Half the users of Spotify's free ad supported tier convert to Premium paid users, if they stay engaged, Barry McCarthy, Spotify Chief Financial Officer said in an interview at the Goldman Sachs 27th Annual Communacopia Conference Friday.
"1 out 2" users that try Spotify's free music service eventually convert to Premium paid users, if they stay engaged, according to Spotify Chief Financial Officer Barry McCarthy. The former Netflix CFO made the comment at a Goldman Sachs investor conference, as part of his justification for expanding the streamers' ad supported free tier. The streamer's paid service can continue to grow "if we make the free service better," McCarty said.
Elsewhere in the interview, the CFO took aim at Spotify's smaller competitors. Without naming Napster, Deezer, TIDAL and others, McCarthy said that for "relatively small and undercapitalized (streamers), it's game over, even if they have not figured it out."
Other highlights from the interview:
- 200,000 artists account for 72% of all the streams on Spotify
- 1.8 million artists account for the other 28% of streams
- "Broadcast radio is toast" as streaming in the car and voice control become ubiquitous.
- The real key to Spotify's future success is company's emphasis on technology and software. "Like Netflix, Spotify is a software first company."
- "The service with the best music discovery wins," and as the largest music streamer globally "by a factor of 2," Spotify has the most data to drive that discovery.
- Upcoming label negotiations are often fodder for "drama queens" who should "have at it," according to McCarthy, He did admit that the major labels often avoid antitrust issues by sending messages to each other via leaks and statements to the press.
- The labels want Spotify to charge more than $9.99 per month, but that's the wrong conversation. "We should be talking about growing revenue."
Spotify is the largest global music streaming subscription service with 180 million Monthly Active Users and 83 million Premium Subscribers with a presence in 65 countries and territories, and more than 35 million tracks.