“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 said
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 in the music streaming service have dropped nearly 20
per cent since Netflix revealed its subscriber growth had stalled, fuelling
fears over the business model as inflation soars.
Although Ek is demurring from comparisons with Netflix,
Spotify has in the past tried to convince investors it could imitate the path
of Netflix, which has been one of the most successful stocks of recent years.
Spotify hired Barry McCarthy, Netflix’s former chief
financial officer, to lead it through a public listing. He has often compared
Spotify to Netflix, telling investors that the music streaming group “reminds
me of my first 10 years at Netflix” and likening Spotify’s podcast push to
Netflix’s initial move into streaming video.
Spotify’s stock has dropped more than 50 per cent this year.
The company has been hit by macroeconomic concerns over inflation and the war
in Ukraine, as well as a fundamental reassessment of streaming as a business
model. The group’s market value has shrunk to $21bn, a third of its size during
its pandemic highs last year.
However, chief financial officer Paul Vogel said he had not
seen any indication that the macro environment was affecting its numbers. “We
definitely think Spotify is a product that people want to continue to have,” he
said. “Any uncertainty whether its war or macro, it’s always going to be
there.”
The company added 2mn subscribers in the first three months
of the year, even as it lost customers after shutting down in Russia and
despite protests against the service over podcaster Joe Rogan and
misinformation regarding coronavirus vaccines.
The group reached 182mn paid subscribers and 422mn total
users by the end of March. During the quarter, Spotify stopped billing
subscribers in Russia because of its attack on Ukraine, which the company last
month warned would cost it about 1.5mn subscribers.
Spotify predicted it would add 5mn subscribers in the three
months to the end of June, accelerating again despite an expected additional
loss of 600,000 subscribers in Russia. The company’s first-quarter revenue rose
24 per cent from the same period a year ago to €2.7bn.
Spotify’s shares are down more than 12 per cent by
mid-afternoon in New York.
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