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Behind the Numbers: an EMARKETER Podcast
What Will Spotify Do About AI Slop? Will Podcasts Catch On in Living Rooms? And More — The 3 Big Questions for Spotify | Behind the Numbers
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A
In today's economy, every ad dollar counts. That's why performance marketers are turning to Rokt ads to reach 1.1 billion unique customers globally in the transaction moment when they're completing a purchase online. You only pay when customers engage. Learn more@rokt.com eMarketer that's R-O K T.com eMarketer. Hey gang. It's Friday, March 6th. Ross, Daniel and listeners, welcome to the Numbers and Emarketer podcast. I'm Marcus and joining me for today's conversation we have two gents. We start living in Westchester with our senior Digital Media Analyst, Mr. Ross Benesh.
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B
Hey Marcus.
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A
There he is. We're also joined by down in the city senior editor Mr. Daniel Konstantinovich.
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C
Hello. Happy to be here.
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A
Hey, fella. Gents, today's fact. All right, so here's the problem. I'm back at my parents house right now. I was speaking to my sister. I said five minutes before the show and I said I need, I'm running out of fact of the day. And she was like, well you should because you're on in five minutes. And she was a good point. But I said I don't have one. Her. But her first reaction to that, I was like, it's hard to find them. She said we'll stop doing it. I said, what? The podcast? She said, no, just kill the segment or quit your job. I don't know what she was going with, but that was her solution was just stop.
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C
Is nothing sacred?
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A
Thank you. A lot of people listening are like, please listen to her because we're sick of this. But some people would still enjoy it. I get messages about people that like it. So we're going to continue. So she said she, you could clip
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B
older episodes and just reuse the facts.
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A
It's really hard. So we've got two. She suggested one which I don't think is as good as mine. So you guys can decide. Hers is about a black hole. If you fall into a black hole, what happens? She was asked, she was like, where do you go? What do you see? If you fall into a black hole, you get stretched and compressed by extreme gravity. A process which is honestly which this, I'm not making this up. Is referred to as spaghettification.
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B
Wow. Yeah. Yeah.
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A
You might see the other side before crossing the event horizon or of a small black hole. You might possibly see the other side, but then you'll be crushed almost instantly.
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B
I don't think you're seeing much there.
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A
No.
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C
Yeah.
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A
She watches a lot of horror films, so I'm not Surprised? This is dark. But my one, on a more positive note, the most medals, Winter Olympics medals of all time, Norway. This doesn't include this Olympics, but they basically won the most again, so it doesn't really matter. Norway have the most medals. Prior to this Olympics, they had 405 medals total. The USA had 330. Germany in third place were 267, which isn't too bad. But that's crazy because Norway has the same population as less people than New York City.
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B
Isn't it all from skiing, Ross?
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A
Isn't that impressive?
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C
That's how they get around over there because they just.
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B
They just have so many skiing events. Yeah, they're not winning hockey, you know.
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A
Yeah, yeah, apparently not. Congratulations, America. All right, whose was better?
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C
You know, I kind of like spaghettification, I gotta be honest. Spaghettification. It's a pretty fun word.
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A
All right, she hasn't listened to this podcast.
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B
I'm going with the fallen into a black hole.
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A
All right, thanks, guys. Appreciate it. Jesus. She'll never know. She doesn't listen. She's probably outside the door right now. Thrilled. Don't say a thing, Nicole. Anyway, today's real topic, the three big questions surrounding Spotify. All right, we set the table, gents. We're talking about Spotify today, how they've been doing. Well, they just added 38 million new users in Q4, a quarterly record, crossing the 750 million monthly active user mark. Not bad. Total revenue, not great. Up 7% in Q4, 10% full year. Both of those, though, are half as fast as previous periods. So the money, not so great. The users do seem to keep climbing. Today we are talking about the big question surrounding the company at the moment. So, Ross, I'll start with you. What do you think's on Spotify's minds right now?
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B
I'm curious how they're going to gatekeep AI slop, because people are going to be trying to make their own kind of music, using prompts to mix and match all sorts of things. And it's kind of cool to see, like, oh, this is what a Beyonce song would sound like with Hank Williams singing. But you're gonna get a lot of garbage for everything that is decent. And, you know, how do you incorporate that stuff without letting it overwhelm the music that people are familiar with?
