India will be a massive part of Spotify biz: Daniel Ek

India has become one of Spotify’s key growth markets three years after it entered the country, but “not one of its better markets from a profitability standpoint,” according to Paul Vogel, chief financial officer of the Swedish audio streaming platform.

India found mention in Spotify’s global earnings presentation earlier this week when the company told shareholders that “quarterly performance was positively impacted by better-than-expected intake in India as a result of a multimedia marketing campaign driving activations and reactivations.”

The platform has claimed leadership in podcast content in the country in the past, saying that one of every four music listeners on Spotify in India tunes in to podcasts.

In an interview soon after its earnings release, Spotify founder and chief executive officer Daniel Ek spoke on why India needs a long-term focus and the company’s struggle with paid subscriptions. Edited excerpts:

How much of a priority is the Indian market for you? Is there an estimate on how much it’s growing, especially in terms of paid users?

It’s a very big priority for us in the long-term obviously, because it is the most populous country in the world. If you want to be the most accessible audio service in the world, you should continue investing in a market like that...it is a key priority of ours to really succeed in India. It’s a market I keep very close track of, and we’re feeling really good about the progress we made (here) in 2022 and where that sets us up for 2023 and 2024. It’s still early if you think about the impact India has on the overall Spotify business. However, it is my belief that India will be a massive part of the Spotify business if you fast-forward the next five to 10 years. We’re going to be long-term about India; this is not something we’re going to try for a quarter or a year, and then, if we don’t get the results that we want, we’ll stop investing. We will invest for as long as we need to in order to succeed in India. I’m just super excited about the region, and I hope to be able to visit in person early next year.

The Indian market is known for users who like to access music for free. Plus, there is a huge piracy issue here. How are you combating these challenges?

Yes, it’s very much a ‘free’ market, and it is the only market in the world where we have such an extensive free-on-demand service offering (Spotify offers free music for a month other than an ad-supported model in India). That obviously impacts the monetization levels that we can get relative to some other markets. However, this is not a new story for me. This was very much the case in my own country (Sweden), too, which was the No. 1 pirate market in the world.

The key recipe for success is the same, which is you provide much better legal services and, over time, introduce more benefits and increase the quality of the experience.

As you do that, people don’t mind paying.

And that’s what we’ve seen before in Sweden, as well as in China, which is now one of the fastest-growing music markets in the world when you think about revenue back to creators and the whole music industry.

So, I’m very bullish on India in the long-term. But it’s definitely going to take some time to get there.

Are there trends that stand out in India? What are the languages or categories that are doing particularly well?

We’re early on in our journey in India, but one of the most fascinating things is the wealth of languages. So, we’re improving our search experience on not just Hindi but some of the local languages, too.

Voice search is another thing that’s extremely well used in India but not used to the same extent in other markets.

We’re doing a lot of customization for the Indian market, which I think will serve us really well as we think about other Southeast Asian markets besides Africa going forward.

How big is your Indian library right now? And what are your plans in terms of expansion, content or distribution partnerships?

Much of our global catalogue, which is 70 million-plus tracks, is available in India.

A lot of popular Indian content should be on the service now as well, and we’re constantly filling out the catalogue and adding more content. That’s fantastic because (other than listeners in the home market), there’s a huge Indian diaspora in the UK and US as well, and this resonates really well with them.

We’re hard at work on introducing more local partnerships both on the content side and also in getting Spotify to more places where Indians are listening to music, be it cars, devices or wearables.

We have some really exciting things coming up that I believe will have a pretty major impact on the take-up from the average Indian consumer of Spotify in early 2023.