NEW YORK (BLOOMBERG) - Spotify Technology is introducing its audio service in 85 markets across Asia, Africa and the Caribbean in coming days, expanding the company's potential market by some one billion people.
The steps announced on Monday (Feb 22) will nearly double Spotify's geographic footprint and add regions where streaming music is in its infancy. The company already operates in 93 countries or territories.
Spotify is seeking to build on its head start as the leading audio service in the West to become the dominant player globally. While the company already has more than 345 million users, fewer than 20% come from Asia, Africa and the Middle East, where most of the world's people live.
The Stockholm-based company has been slower to expand globally than Netflix or Google's YouTube, partly because of the complexity of securing music rights. But its timing coincides with growing potential in markets across Africa and Asia. Where the music industry was once US-centric, many of the most popular acts in the world right now hail from India, Nigeria, South Korea and Latin America.
"For the first time ever we have the technology to connect the world through audio," chief executive officer Daniel Ek said at an investor event.
Mr Ek spoke at an event called #StreamOn, a presentation of Spotify's growing ambitions in all manner of audio. The company began the event by talking about its original business, music. Spotify is the largest paid music service in the world, and has become the single biggest source of revenue for the recording industry. The company predicts global music sales will reach a new peak by 2025.
Investors liked what they heard, boosting the shares by more than 6 per cent to US$387.44 in New York. Spotify has gained almost 160 per cent over the past year, raising its market value to more than US$70 billion (S$92.5 billion).
Pop stars J Balvin, Billie Eilish and Justin Bieber all made appearances during the event, which Spotify used to discuss ways the company is supporting artists, including a new subscription offering for higher-quality audio.
Yet Spotify is also shifting its focus from being a music service to an audio service with a wider product offering, prioritizing growth in podcasts and audiobooks. Spotify already hosts more than 2 million podcasts, and has bet they can become a multibillion dollar business. The company generated 7.88 billion euros (S$12.7 billion) in sales last year, the majority from subscriptions, and is now looking to increase advertising revenue.
Few podcasts make money, and those that do generate most of their revenue from advertising. The Swedish audio service announced on Monday new tools to change that, including an ad network for podcasts and tools for podcasters to sell subscriptions to listeners.
The company also announced dozens of new original series, including global sports shows from "The Ringer," a slate with DC Comics, and a new show pairing former President Barack Obama with rock star Bruce Springsteen.
Investors have cheered Spotify's investment in podcasts, betting the company can find ways to make money from more than 100 million people who listen every month and stem years of net losses from its money-losing music service.
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