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Behind the Numbers: an EMARKETER Podcast
Spotify the Lifestyle App? Can Badges Fix Spotify's AI Issue? 3 Big Questions for Spotify | Behind the Numbers
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- [00:00]
A
Foreign. It's Monday, May 18th. Danny and listeners, welcome to behind the Numbers Knee marketer podcast. I'm Marcus. Join me for today's conversation. We have senior editor of our marketing and advertising briefing based in New York, it's Daniel Konstantinovic.
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B
Hello. Happy to be here. How you doing, Marcus?
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A
Yeah, very good, mate. How are you?
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B
I'm good. It's a gray, gloomy day here in Brooklyn, but that's Good.
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A
I know. May 18th.
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B
Yeah. Someday we'll have the sun.
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A
I know. Well, it happens quick. It's definitely a light switch moment, so I guess enjoy it whilst you can because it gets. It gets turns to Sahara desert real fast. Today's fact. Okay, so I thought this was quite fitting. Talking about Spotify. So I've got the most streamed songs ever on Spotify. I've got the most, lots of things on Spotify. So maybe we could do a quick quiz. Danny. But. So I'll give you. If you can name something in the top three, then you get the point. Can you name the first one's probably the hardest, maybe the hardest. Most streamed songs ever on Spotify. Give you half a point.
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B
For an artist, I'm gonna guess Taylor Swift perhaps is one of the most streamed.
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A
You think she's. She's. She's in the top.
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B
One of the top artists.
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A
Yes, she's one of the top ones.
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B
You know, I feel like you're going to say what it is and I'm going to be like, of course, yes.
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A
Not get that there's 100% what's about to happen.
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B
Gangnam Style. It's coming back in a big way.
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A
No, surprisingly, most stream songs, Taylor Swift, she has. Oh, she's not. Oh, that is shocking. She's not in the top 20.
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B
Oh, that is shocking.
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A
What?
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B
Well, I guess, like, compared to other artists, she hasn't been around as long. Right. I'm trying to think of it like, who.
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A
Yeah, that's definitely part of it.
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B
That'd be someone who's been around the block.
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A
Most streams don't. Well, kind of. The Weeknd's Blinding Lights is the Spotify's most streamed song ever with over five and a half billion plays as of April 2026. I had to go back and listen to it to remember what that song was.
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B
It's a good song. I. I like it.
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A
It's good. But most ever is surprising. Ed Sheeran, Shape of you was second 4.9 billion. And then sweater weather by the neighborhood. Great song.
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B
But third place, so surprising. Yeah. You know, I remember reading years ago that Selena Gomez was one of the most streamed artists on Spotify and that really surprised me. You know, out in the street you don't really meet a lot of Selena Gomez mega fans, but I guess they're out there.
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A
Is she somewhere on this list? No, maybe she's been booted off.
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B
She also hasn't really done a lot of music in quite a while.
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A
Yeah, yeah, that's true. This is fluid. Most streamed artist of all time. I'll just give you the point for this one. Taylor Swift, she is the most streamed artist. She just doesn't have one of the most streamed songs. Followed by Bad Bunny. And then Drake with the Weeknd is actually fourth, so he's up there too for that most streamed album.
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B
I don't have a clue.
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A
It's one from Bad Bunny.
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B
Oh, really? Well, I was gonna guess Rumors by Fleetwood Mac maybe Shot in the Dark, I guess.
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A
Most stream podcast, it's not this one.
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B
The Joe Rogan Experience probably.
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A
Exactly.
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B
Yep.
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A
And then the German. Yep, the Joe Rogan Experience. Number one, a German language show is second called Gemishtus Hack. And then Crime Junkie is in third place. And then most streamed audiobook. Last one for you.
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B
Oh, I don't know. Harry Potter.
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A
I would have thought that Rowling would have been up there as well or that Tolkien would have been first, but he's. He's second most streamed audiobook on premium. A Court of Thorns.
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B
Oh, yes.
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A
By Sarah J. Maas, I think is how you pronounce it. Tolkien's Fellowship of the Ring is second. Fourth Wing by Rebecca Yarros is third.
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B
Interesting. I keep seeing people all over the city reading the Court of Thorns.
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A
Oh, okay. I hadn't heard of it.
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B
That series. Yeah, an incredibly popular fantasy novel series that feels like it kind of, at least to me, came out of nowhere.
