We think Spotify is serious about making the best experience for creators. Gimlet (podcast studio, Acq for $194M) in Feb 2019 The Ringer (website and podcasting network, Acq for $196M) Feb 2020 Megaphone (podcast tools for advertisers & publishers, Acq for $235M) Nov 2020 Podz (podcast discovery platform, Acq for $45M) Jun 2021īetty labs (live audio social app) Mar 2021 Podsights & Chartable (podcast analytics) Feb 2022 To illustrate how serious Spotify is in becoming an aggregator in Podcasts, let's take a look at the recent acquisitions helping to drive this: It seems Spotify has found a strong source of revenue and has used acquisitions to strengthen the proposition and become an aggregator for podcasts. What makes the case particularly strong for Spotify to generate revenue from podcasts is the ability of the podcast publisher to easily insert relevant ads into their podcasts. This is a lot of potential revenue Spotify could capture. What’s worth highlighting is ad spending for podcasts was $2.31 billion in the same year but is growing at a faster rate than ad spending for streaming and could be worth $4.26 billion by 2026. Ad spending for music streaming in the US alone was worth $3.65 billion in 2021, of which Spotify already has a large portion. #SPOTIFY STOCK FORECAST 2030 DRIVER#The main driver for this growth in ad-supported revenue apart from expected ad-supported music streaming growth would be podcasts. This suggests revenue might grow faster in the coming years even as premium revenue growth slows down. What revenue growth could look like for Spotify However, for Spotify in particular we know that their ad-supported revenue has grown by 62% in the last year. When we take a look at the RIAA music revenue statistics, we can see below that ad-supported streaming revenue has grown 46.7% in the last year. Furthermore, as podcasts are already up to 23% of the ad-supported audio share and increasingly get bundled into Spotify, Spotify will gain a significant share of ad-supported audio and revenue. #SPOTIFY STOCK FORECAST 2030 ANDROID#However, we can easily see radio’s share will slowly decline as: 1) younger audiences opt for subscription-based audio such as Spotify, 2) the number of cars and devices that support radio declines, while ones that support Apple CarPlay or Android Auto increases and ultimately, 3) streaming becomes the de facto method of audio consumption. Market Share of Ad-Supported Audio Time Spentįor podcasts, this share can be anywhere from 9% to 23% and for Spotify itself, its share of ad-supported audio would be anywhere from 2% to 10%. On a side note: for the first time in 20 years, there was growth in the physical market, partly driven by a recovery in physical retail and a resurgence of interest in vinyl. 3) The global recorded music industry generated $25.9 billion in 2021 (+18% YoY). 2) We can also see digital downloads have been almost phased out while physical sales have dropped significantly. Overall streaming revenue has improved by 24.3% from the prior year and now represents 65% of total music industry revenue. in 2011, but it is only in the several years it has become the most dominant. If we look at global music revenues in the last two decades below, we can see a few things: 1) streaming has taken off since Spotify launched in the U.S. The thesis is rather agreeable and it seems Spotify has significant tailwinds. 2) Spotify will begin to have the upper hand in the relationship with record labels and 3) Spotify can continue to exert dominance in the audio industry. It lays out a strong thesis where Matt believes the following: 1) Audio has been significantly under-monetised and will grow due to Spotify's focus on ads, international expansion and pricing power. One fantastic overview is by Matt at MT Capital Research. Spotify ( SPOT ) has cropped up a few times fairly recently.
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