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A
This is an interesting one because it's more broadly people are concerned with AI getting into music. And is it really music if AI is involved? Should you kind of have separate distinct distinctions between. Between the two? Is that how we get around this. What do you think's on their mind? What do you think they're going to do about it?
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B
I think they want to, you know, have some of it because it'll be like cheap content, but it's. You probably won't have to pay the artists using AI the same way you pay a traditional label. And if it increases the amount of time people are spending on Spotify, that's good for them. So I don't think they'd want to entirely dismiss it. But they also have to be careful because they don't want to make the labels mad and they don't want to make the user experience terrible. If you log on to Spotify and you're just getting a bunch of AI stuff jammed into your playlist and you don't want that, that would be off putting.
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A
Yeah.
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C
Something about the AI slop that's interesting is that it's not just stuff that is, you know, Hank Williams singing Beyonce, but it's a lot of fake artists, like people who are pretending to be a musician releasing an album or a song, and then it turns out that, you know, it's an AI generated and not real. And it's very hard for users to distinguish between them. There have been several instances already of some of those songs climbing very high on Spotify's charts and then being removed. So, yeah, I'm not sure what. It feels kind of unclear what their approach to AI moderation is going to be, because when it comes to user features, Spotify is trying to inject AI into almost everything. But when it comes to, you know, AI content and maintaining quality, I think that's a different question.
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A
Yeah. AI to help place ads. Yes. For recommendations. Yes. In terms of content, what will they do about it? That's a good one. I hadn't had this one at all. Danny, what do you think? What else do you think is on the mind?
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C
I'm wondering if Spotify's ads business will ever overtake subscriptions in terms of revenues.
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A
Yes, that's a good one.
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C
In the marketing and advertising briefing, we write a lot about podcast advertising. There's a lot of interest in it, even though it makes up a very small portion of the overall total digital advertising pool. It's kind of where, I guess, Zeitgeist is at the moment. And Spotify has leaned on podcasts pretty heavily to boost its ad business, but results are kind of mixed. I should also say there's a lot of pressure on Spotify from investors to increase ad revenues. And Spotify's Tried to make it easier to buy inventory by opening up programmatic ad buying on the platform. But you know, this most recent quarter we saw that year over year advertising revenues actually declined. So I'm curious what it's going to take for them to flip the switch if ever. Because if you look at video streaming services that have a, you know, paid ad free tier and a cheaper ad supported tier, the ad supported tiers are driving a lot of revenues for those companies in a way that ads on Spotify just aren't.
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A
Yeah, the context here. So Spotify, their ad supported subscribers are about two thirds of their business. So a lot of them are ad supported. In terms of money made full year 2025, about 10% of the money comes from ad supported and then the other 90 comes from people paying to avoid ads. To Danny's point, in Q4, ad supported revenue was 4%. Full year 2025 it was down 1%. And that full year 2025 down 1% is on plus 10% the previous year. So not good at all. Actually, the ad revenue for the last three quarters of the year was in the red. So not so great for Spotify. Ross, I'm wondering if they're doing this by if the reason advertising money isn't crushing it is potentially by design. And so our analyst Grace Harmon was writing, quote, ad revenues could be failing to keep pace if Spotify is optimizing ad inventory and bal user experience with monetization like fewer intrusive ads and better ad targeting that can pressure short term revenues but support long term engagement and paid conversion. What do you think?
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B
I don't get the sense that falling ad revenues is by design because they would like to have another substantial revenue stream so that it's not so predominantly coming from subscriptions. But you know, they're kind of like Netflix in a way where you don't want to disturb the ad free subscription product too much because that's what you've been known for and that's what users tend to like. So if you know you're making most of your money off subscriptions, as long as your total user base keeps growing, that's probably fine.
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A
We think things are going to be better this year. We expect Spotify to grow ad revenue faster in 2026 than it did in 2025 where it posted that negative 1% on the year. Q1 looked good last year, up 8%. But as I mentioned Q2, 3 and 4 all shrinking. So yeah, I think this is a good one. I've got another one for you. Guys, one of the ones I had was how concerning is it that a lot more people are watching podcasts on video streaming platforms like YouTube, Netflix versus Spotify because Marissa was writing an article. Marissa Jones, one of our analysts Hulu joins the podcast licensing race to compete with Netflix and YouTube and of course Spotify. And maybe you guys can help me. I still don't fully understand why Spotify did the deal with Netflix to let them showcase select Spotify video podcasts. Are they not more concerned about these video streaming players getting in on, on this, on this corner, on their, on their territory here?