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A
Yeah. Yeah. Well, she's got three of the top 20. She's number one. A court of wings and ruins. 7. A court of silver flames.
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B
16.
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A
So very popular indeed, it seems. Anyway, today's real topic, the big three questions surrounding, of course, Spotify. All right, let's set the table. In Q1 2026, how did Spotify do? Total revenue grew 8% in the quarter Q1 year over year. That's half as fast as last Q1. So not brilliant. Revenue from premium, that's ad free users, people who pay to get rid of ads, grew 10%. That's down from 16. Last Q1. Revenue from ad supported users, folks that have ads, fell 5% in the quarter last Q1, it was up 5%. So a swing from plus 5 last Q1 to negative 5 this Q1 for the ad supported folks. Spotify has 761 million monthly active users. Adding 10 million in Q1. That's better than the three they added at the Q1 a year ago. So that's how Spotify's done. We're here to talk about the three biggest questions for the company at the moment. Danny, what do you want to throw on the table to kick us off?
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B
Well, since we were talking about the ad revenue decline, I feel like that's a good place to start. And my question is sort of inspired by one Ross asked in our recording about Netflix, which is Ross Benish.
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A
Yeah. Senior analyst. Yep.
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B
Right. Sorry. I should have included his full government.
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A
He doesn't really deserve it, but Stuart makes me say it.
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B
Yeah, we'll work on that. My question is, how badly does Spotify even need to increase its ad revenues? Um, the company clearly makes the overwhelming majority of its revenues from subscriptions. Like 92% of its revenues come from subscriptions. And you see, you know, even though there has been a slowdown there in growth, this earnings showed that that is still where the majority of its revenues are coming from. So if things keep humming along there and the ad business is struggling, it's had a very slow crawl over the last several years, what is there really an urgency there to increase those revenues? I, I feel sort of mixed on it. I'm not entirely sure what my answer is.
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A
It's a good question. They've been getting most of their revenue from the premium folks for years now. Going back, I just checked, going back to at least 2020, it's been about 90% of their money has been coming from that line item. So it's not really shifted over in terms of the share. My question related to that was why has Spotify's ad revenue stalled and can it jumpstart this line item? Because even though the share has been stayed Roughly the same, Q1's 5% drop marked the fourth straight quarter of negative ad revenue growth. Going from 0.7 to last. Last Q1 or Q2, sorry, to negative 5 and then negative 5 roughly, and then negative 5 again this Q1. So I was trying to figure out what's happened the previous year, 2024, it was up 10%. Last year, ad revenue fell 2% for the company. And it's strange, Danny, because the number of ad supported people is going up. Growth has been really strong over that same four quarter period where it's seen four straight quarters of negative growth. They've added 60 million ad supported users, going from 423 to 483. Yeah.
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B
You know, I'd be curious to see how much time those ad supported users are spending on Spotify because that could be a reason that the revenues are not growing so fast. Every platform has to juggle the difficulty of getting revenues from advertising and balancing the user experience with it. And I think an audio service is perhaps more vulnerable to a decrease in the quality of the user experience due to advertising than a video streaming service like Netflix perhaps. Even though, you know, advertising obviously has a long history with audio formats. I think the, the way people engage with music streaming or expect to engage with it, having, you know, fluidity listening through a playlist, like without interruption or just kind of selecting songs on the fly. I think, you know, a heavy ad load there feels more disruptive than it does elsewhere. Interesting. And because the revenues are slow despite the growth in ad free listeners, I think that's why you're seeing Spotify push so much into other formats that could create new ad space for them. Audiobooks are one, although we haven't really seen them attempt to bring ads into that. I'm sure it's probably a complicated affair there. But you know, recently they have this partnership with Peloton kind of moving in like a lifestyle app direction that could create, you know, new ad opportunities for them. Video podcasts have been a very big push at the company in the last year to two years. That obviously has big advertising implications. Video inventories much more, you can charge much more for it and it's, you know, viewed as in higher demand. I think you're seeing an effort to move away from just, you know, a free user tier as the primary or only source of ad revenues.
