Spotify’s UK MD Tom Connaughton has given a rare interview in which he discusses the streaming giant’s growth strategy.
Connaughton gave his exclusive first interview to Music Week earlier this year. Now’s he spoken to BBC Radio 4’s Media Show about the DSP’s UK performance and future plans.
While Connaughton declined to break out UK user numbers from the current global total of almost 300 million (including 138m subscribers), he made clear that this is a priority market.
“The UK is a very important market for Spotify globally, we’re one of the top three markets for Spotify globally,” he said. “We’re the number one audio streaming platform in the UK.”
Spotify recently offered a free Google Nest Mini as part of a subscription drive.
While Covid-19 may have taken Spotify staff out of the new London HQ, Connaughton was bullish about the prospects for growth in the UK operation, which houses the DSP’s first R&D hub outside the US and Sweden.
“There are going to be a huge amount of jobs created, there are going to be 600 to 700 jobs within London, primarily focused on R&D,” he said. “The UK and Ireland has got a rich history in audio, so it makes sense for us to be here.”
With Spotify now in 92 markets, Connaughton stressed that it has a localised approach in each territory.
“We have fantastic music teams, marketing teams and studios teams in each market,” he said. “They are really embedded in and in touch with what’s happening locally in any given market, and can therefore really respond to the needs of the audience and make sure that we are reflecting what’s happening culturally.”
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Connaughton also noted the influence of Covid-19 and the easing of lockdown on users’ behaviour.
“We saw, for instance, a huge rise in the creation of road trip playlists from June to July, which will be no surprise,” he told the Media Show.
The UK is a very important market for Spotify globally, we’re one of the top three markets
While the music industry focuses on subscriber growth, Connaughton said it remains committed to the free ad-funded tier.
“We view it as being very important to have both offers,” he said. “We have the free tier for people who want to access it that way, and then we have the paid tier for people who want a more premium experience. What we’ve seen over the history of Spotify’s evolution is that that free funnel is key to the success of the business. We see a huge amount of people that come into that free tier then going on to become fully paid subscribers down the line.”
Spotify is reaching out to advertisers, including brand sponsorship of playlists.
“We are offering an innovative offer to our advertisers,” said Connaughton. “What we can enable advertisers to do is to really tap into and lean into cultural moments that are happening on Spotify, and reach those audiences. That’s through recommending playlists that brands can advertise around with branded messaging that’s conscious of the cultural climate."
Spotify’s claim to advertisers is that it provides ‘real-time context targeting’ to reach people listening to music tailored to moods and activities.
“It’s very important for advertisers, that’s why advertisers are really responding to the offer that Spotify can deliver to them,” said Connaughton. “What spotify can offer is that intimacy, married with all the best parts of digital in terms of measurement and efficacy.”
The Media Show interview also covers the growth of podcasts on Spotify, which James Cator leads on in the UK. Upcoming original content commissioned in the UK includes a podcast with Danny Dyer.
Amazon Music has now launched podcasts, as exclusively revealed by Music Week.
Spotify is nominated in the Music Consumer Innovation category at the Music Week Awards.
To read our exclusive Music Week cover story with Tom Connaughton and the Spotify UK team from earlier this year, subscribers can click here.
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