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B
Well, the licensing revenue is nice. You know, if you can take shows and license in them, that, that's another line of revenue there. So that's probably exciting and then you, you know, increase the awareness for them even if they're consuming them elsewhere. For now. Right.
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A
But is part of the concern. This lead me led me to another one I had which is so Marissa Jones again. She interviewed Brian Burner, Spotify's global head of advertising, sales and partnerships. He told her podcasts will cement their status as a primetime media format in 2026. And so it got me thinking and posed this question. Will people sit down in their living rooms and turn on a podcast to watch en masse? Is that an activity that we're moving towards? And if so, wouldn't Spotify want people to open up their app versus people versus people watching their shows? Spotify originals on Netflix.
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C
I think it is a behavior that's already happening. Like YouTube is probably the most popular platform for podcasts and the majority of YouTube viewing happens on TVs. That's not an exact one to one, but I do think that video podcasts make for great second screen content. Something that like a user can watch while, you know, playing on their phone or doing something else. It's kind of low attention I guess compared to other video content. And my guess for why Spotify made this partnership with Netflix is like Ross said, it's a revenue stream. You know, you can license out your podcast, get more money in return. Netflix also has an enormous reach. I'm sure that they that Spotify is eager to onboard as many Netflix users who may not have a Spotify subscription or may not use the Spotify platform as possible. And as far as like, you know, doesn't does this eat away at their market if they were to try and get video viewership to happen on Spotify? I'm not really sure if I have like a solid answer on that. I think yes to some degree. Like if Spotify could control that time entirely. And, you know, you have listening happening there, you have video viewership happening there. I'm sure that would be to their benefit. It's something they want, but perhaps, you know, the incentives for users are not in place yet, or it's just a behavior that they're not seeing. And so this is a lever that they have to pull to get something out of it. Yeah, Spotify is making a really big video push within its platform. Music videos, video podcasts. So maybe they're inching in that direction, but I think a barrier for them is that when people open Spotify on their phone, tv, computer, what have you, I don't really think that video is something that they're opening it for. You know, the way that obviously when you go to YouTube, that's the first thing that jumps to mind.
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A
They wanted it to be right. They wanted to be the Everything app of, of a lot of types of content. They wanted to be the Everything app kind of for media. They wanted to be the place for music, the place for podcasts, the place for audiobook. They wanted to be the audio Everything app. And so, Ross, I am wondered, wondering kind of what they're thinking is here, because we talked on the show recently, I was speaking to Ethan and Oscar about social media addiction trials going on right now and where people spend their time with media. And one of the conversations we're having there is about social apps moving across to TVs. Much more people are watching, like we said, YouTube on a TV. Over half of YouTube viewership now on a TV. We've got other platforms, TikTok, Instagram, talking about or putting out apps for TVs, because they know that when it comes to time spent with media, any growth in time spent with media is really just on the tv. It's on the ctv. It's not growing anywhere else really. And so because of that, I was wondering that kind of seems like they're preparing for this world where people are sat in front of their TVs and how can we have an app? How can we be the app that people want to open? The way that YouTube has kind of almost established itself. So, Ross, I'm surprised, does that not surprise you that if you, if this trend is going to happen, where people are sitting in the living rooms and turning on a podcast, turning on whatever content the Spotify wouldn't want to be front and center there?
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B
Well, about the TV thing, though, the time spent on mobile is still much higher than time spent on ctv.
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A
Yes.
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B
In general, even If CTV is growing, you know, mobile is probably double, if not more than that. So you're still going to have a ton of people listening on their phones. Now with podcast ads, I think something we should keep in mind though is the ad reads tend to be host read baked in, especially for those huge shows. So if, if you're watching like the Ringer on Netflix, I get your saying you don't want to send a user elsewhere to Netflix. You don't want to have them habituated to a platform that's not you, but you're still seeing the Spotify branding if you're actually watching it. I don't think most people actually watch video podcasts even if they have them on because they're doing all sorts of other stuff and you are, you're still extending your ad reach. So like, if Spotify sold those host thread ads, you know, the advertiser is still getting the impression even if it's elsewhere. So I think they're seeing the benefits outweigh the cons. And also another issue though is Spotify has tried several video initiatives in the past that have failed. They're just not really mentioned anymore. This isn't like the first time they've tried to jam video into the platform. So Netflix is a place that like is video by default. So if you're making a big production investment on these video podcasts, you're hedging your bets a little bit in case users on your platform don't actually use it. You will still get that audience reach on Netflix.