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A
Yeah. Marissa who writes for the briefing was Marissa Jones, one of our analysts was also noting two new ad formats. This is in March, the company testing interactive carousel ads, a multicard swipable format she said, for Spotify now playing View and then also Spotify reinventing its sponsored playlist feature, giving brands 100% share of voice on Spotify's top playlists. They did have some numbers about time spent. So this, which kind of surprised me because in another piece Marissa was saying a Spotify spokesperson told Emarketer the in focus app time, it's up 18 year over year for ad supported users directly translating into better ad performance. As audio ads see a 14 increase in click through rates. And then some more data. Spotify is saying audiences are 36 more likely to trust music and podcast ads and social media ads. 80% of advertisers agree that audio offers heightened trust in the digital media landscape. But we've seen this disconnect between time spent on audio and ad dollars on audio. And it's always been this chasm, and it doesn't seem like it's shrinking.
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B
Yeah, clearly they want to increase that. I mean, Daniel Ek has gone on the record saying that, you know, it's moving too slow. We really need to increase the ad revenues. There's been all these pushes like the ones you just named, and efforts to make it easier to buy ads on Spotify through established, you know, methods like opening the doors to programmatic advertising on Spotify. Seems like they really just want to tear down barriers to entry. But, yeah, it's. It's an interesting conundrum. You know, I'm not entirely sure why it's moving so slowly or what roadblocks they're running into.
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A
I want to throw something out there because you mentioned it already. It's one of the ones I had. Are there other partnerships that can help bump up engagement? The one you mentioned. So Spotify recently announcing a deal with fitness company Peloton Interactive offering over 1,400peloton ad free on demand classes for Spotify's premium subscribers, including strength, cardio and yoga sessions. Spotify also says free and premium users will have access to content from established wellness creators. I was trying to think about the partnerships that make sense. None. None came to mind. But any thoughts on this partnership, Danny, and how much it could help?
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B
Yeah, I could see a lot of potential partnerships. I mean, the first kind that jumps to mind to me could be like a cooking service of some kind. You know, like, think of something like how the New York Times has done very well with, you know, a cooking app. I think something like that can make sense on Spotify. And, you know, this is the, to my knowledge, the first partnership of this kind that they've struck. And I'm sure it is a testing ground of sorts or something that they kind of want to show around on a platter. Like, hey, look, this could be you if you partner with us to do the same thing. I had a similar question, which was, what does a Spotify lifestyle app look like?
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A
As.
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B
I mean, this is something that is only available to premium subscribers at the moment. And as they keep adding these things, audiobooks, video podcasts, I mean, those are more widely available, but things like this Peloton partnership or other potential ones down the line, it could be a way to in, to widen the gap between an ad free user and a regular free ad supported user. And you know, that could be an excuse to do price hikes and increase the cost or have maybe like a, you know, select your perk subscription offering just ways to, you know, add more flexibility for consumers to make them more likely to subscribe. Or if you increase the price, you know, writ large, offload more consumers onto the. Or onboard more consumers is maybe a better term onto the ad supported version of the platform.
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A
Yeah, that's a, that's a really good idea. And they're going to need to do something because they've raised prices in the U.S. i think three times in four years. And so they're going to figure out a way to add value before they keep increasing the price there. It does beg the question of like, who are they trying to be? Because I still think of them as the music streaming company, but they obviously wanted to be the Audio Everything app.
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B
Right.
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A
With the podcasts and with audiobooks and with music and now with fitness components you mentioned. So it's a really clever idea. Recipes and cooking being part of it as well. Potentially a lifestyle app. Is that where they're trying to be? So it, Yeah, I, I do think identity crisis is probably a bit strong, but I do think they're kind of wrestling with who they are.
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B
There's always the pressure of, of being a public company and, and needing to find, you know, new growth levers that will force Spotify and a lot of companies like it to, you know, throw things at the wall and see what sticks. I think Spotify was maybe feeling some type of way to be super non specific about it, about kind of being scooped by other rival platforms. I mean, to your point about them being the Audio Everything app, Spotify was seen as this like hub for podcasting. And then YouTube comes around and becomes the most popular place to listen to podcasts and video becomes a huge part of podcasts. And I think Spotify then has a moment of, you know, whoa, you know, we were the top dog here. What happened? Suddenly someone else has come out from underneath us. We need to do exactly what they're doing or like, look for whatever the next thing is that we can pounce on.
