Spotify chief distances music streaming group from Netflix

Spotify chief government Daniel Ek has sought to distance his firm from Netflix, telling traders the 2 are “vastly different businesses”, after the latest crash within the video streaming service’s inventory value sliced Spotify’s worth by a fifth.

“I think a lot of people are grouping us and Netflix together . . . despite both being media companies and primarily subscription revenue companies, that’s kind of where the similarities end for me,” Ek mentioned on Wednesday.

“With Spotify we are a platform, Netflix is not. With Spotify we have a free service, Netflix does not . . . it’s vastly different businesses,” he added.

Shares within the music streaming service have dropped practically 20 per cent since Netflix revealed its subscriber development had stalled, fuelling fears over the enterprise mannequin as inflation soars.

Although Ek is demurring from comparisons with Netflix, Spotify has prior to now tried to persuade traders it might imitate the trail of Netflix, which has been one of the crucial profitable shares of latest years.

Spotify employed Barry McCarthy, Netflix’s former chief monetary officer, to steer it via a public itemizing. He has usually in contrast Spotify to Netflix, telling traders that the music streaming group “reminds me of my first 10 years at Netflix” and likening Spotify’s podcast push to Netflix’s preliminary transfer into streaming video.

Spotify’s inventory has dropped greater than 50 per cent this 12 months. The firm has been hit by macroeconomic considerations over inflation and the battle in Ukraine, in addition to a basic reassessment of streaming as a enterprise mannequin. The group’s market worth has shrunk to $21bn, a 3rd of its dimension throughout its pandemic highs final 12 months.

However, chief monetary officer Paul Vogel mentioned he had not seen any indication that the macro setting was affecting its numbers. “We definitely think Spotify is a product that people want to continue to have,” he mentioned. “Any uncertainty whether its war or macro, it’s always going to be there.”

The firm added 2mn subscribers within the first three months of the 12 months, even because it misplaced clients after shutting down in Russia and regardless of protests towards the service over podcaster Joe Rogan and misinformation concerning coronavirus vaccines.

The group reached 182mn paid subscribers and 422mn whole customers by the tip of March. During the quarter, Spotify stopped billing subscribers in Russia due to its assault on Ukraine, which the corporate final month warned would price it about 1.5mn subscribers.

Spotify predicted it might add 5mn subscribers within the three months to the tip of June, accelerating once more regardless of an anticipated extra lack of 600,000 subscribers in Russia. The firm’s first-quarter income rose 24 per cent from the identical interval a 12 months in the past to €2.7bn.

Spotify’s shares are down greater than 12 per cent by mid-afternoon in New York.

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