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Q4 2021: Spotify Sustains Momentum in Subscriber Growth

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Spotify Subscriber Growth

By Dipo Olowookere

In the fourth quarter of 2021, one of the audio streaming platforms, Spotify, posted strong numbers, sustaining its momentum in subscriber growth and others.

According to the financial statements analysed by Business Post, the firm improved its monthly active users (MAUs) by 18 per cent year-on-year to 406 million from 381 million in the last quarter.

This was buoyed by gains from the 7th annual year-end Spotify Wrapped campaign launched on December 1, 2021, to users in 103 markets.

Collectively, 120 million MAUs engaged with Wrapped content in Q4 (up 29% Y/Y) as the campaign trended worldwide with nearly 60 million shares of Wrapped stories and cards, triggering significant levels of consumption across our two personalized playlists (Your Top Songs and Your Artists Revealed) which were responsible for almost 8 per cent of total on-platform consumption hours within 48 hours of launch.

It was observed that premium subscribers grew in the period under consideration by 16 per cent to 180 million in the quarter as a result of the strong promotional campaign performance.

This supported the 24 per cent growth in the revenue generated in the quarter to €2,689 million and was above the top end of its guidance range due to significant strength in advertising and favourable FX movements.

Within premium, the average revenue per user (ARPU) of €4.40 in Q4 was up 3 per cent and excluding the impact of FX, the company saw a benefit to ARPU primarily from its price increases.

As for the gross margin, it finished at 26.5 per cent in Q4, above the top end of its guidance range and flat versus the prior-year period. The gross margin trend reflected a favourable revenue mix shift towards podcasts, marketplace activity, and Other Cost of Revenue efficiencies (e.g. payment fees, streaming delivery costs), which were offset by higher non-music and other content costs and publishing rate increases.

According to the results, Spotify witnessed a 12 per cent increase in operating expenses at €719 million in Q4, though better than forecast and contributed to positive operating income in the quarter.

However, the firm posted a net loss of €39 million in the period under review compared with the net profit of €2 million in the preceding quarter.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Nigerian Music Stars in Hot Demand Worldwide—NCC

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Nigerian music stars

By Adedapo Adesanya

The Nigerian Communications Commission (NCC) has tasked content creators in the country to take advantage of the many advancements in the nation’s growing telecommunications industry, saying much can be achieved through music artists, who are hotcakes globally.

The Executive Vice Chairman/Chief Executive Officer (EVC/CEO) of NCC, Mr Umar Danbatta, stated this in Lagos over the weekend while speaking at the 10th Annual Brands and Marketing Conference of the Brand Journalists Association of Nigeria (BJAN) where the NCC was conferred with the Regulator of the Decade award.

Represented by the Executive Commissioner for Stakeholder Management, Mr Adeleke Adewolu, the EVC noted that the ongoing process, for which arrangements are in top gear, followed the successful auctioning of two bands of the 3.5GHz spectrum in December of 2021.

Mr Danbatta informed the participants at the conference that content creation and consumption had grown around the telecommunications infrastructure provided by technology, which Nigerian entertainers had leveraged to become global brands.

He said,  “Due to heavy leverage on digital platforms, the Nigerian entertainment industry has gone global. Nollywood is one of the biggest movie industries in the world. In fact, more movies are produced by Nollywood yearly in comparison to Hollywood.

“Nigerian music stars are in hot demand worldwide because of their popularity and brand recognition on social media. We should add that many of these global superstars emerging from Nigeria launched into stardom by leveraging caller tunes and other mobile content platforms to grow their brands and huge followers online.”

Mr Danbatta declared that, “Digital platforms are fostering different types of systemic change, creating new brands, eroding the value of some brands, whilst at the same time increasing the value of other brands. The innovation-transformation-disruption cycle has come to stay and will be exacerbated as technology continues to evolve.”

The EVC  assured that the NCC would continue to aggressively drive the rollout and seamless operation of infrastructure to drive new digital technologies to benefit all sectors of our economy.

“It is our hope that Nigerian brands will continue to leverage robust infrastructure to grow their value and ensure that our country derives maximum benefit from unfolding digital transformation efforts,” he said.

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Gospel Singer Sammie Okposo Slumps, Dies

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Sammie Okposo

By Modupe Gbadeyanka

Reports just filtering in indicate that a popular gospel artist in Nigeria, Sammie Okposo, has passed on.

Details of this unfortunate incident are still sketchy, but it was gathered that he passed away on Friday at the age of 51 after he slumped.