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A
And as they do this, they need to make sure that they're maintaining their core competence, that they are the place to stream music. And I thought this, this chart really surprised me is from Activate Consulting. It's basically looking at places where U.S. music listeners discover new music and artists. Music streaming services, Apple Music, Spotify People like that was third. So it didn't even seem like it's the place to discover new music and artists anymore. Actually YouTube was number one, 65% of people discovering music and artists. There number two, 53%. Social media platforms Instagram and TikTok and then music streaming, 39%. TV shows and movies was almost as much in terms of discovery. So if you're not going there as a primary place to discover new artists and music, then what are you going there for? Obviously to listen to music, but you want to keep people engaged and they, they need to do something with engagement as well. This is something else that came out of this, this question around partnerships and trying to bump up engagement was, according to our forecast, time spent with Spotify has been hovering around the 55, 0 minute mark for the last decade, almost according to our forecast, and it's high. That's close to an hour. But it's not growing. It is sec. Third. Sorry, only compared to YouTube and Netflix. When you look at all the different things people do digitally, it's ahead of TikTok, Instagram Time, Hulu, Reddit, Disney plus, etc. Etc. It's third, but it's flat.
- [16:48]
B
I think your point about discovery is a really interesting one. I think for sure Spotify's utility as a music discovery tool has diminished somewhat. I think in it's gotten lost a little bit in the desire to chase engagement, engagement and increased time spent in the service. A lot of services, social media platforms, video platforms will resuggest things to you that you have already seen or that you are highly likely to engage with. It shows you more of what it knows, works for you. And perhaps a music service is more vulnerable to the negative effects of that because people do want to discover new artists and find new music. But if Spotify is just kind of resurfacing the same songs you're already listening to or promoting specific songs or artists across its, you know, various playlists. A habit will form that users will not think of it as a place to discover new things.
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A
I don't. I think of it as your utility. They just said 7 million podcasts now on Spotify. I can't remember the last time I discovered a new one. Yeah, and I don't think it was through Spotify. I think it was. I think it was probably the gray area with Sean Illing, I think is his name. And it was. I was reading an article and in the article they mentioned the podcast. Anyway, what else do you have? What else are we throwing out there in Terms of big questions for Spotify,
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B
my last one is a little bit of a pivot. I'm wondering what Spotify can do about AI AI slop and how it might impact the service. I think this is one that a lot of platforms are dealing with, but the frequency with which we see stories of, you know, of song going viral on Spotify and oops, it is AI generated and no one knew it, seems to be increasing. And I think that suggests that maybe their detection methods for these things are lacking somewhat. And that's another thing that could damage, like the value perception of the service. Yeah. At the same time that they're doing things like peloton audiobooks trying to show, like, look at all this stuff you can do here at Spotify. Things like AI kind of work against that and hamper those efforts.
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A
Yeah, this was exactly the question I had, which was my question was how Spotify solve the AI AI problem by adding verified badges to distinguish human artists from AI ones. To explain, Laura Cress of the BBC was saying that the audio streaming giant said verified by Spotify, that phrase, that text and a green check mark icon would appear next to an artist's name when they meet what they call defined standards, demonstrating authenticity. She notes that this could include having linked social accounts on their artist profile, consistent listener activity, or other signals of a real artist behind the profile, such as merchandise or concert dates. Problem with this, though. In the article, Ms. Kress was noting that some folks are pointing out that a verified account only proves that the artist is human, not that the music was made without using AI.
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B
One issue is fake, if you will. Artists who are releasing their own songs that get very popular impersonation is another one, and something that's certainly happened before on Spotify with AI generated music. But then what do you do if, you know, Bad Bunny decides, like, I'm going to release a song with AI. AI is used to make this piece of music. What's the policy there? You know, I'm sure Spotify will be more lenient with these artists that are big revenue drivers or engagement drivers for them. But, you know, it opens up this whole gray area and do artists have to disclose it? Will Spotify require that? How will it be shown in the app? Will they just say no outright? I think the last one is pretty unlikely given that Spotify has pushed a lot of AI features onto consumers, like AI DJs, AI generated playlists. I doubt that they would come out and be like, AI is out of the question. Like, that's not allowed here in any capacity. But it is just a strange line to tiptoe. And I think it's such a strange tightrope walk. Like consumers are using things like the AI DJs and you know, the AI generated daylists, for example. Those have been big successes for Spotify. But you know, if you look broadly at consumer sentiment around AI in really like any sector that it is used in, it's really negative. So what do you do about that? Like, how do you balance the. The consumer sentiment there?
