Bryan Goldberg: All right. Our next question is going to come from Rich Greenfield on audiobooks. There’s been speculation that you will launch a premium tier that excludes audiobooks for $10.99 while the audiobooks goes to [$11.99] (ph). I’m curious if that’s needed to improve the cost structure of your audiobook offering. Could you help us understand the margin profile of the audiobook’s business?
Daniel Ek: Yeah, I’ll start here and maybe Ben can add. So Rich, I think my sort of last answer kind of captures this. What we’re focused on at Spotify is really, we’re trying to improve as much value as we can. And over the course now of the last two years, we’ve added a tremendous amount of value. We’ve added, of course, more and more podcasts than ever before, millions of podcasts now. We have a library of over 100 million music tracks now onto the service. We’ve added audiobooks in many markets, more than 25% of our base are now using that. And two, I think I saw something online where you were talking about whether or not people were engaging of that 25% of users. Well, in the first 14 days of new users using audiobooks, we see over 2.5 hours of incremental usage on the audiobook side.
So we’re seeing some great results. And of course, we’ve added video to both on the music side, but also on the podcasting side. So we’re adding a tremendous amount of value over the course really of this last two years on the service and more and more product features like AI DJ, day list and so on. So we’re adding more value across the base and we’re focused on capturing some of that value we’ve been adding over that past two years by increasing the price. And obviously you’re mentioning the US numbers, but in many territories, we have been doing even more price increases. Sometimes that’s due to local dynamics, sometimes that’s also due to inflation and other things that are contributing to. So it’s really a mix of many different things that we’re considering as we’re raising prices.
But the main one, if I want to focus you on one, it’s really around value to price ratio and keeping that very healthy where we’re obviously offering a lot more value to consumers than what we’re capturing through the price increases. But I feel really good about us doing that. That’s also why you saw us having a healthy guidance on the subs number too, because we think consumers like what they’re seeing from Spotify. They love the offering and they feel that the value that they’re getting is more than fair.
Bryan Goldberg: All right, our next question is going to come from Doug Anmuth on MAU. Can you talk more about the greater MAU variability you saw in the first quarter? Was moderated marketing activity as expected or were — campaigns less effective at the top of the funnel? And does organizational change just reflect increased discipline and higher LTV to SAC thresholds? Where is that ratio versus historical levels?
Ben Kung: Absolutely. I’ll take that and I’ll start with it and maybe, Daniel, you can add if you have any other thoughts. I think it’s important to first start my answer here with just a bit of look back context. So we started honing in on marketing efficiency as we enter 2023. So more than a year ago. And when we began pulling back on spend last year, we had other tailwinds working for us that more than counteracted this and drove the record year for us. So these included product changes and innovations that we made, as well as benefits on the competition side with certain competitors sort of exiting different markets. We also had a super strong end of year effort with activities such as Wrapped and our campaigns around the holiday and the new period.
So all these things sort of contributed to what otherwise was observed as the variability on Q1. That said, we’ve had some great learnings and insights from this performance, notably as we’ve talked about sort of as Daniel mentioned, thinking about sort of our marketing spend and how we calibrate that. I think you’re right to call out that we are very focused on a high LTV-to-CAC threshold. But we also want to make sure that we’re capturing all the opportunity under the investment curve that we have in different markets and I think it’s important to sort of strike that balance in making sure we capture the opportunity while staying disciplined and making sure that we’re focused in a way we target high value users across the board.
Bryan Goldberg: All right, next question from Justin Patterson on education. Daniel, could you please frame the opportunity you see in education? How would you characterize the investment to succeed here versus what you had to invest in podcasts and audiobooks, what would cause you to expand beyond the UK?
Daniel Ek: Yeah, I mean, this is very, very early days. For those of you that may not know, we’ve rolled out an early test in the UK, where we have an educational offering for consumers. Long-term education remains obviously a huge potential opportunity for Spotify, but it’s too early to say what the results is of the specific test that we have. But as many things with Spotify, maybe to uplevel a little bit, is that oftentimes we either see consumers or creators tapping into a need. And quite often what ends up happening is that creators are using our platforms for things that we may not have initially intended it. So — a long while ago, we added the ability to have a certain podcast behind a paywall. And what we were seeing was that some of these podcasts were actually having courses available for them so that you can consume that and unlock them via Spotify which is a great use case.