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A
Speaking of jamming in video, trying to make it work. Apple announcing recently that they're gonna Apple podcasts are gonna start adding video. So if you're watching a podcast on Apple podcast now, you can either flick between being audio or being video the way that you can with Spotify. Danny, what do you think of this one?
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C
I mean, it doesn't really surprise me considering it's what all of the audio platforms are doing. I'm not sure it's something that's really going to drive users to Apple Music over any other streaming service. But if you're already an Apple Music subscriber, maybe it increases your time spent by some small amount, which is good for Apple. Going back to the quote that you read from Marissa's story with the head of advertising and Spotify about podcasts becoming prime time TV or primetime media. I do think that's true and very interesting. I mean, a lot of the high profile interviews that used to go to like late night talk shows are kind of dispersed More around podcasts and other Internet content. And, you know, we're seeing a lot of late night show declined. Seems like podcasts are really taking over as like the popular interview format, whether it's video or audio for this generation of consumers. So I think that is part of what's driving all of this interest from the platforms to find a way if they can get in on that pie.
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A
Yeah, it's an interesting way of looking at it that, you know, watching Conan o', Brien, you know, the Late show, the Late Late show, whichever one, people are similar format, interview show. But people are now saying, maybe I don't need to sit and stare at the people on the screen. I could just take that content with me. And it's just being repackaged, doing new things in old ways, as the saying goes.
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B
Ross, I would expect Colbert will probably have a podcast with a year after the cbs.
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A
Yeah, exactly.
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C
It's probably already in time.
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B
Yeah.
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A
Um, Ross, anything else on Spotify's mind at the moment?
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B
For years, Spotify and all of the music services really kept their. Their subscription prices flat. It was like $10 a month for a long time, which is a really good value when you consider how much streaming video prices have increased. And lately Spotify and others have been gradually increasing it, usually by like a dollar a month. It's not gone up really that much, but it has gone up a few bucks. And that's a, you know, a surefire way to grow your overall revenues if you have a loyal audience. Netflix for sure has demonstrated that. I do wonder, at some point, does digital audio, which has been reluctant to raise prices on consumers, will it eventually become as beholden to price increases as a revenue driver in the same way that digital video has for years?
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A
Yeah, this is a good one. We talked about the ad supported revenue declining 1% full year 2025. On the other side of it, premium revenue was up 11% full year 2025. However, that's half as fast as 2024. And so you can see, Danny, why Spotify is the third price increase in three years. Why Spotify has decided to bump prices because that can juice the revenue.
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C
Spotify has been raising prices. I think the slow roll of it kind of shows some nervousness about exactly what Ross is saying. Like, is there is access to music streaming going to become like a premium thing? Because even though Spotify has raised the prices for its subscription plans. So I think it's about 12.99amonth right now in the US for an individual
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A
January by a dollar.
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B
Yep.
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C
You've also seen them launch a lot of bundles at the same time that they're increasing prices. You know, there's Duo plans, some of these have been around before, the most recent swath of price increases. But yeah, you have Duo family plans, subscriptions that are audiobook only. So you see them kind of like extending these olive branches to users who maybe want access to ad free music, but with or like a particular kind of content or style of consumption. So I wouldn't be surprised to see them increase the prices more. But I don't know if it will ever reach the same kind of divide that we're, we're seeing with like Netflix. And it's ad supported too, if that makes sense. Like the average ad supported user on Netflix gives way, way more revenue to Netflix than a premium subscriber. And it's kind of unclear if that dynamic is the same for digital audio. I don't know. Do you have any insight into that, Ross?
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B
Advertising is one third of total digital audio revenue, the other 2/3 of subscriptions. That's actually very similar to video. So I guess the audio and video breakdown of ads versus subscriptions is more similar than I realized.