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A
Part of the problem here is will it even be accurate? And Ed Newton Rex, a campaigner for creators rights and former AI executive, was Spotify's approach could punish real human artists who don't have some of the markers the verification is based on, like touring or selling merch. That's part of it. But going back to what you were saying before, yeah, labeling the music is going to be much more difficult. Professor of music at the University of Durham Nick Collins said Spotify's which is just a cool title. Professor of music said Spotify's decision was unsurprising given the ongoing public outcry around Genai, but added it would be a trickier task if it ever tried to label the music itself. AI usage is not binary between entirely authentically handmade and fully AI generated, but can have lots of in between cases. So, yeah, a big question is going to be how much AI makes AI. Is it 50%? Like, what's the threshold?
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B
Yeah.
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A
An article in the British newspaper the Guardian, which I was reading, said Deezer, which is a competing platform, disclosed recently that synthetic tracks now make up 44%. So AI made up 44% of all new music uploaded to its service each day. So it's a problem. It's become a problem real fast. Yeah.
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B
You know, on the one hand it's benefited Spotify hugely to make it easier to upload music onto the platform. But then this is a really big drawback that any platform with that kind of a model is going to face.
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A
There was another note about them going beyond the badge, adding a new information section to all artist pages. So whether or not they hold verified status, displaying career highlights, release patterns, live performance history, companies said it's going to compare it to nutritional labeling for food, giving listeners a way to gauge an artist's track record on the platform. I don't know if people are going to do that, have time to, to verify or check the credentials or the history of an artist before listening to them or after listening to them, but that's something else they're doing the one other note I thought was of interest was Forbes contributor Corey Martin saying there was a decline in premium subscribers in North America. So not overall, but in the specific region, North America, the US And Canadian markets, long considered the most commercially important in the streaming world, appear to be reaching saturation. Total MAU growth, monthly active user growth with 12% globally masks a more complicated picture at home, where price increases over the past two years have slowed subscriber ads even as they improved per user.
- [23:52]
B
Economics, maybe not so surprising since this is kind of its biggest market and it has had really a really long Runway to build relationships with consumers, you know, from years. You know, I remember when I was in College in 2014, there were these student deals. Even before that, when I was in high school, you could pay really cheap to get Spotify. And, you know, speaking for myself, that has definitely made me so far a lifelong user of the service. And I'm sure there are a lot of people like that, so not a lot of room for upward growth, perhaps in its biggest market.
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A
All right, Danny, let's pick three. I'll let you go first. I'll go second. You can have the final choice. What's number one?
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B
I think the ad revenue question. Does Spotify need to have a large ad business given that the subscriptions are the overwhelming majority of its revenue?
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A
You go second, because I might pick one of your. I might pick one of your ones. You. What do you have second? You go pick the second one. What's your second favorite?
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B
My second favorite, probably the lifestyle service question. I'm really curious what direction this goes in.
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A
That's where I was leaning.
- [25:00]
B
Stealing yours. Sorry.
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A
No, no, no, no. I was stealing. You're stealing yours back from me.
- [25:07]
B
Reclaiming.
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A
They also introduce messaging as well amongst users.
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B
Yeah, that's right.
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A
Are they trying to be, you know, more like an Instagram that has a huge music and audio components and trying to be. I mean, you said lifestyle, you know, also maybe more of a social app. So we'll see how that goes. All right, I'll pick one of the AI ones. I will pick. Have they solved the problem with the Verified Badges just because it's more recent news? I think your question, if you zoom out, this one's very. The Verified badges is like, of this moment. But I think your question about what. What are they going to do about AI music is. Is an important one. Zooming out for the rest of the year and beyond. But I'll pick the Verified Badges one. So top three. Does Spotify even need to increase ad revenues second was, what does a Spotify lifestyle service look like? And then third, has Spotify solved the AI problem by adding verified badges to distinguish human artists from AI ones? That's our top three for you. Big questions for Spotify at the moment. Thank you so much, Danny, for hanging out with me today and putting together this list.
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B
Yeah, of course. That was fun.
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A
Yes, sir. Thank you. Of course, to the production crew. We've got Lance and Mike helping out with this one. Thanks, of course, to everyone for listening in to behind the Numbers and Emarkset podcast. Watch upcoming episodes of our video podcast on YouTube and Spotify, or, of course, listen on Apple Podcasts. I will be back on Friday, but Susie will be here with the Reimagining Retail show this Wednesday talking to Christopher Karl, the US CMO of AliExpress Sat.