Spotify aims for 1 billion more users in biggest ever expansion

Saleha Riaz
·4 min read
Spotify logo. Photo: Press Association
Spotify logo. Photo: Press Association

Spotify (SPOT) is planning a “sweeping expansion” that will see its music streaming service available in 85 new markets around the world as it aims to be available to 1 billion more people.

The service is already in 93 countries and has 345 million monthly active users.

“We’ll deliver a Spotify experience that meets the unique needs of each market, with scaled language translations and specialized payment formats,” the company said.

“These 80+ markets represent more than 1 billion people — potential Spotify listeners who have yet to tap into the power of our platform. These moves represent Spotify’s broadest market expansion to date,” it added.

It said the the existing rich music cultures in these markets will now be able to reach Spotify’s global audience and accelerate the discovery of genres like K-Pop, reggaeton, and amapiano that have earned a place in the global music arena.

Spotify believes access to its creator tools will help propel artists in these new markets to new heights and empower them to turn their passion into a profession.

The new markets are in Asia, Africa, the Caribbean, Europe, and Latin America, and include Angola, Bahamas, Bangladesh, Cambodia, Gambia, Jamaica, Kenya, Kyrgyzstan, Nigeria, Pakistan, Sierra Leone and Zimbabwe, to name a few.

In each new market, Spotify will work with local creators and partners.

The announcement was made via a livestreaming event that featured Justin Bieber, Prince Harry and Meghan Markle.

“Together these markets represent more than a billion people, with nearly half of them already using the internet,” said Spotify spokesman Alex Norstrom.

“Some of the places we’re going like Bangladesh, Pakistan and Nigeria have the fastest growing internet populations in the world,” he added.

At the event, the company said it has paid more than $5bn (£3.5bn) paid out to rights holders in 2020 and that over the last four years, the number of recording artists whose catalogues generated more than $1m a year across recording and publishing is up over 82% to more than 800 artists.

However, many musicians have said its streaming loyalties are inadequate.

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It also said the number of recording artists whose catalogues generated more than $100,000 a year is up 79% over the last four years to more than 7,500 artists.

The company is working on high-quality music streaming and later this year, Premium subscribers in select markets will be able to upgrade their sound quality to Spotify HiFi.

Spotify earlier said its 2020 fourth quarter revenue rose 17% to €2.2bn (£1.9bn, $2.7bn). This was at the top end of management’s guidance range. The number of premium subscribers (who pay to use the ad-free version of the service) rose 24% to 155 million, which exceeded management’s expectations.

Spotify reported an operating loss of €69m. "This reflected higher than planned operating expenses, relating to payroll taxes linked to the group’s share price performance," explained Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

"A world locked indoors has resulted in ballooning demand for podcast content. On one hand this is a bonus for Spotify, giving them another area in which to grow. But it’s a mistake to think this change in demand patterns means profits and cash flow are going to take off – ramping up podcast content is one of the reasons free cash flow deflated in the final quarter," she explained.

In its recent announcement, Spotify said it is introducing a "first-of-its-kind" podcast advertising marketplace.

"Still, Spotify is in a great position. Crucially, the number of monthly active users is growing at an impressive rate. That’s important because it’s these users that keep the top of the revenue funnel filled up, a large chunk should then become paying, premium subscribers, at which point they contribute more meaningfully to group profit," Lund-Yates went on to say.

"The investment case has been a little muffled by rumblings of upset in the music industry. While these negative vibrations shouldn’t be ignored, Spotify’s enormous importance to artists and labels alike hasn’t changed," she added.

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