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Spotify VP Paul Vogel Talks Subscription Prices, Label Licenses, Podcasts

The annual Goldman Sachs Communacopia Conference gives representatives from major companies the opportunity to present to the investment community, and Paul Vogel, Spotify’s VP and head of financial planning & analysis, treasury and investor relations, spoke on the streaming giant’s behalf on Tuesday morning.

While many of his comments were statements frequently heard in the company’s announcements, he did present some intriguing perspectives, as well as throwing shade at Amazon’s just-launched high-quality audio service when asked about it by a reporter.

Vogel began by noting that Spotify is by far the world’s largest audio streaming service, with 108 million paying subscribers in 79 countries. When asked about the company’s feelings about the pace of its subscription growth, he said, “It’s pretty good, we’re growing about twice as fast as our nearest competitor [Apple Music], and internally we’ve been really consistent about hitting numbers,” although, presumably in light of the company’s comparatively subpar results in its latest earnings report, “in any quarter there’s always going to be nuance.”

Speaking of nuance, he was also asked about the status of the company’s negotiations with the labels, which sources confirm are still outstanding with the Universal and Warner Music Groups. “This is our sixth round of negotiations in 13 years,” he said. “It’s not new to us. Some go quickly, some take longer, and this process doesn’t feel any different. I don’t expect any change.”

Asked why the company hasn’t raised its subscription prices, “In order to grow our ecosystem, we’re not yet at a point where you have the stickiness globally,” he said, “but I think $9.99 is a pretty good value, we think it’s fair. It’s on growing users and subscribers and bringing more and more value into the ecosystem, which is essentially lowering pricing [in itself],” he said.

He then spoke about Scandinavia, where the company recently tested a price hike on certain plans. “That’s a market where we tested pricing and that test went really well,” he said. “That’s not to say we wouldn’t test other markets, but our main focus is on growing the top of the funnel: users and subscribers.”

Referencing the family plan and the many people taking advantage of it who are not necessarily legally related — “It’s shocking how many six-member families there are out there,” he joked — Vogel replied, “It’s tough to say, they have to live in same home, and there are tools we can apply to enforce some of the rules. But we know it gets people into using the product, and eventually they’re going to graduate away from the family plan. For us there is a high element of the more people you get into the platform [the more its numbers will grow].”

Finally, he spoke at length about podcasts, which have been Spotify’s primary growth focus over the past couple of years, and he singled out the company’s popular podcasts from Amy Schumer, Joe Budden and its recent deal with Barack and Michelle Obama’s company. “Podcasts are growing really nicely,” he said, “the audience is up 50% [in the second quarter] over Q1, people using podcasts are more engaged and consume more music, so retention is going to go up and churn will go down.

“We think there’s an opportunity to differentiate our product in ways others are not,” he continued. “Something that’s not talked about as much with podcasts is discovery — when you own discovery, you own so much of your ecosystem and the demand generation. We’re still in early days in music but we’re best in class in terms of discovery algorithms — and look at podcasting. It’s way, way further back. The ability to help people discover what they want to listen to on podcasts — that’s nowhere! When you can help drive discovery and demand you can drive the discussion about what matters.

“I think we have an opportunity to shift the dynamic and help people discover what’s out there,” he concluded.

 

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