending its second quarter with 551 million monthly active users, adding 36 million from the previous quarter and hitting an all-time high for the company. It also added 10 million paid subscribers, 3 million above its guidance forecast and a record for the second quarter, to reach 220 million overall. Still, operating losses continued at the company, which has been vowing to focus on pushing its business toward profitability.