Recall that some months ago, Sammie Okposo was in the news over issues concerning his marriage.

The Wellu Wellu crooner later apologised to his fans and others for betraying their trust, promising to be a better person.

Three years ago, the Delta State-born music star had a close encounter with death after the propeller shaft of his car pulled off while on motion.

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More than a Music Streaming Service – Why You Should Allocate Media Spend To Spotify

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Spotify music streaming service

By Carla Harrison

If I were to pick up your phone right now, there’s a very good chance that I’d find Spotify among your apps. It is, after all, the world’s most popular music streaming service, with 433 million users (188 million of whom are paid subscribers) in 183 countries. Since its launch in 2008, it’s transformed the way the world listens to music and helps launch the careers of artists around the world.

And if you use Spotify, you’re probably also aware that it’s expanded from just music streaming into podcasting, with some 4 million podcast titles joining its library of 82 million songs. But did you know that it’s also a powerful advertising platform with a growing focus on the African continent?

Any brand that’s serious about expansion, particularly in high-growth markets such as Nigeria, simply cannot afford to ignore it.

The pros of radio, plus more  

In order to understand what makes Spotify such an appealing platform for advertisers, it’s worth first reminding ourselves of the strengths offered by traditional radio. In general, for example, radio ads are more cost-effective than other forms. You can also get away with increased frequency, meaning that your message is more likely to stick.

Spotify offers all the benefits of radio advertising plus more. With growing numbers of people listening to digital audio streaming every day, you’re guaranteed an active and engaged audience. At the same time, you’re also reaching them while they listen to what they love. And because Spotify’s targeting options are so advanced, your brand can reach specific people based on age, gender, music genre, and playlist. Unlike radio, Spotify guarantees 100% completed listens in its reporting. It can also provide metrics around which type of audience engaged with your ad and a companion banner which allows users to click through to a webpage.

The streaming service is an innovator in the advertising space too. Its 3D audio feature, for instance, allows brands to provide premium quality advertising through an immersive, dynamic, and sensory audio experience. As a result, listeners don’t just hear an ad; they feel it.

But Spotify offers more than just audio ads. It also allows brands to reinforce their messages with high-impact display and video ad formats. Spotify video ads are actually the best performing in the industry, as they had to be built for viewability. The ads are 100% viewable and 100% audible, and Spotify only charges for 100% completion.

Making an impact in Africa 

It’s also worth pointing out that Spotify is seeing significant levels of growth across Africa. While the streaming service has been available in South Africa since 2018, its real expansion into Africa only came in early 2021, when it launched in an additional 40 countries.

But just a year after launching in Nigeria, the number of artists streamed per user had grown by 60%, and Nigerian music fans had created 1.3 million user-generated playlists. Additionally, nearly 21 000 songs had been added to the platform, placing Nigeria as the country with the second most streams after Pakistan in the new markets, with Kenya third in the ranking.

That growth isn’t likely to slow down anytime soon, either. According to Statista, music streaming revenues in Nigeria are expected to show an annual growth rate of 12.61% between 2022 and 2027. It’s also worth noting that penetration in the overall streaming market currently sits at just 4.1%. With an additional 35 million Nigerians set to come online by 2026 (all of whom will be hungry for the consumer experiences that come with affordable and ubiquitous access), Spotify looks primed for significant growth.

That comes with obvious growth benefits for advertisers, especially when you factor in that 39.6% of music streaming users are in the medium-income group. As Nigeria’s economy continues to grow, that income group will become larger and more valuable.

Partnering with the experts 

Brands looking to utilise Spotify as a marketing platform don’t have to go in blind, either. By working with experts that have specialist teams, they can get the most out of their campaigns. The right partners will also offer advertisers price transparency, ensuring that they get advertising on the platform at the most affordable rates.

In doing so, they can ensure that they always reach the right audiences at the right time with the right message. Moreover, with Spotify, they’re reaching people during the moments they love. And that’s always incredibly valuable for any marketer. Small wonder then, that Spotify is seen as the most trusted ad platform among consumers. Factor in the brand safety it offers, and you have a winning combination.

A culmination of factors 

Ultimately then, Spotify represents the culmination of a number of factors that should be of interest to anyone with a media budget that needs to be spent. And as Africa, and Nigeria in particular, that combination of engaged, active audiences, the ability to target specific audiences, and innovative advertising products will only become more important.

Carla Harrison is the East African Sales Manager at Ad Dynamo by Aleph

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