Now the problem of that obviously is that — this has been a far then really a great user experience for consumers. So people are hacking our system in a positive way to do more things on it. And this is exactly how audiobooks started for us too. So audiobooks started in Germany for us where the music labels had a bunch of audiobook rights and we’re uploading these audiobooks to our platform and [it] (ph) started seeing great consumer success. And similarly on education, we’ve started seeing how people are using Spotify for educational purposes. And what we’re trying to do now is obviously create a much more compelling consumer experience for set education, and we’re adding more tools that allows these educators to communicate not just via audio but also via video and adding more and more ways for them to engage in that way.
And I think long term if you squint and see that education remains a massive opportunity. And the internet should be poised to create an unparalleled user experience where some of the world’s best educators and creators and storytellers should be able to help lots of consumers. So what you can see if you’re a consumer in the UK, at the moment at start is you’re going to see lots of really cool ways where for instance you can learn how to become a better DJ using Spotify or learn how to play the guitar. It’s some really amazing content that’s on there by creators. A lot of these creators were already doing podcasts and they’re now adding ways to up monetize their fans, by creating amazing content that allows them to get better at their craft.
And I think that is the trend in education. You guys know this, but more and more consumers are relating to other people. They’re not necessarily related to faceless brands. And so this is a huge trend in education that we’re very excited about.
Bryan Goldberg: All right, our next question is going to come from Mike Morris on pricing. Recent press indicates that you’ve raised price in the UK and Australia and are planning to do so in the US later this year. Can you provide an update on pricing changes for this year? How will you approach pricing increases by plan and unique pricing for audiobooks or other premium features?
Daniel Ek: Yeah I’ll start and maybe Ben can add. We don’t pre-announce anything we’re doing on any particular type of price increases. But as I said, the general thinking, if you want to understand how we’re thinking is, it is really about value to price ratio. So we’re constantly looking at how much value we’re adding, how are consumers in that market responding to that value that we’re adding, and then what is the fair price to have a good value to price ratio. And we’re doing this in multiple ways, of course. One is adding value into this base tier, but the other way is to increase the choice for consumers. So I do want to point to that a little bit more here. So you’ve seen us over the years to add more ways for consumers to choose different plans on Spotify.
And it originally started off by being sort of just a single person plan and it then went to a family plan and then we added Duo and then we added various ways of paying for these family plans in, for instance, Southeast Asian markets where you can have a day pass, a week pass and so on. So just a lot more flexibility and you should think about that we want to offer as much flexibility as possible in this next stage of Spotify to, now because we’re at the size where we want to appeal to an even larger base of consumers to turn to one of our subscription offerings. So that obviously means that you’ll see things like for instance the audiobook only tier that was referenced earlier here. You should also expect to see a music-only tier as well, and all of this is in-line to just offer as much flexibility to consumers as possible for them to pick whatever plan they feel offers the best value to price ratio for them.
Bryan Goldberg: Okay, next question will be from Benjamin Black on gross margins. There was a big step up in gross margin in the quarter and for the second quarter outlook. Were there any one-timers or is this a new trend? How should we think about the cadence of gross margin expansion for the balance of the year?
Ben Kung: Thanks, Ben. This is a great question. I’ll start just by re-emphasizing what we’ve been saying a few quarters in a row now. We feel really confident about the gross margin trajectory and the sequential momentum we have. So consider this a real trend and not just a function of one-offs. As I said in my prepared remarks, we have a lot of moving parts, as is the case every quarter. Non-music, music, marketplace, to name a few of the major areas. We also had movements in other costs of revenue such as continued favorability with cloud costs as Daniel mentioned. So there are a bunch of things driving the upside. From a year-on-year perspective, it’s the continuation of the trends, we talked about last quarter that I mentioned too. Music improvements driven by the growth of our marketplace business, our continuing pivot to profitability and podcasting and also optimizing other costs of revenues. For Q2, we see momentum from these same areas, areas persisting.
Bryan Goldberg: Okay, and we’ve got another question from Doug Anmuth on Investor Day goals. You often say that Spotify is well positioned to deliver on the 2022 Investor Day goals, but the company’s changed a lot since then. Were the changes that you’ve made and the new found discipline required to actually deliver those goals, or should you now have real upside because Spotify is being run very differently?