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C
Going back to like the value idea, a lot of music streaming services like Apple, you know, are bundling into phone plans as well. You know, if you sign up with a plan with Verizon or whomever, there are perks there. You can get access to Spotify, Apple Music or whatever music service they have partnered with. And that's something we've also seen for ad supported plans on video streaming. So it's a way for them to, you know, keep churn low to maybe increase subscription prices without really squeezing consumers too much who are looking for value. I expect that Spotify will increase prices further. It is kind of hard to imagine them not doing that.
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A
My take here is that I think that Spotify can put the price up to 40 bucks a month. I'd pay it because, because you don't choose your music.
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B
I'll give them ideas.
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A
A lot of this is based on do I have an Apple, do I have an iPhone? I'll probably use Apple, Apple Music, do I not? I'll probably use Spotify and, and if I have one or the other, maybe I'll listen to things on YouTube. But I don't think that anyone would change music streaming services if the price went up too high. And they've not. They've got so much run. I think it's a great question, Ross, you know, comparing it to video stream streaming services and how much?
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B
How much?
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A
They've hiked the prices but they went from like 35amonth to like 45 and then 50 and then 60 and it went up quite. Spotify is going up by like a dollar a year.
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B
So they know you're talking about like the, the like YouTube TV because like 35 bucks, that's. That, that, that'd be a lot for one service.
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A
Yeah, like a YouTube. Yeah, like a YouTube TV. Even, I mean even Netflix was going up by a couple of dollars each time where Spotify is only going up by a dollar every year.
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B
They've done it more times.
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A
Yeah, exactly. So I think the Spotify's got a lot of Runway still to increase prices. I don't think people are going to be bothered. They might be a bit annoyed by it. I don't think they'll lose any subscribers at all of it. Danny, anything else Spotify on Spotify's mind at the moment?
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C
I guess one question I had here was how its audiobook push is going to play out. Oh yeah, this, you know, I feel like information on how it's going with audiobooks has been a little sparse.
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A
Yeah.
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C
But they've launched a audiobook only subscription plan. Spotify has a partnership with bookshop.org where users can buy the physical copies of the books that they're listening to. So yeah, they've, they're clearly trying to get deeper into the audiobook space and turn it into more of a revenue driver.
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A
Yeah. All right, gents, so 10, the show will pick a top three. This is the ones I've written down. Number one, what will Spotify do over AI slop? Number two, advertising continues to underperform despite management's optimism. Number three, will audio streaming platforms have to start raising prices as fast as video platforms? Number four, will people sit down in the living rooms and turn on a podcast to watch en masse? And how concerned should Spotify be with people like YouTube or Netflix or Hulu maybe taking a bit of this corner from them? And then number five, what's the audiobook strategy and how's it going? Danny, what do you want to keep?
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C
I think the question of how Spotify ad revenues will ever overtake the subscriptions is an interesting one for Spotify.
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B
Okay. Ross Daniel's convinced me to choose his audiobook analysis.
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A
Oh, okay, nice.
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C
Interesting. What, what's piqued your interest there?
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B
I'm also just curious if it's going to work like the bringing in the physical books through bookshop.org that's, that's interesting. I feel like that's a high barrier. But I like anyone that's trying to get people to buy books outside of Amazon. So like I'm rooting for them to have this work out.
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A
So you would just, you'd listen to the audiobook and then you'd buy the physical copy and just have it on the shelf like completely on you. Isn't the beauty of the book like there's a bit battered, you turn a few pages like dog eared a few pages.
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C
I haven't read any books on my shelf. I don't touch them. They're there for aesthetic purposes only.
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A
Okay, never mind
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C
that new book smell.
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A
I'm going to pick this. Will people sit down in the living rooms and turn on a podcast to watch? And which platform will they open? I think that's a big one. So we have that one. I just said advertising. Will their advertising revenue ever get close to how much they make from subscriptions? And then what's the audiobook strategy? And how's it going? Great. Top three, gents. That's what we've got time for. For today's episode. Thank you so much for hanging out with me today. Thank you. First to Ross.
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B
Thanks, Marcus.
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A
And of course to Danny.
- [26:51]
C
Thank you.
- [26:51]
A
Yes, indeed. And thank you so much to the whole production crew. We have Danny, Lance, Luigi and Mike all hanging out and helping us out with this one. So thank you to you guys. Thanks to everyone for listening into behind the Numbers new marketer podcast. Make sure you subscribe and follow and leave a rating and review. We'll be back on Monday. Of course. Of course we will. Happiest of weeks.