Spotify chief pulls music streaming group away from Netflix

Spotify chief executive Daniel Ek has sought to steer his company away from Netflix, telling investors the two are “very different businesses”, after Netflix’s recent stock price crash slashed the value of Netflix. Spotify by a fifth.

“I think a lot of people lump us together with Netflix. . . although both are media companies and primarily subscription revenue companies, that’s kind of where the similarities end for me,” Ek said Wednesday.

“With Spotify we are a platform, Netflix is ​​not. With Spotify we have a free service, not Netflix…they are very different companies,” he added.

Shares of Spotify have fallen nearly 20% since Netflix revealed its subscriber growth has stalled, fueling fears over the streaming business model as inflation soars.

Although Ek opposes comparisons to Netflix, Spotify has in the past tried to convince investors that it could emulate the path of Netflix, which has been one of the best-performing titles of recent years.

Spotify has hired Barry McCarthy, Netflix’s former chief financial officer, to lead it through a public listing. McCarthy has often compared Spotify to Netflix, telling investors that the music streaming group “reminds me of my first 10 years at Netflix” and comparing Spotify’s podcast push to Netflix’s initial shift to streaming video.

Spotify’s stock has fallen more than 50% this year. The company has been hit by macro concerns over inflation and the war in Ukraine, as well as a fundamental reassessment of streaming as a business model after Netflix’s growth has been stalled for a decade. Spotify’s market value has plummeted to $21 billion, a third of its size during its pandemic highs last year.

However, chief financial officer Paul Vogel said he saw no indication that the macro environment was impacting Spotify’s numbers. “We really think Spotify is a product that people want to continue to have,” he said. “Any uncertainty, whether it’s war or macro, will always be there.”

The company managed to add 2 million subscribers in the first three months of the year, even as it lost customers after it shut down in Russia and despite protests against the service against podcaster Joe Rogan and misinformation about coronavirus vaccines.

The music streaming group reached 182 million paid subscribers and 422 million total users at the end of March. During the quarter, Spotify stopped billing subscribers in Russia due to its attack on Ukraine, which the company said last month would cost it about 1.5 million subscribers.

Spotify predicted it would add 5 million subscribers in the three months to the end of June, accelerating again despite an expected further loss of 600,000 subscribers in Russia. The company’s first-quarter revenue rose 24% from the same period a year ago to 2.7 billion euros.

The shares fell 6% in premarket trading.

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