“Whether you’re on a commute, in a kitchen, studying, on a date, or partying, our mission has really been about being a ‘soundtrack’ to [users’] lives,” said Gautam Talwar, Spotify’s General Manager for the Asia Pacific, during an interview with ChosunBiz on Oct. 22. Since its founding in 2008, Spotify has grown into a leading audio streaming platform, currently available in 180 countries with over 626 million users.
As one of the largest global audio streaming and media providers, Spotify offers an extensive discography that includes 100 million tracks and 6 million podcasts. Unlike other major domestic and international music platforms, Spotify specializes solely in music streaming and operates independently from larger corporations.
Having entered the Korean market in February 2021, Spotify recently introduced the ‘Spotify Free’ option, allowing users to enjoy music with advertisements. This Freemium model has been crucial in attracting users, serving as a stepping stone to premium subscriptions and driving the creation of 626 million accounts in total. Roughly 60% of first-time subscribers start out on the Freemium and then later upgrade to the premium. Talwar highlighted the significance of personalization in enhancing user experience, noting the unique playlists tailored to individual listening habits.
When ChosunBiz asked Talwar to share his thoughts on the Korea Fair Trade Commission’s (KFTC) potential investigation into YouTube’s alleged bundling practices with YouTube Music, he stressed the importance of choice for users. “No two users are the same. Users need a choice. If they want to listen to music for free, along with ads, they should be able to do that. If they want an ad-free experience through our premium subscriptions, they should be able to do that.” Throughout the hour-long interview, he reiterated the importance of personalizing the listening experience to cater to users’ moods.
The South Korean music streaming market is dominated by YouTube Music and domestic apps. What strategies is Spotify using to make its mark in this competitive landscape?
“There are three foundations that have been important differentiators for Spotify in Korea and globally. The first foundation is this notion of personalization. We have one of the world’s most advanced R&D platforms, and it’s very focused on this idea that with 626 million users, no two users are the same. We are personalizing 626 million experiences to help [users] soundtrack their lives through music and podcasts. That promise holds true for how we deliver in Korea and has been the most popular feature that Korean music listeners attribute to us.
The second big differentiator we have is ubiquity. We are a Swedish company, supporting almost 2,000 devices in partnership with key partners. Our promise is to be a companion to the lives of our listeners wherever they are, whether on social media, in their cars, watching on television, or listening through speakers. These ubiquitous integrations in a highly advanced tech market like Korea have been some of the most popular features cited.
The third, which is actually one of our most important components, is Freemium. On October 9th, we hit a significant milestone in Korea by rolling out our free tier for the first time. The Freemium model has been a vital driver. Under the Freemium model, it’s a catch-all for democratizing music, allowing any Korean listener to use Spotify. We’ve found that Freemium is an essential stepping stone to premium subscriptions, with almost 60% of our premium subscribers coming through the free tier.
These three differentiators, especially the free tier, give us confidence in our ability to expand our reach among Korean audiences.”
How will Spotify offset the absence of subscription fees?
“Looking at our performance over the past few years, profitability hasn’t been an issue. In Q2 of this year, we recorded total revenue of €3.8 billion (approximately 5.6459 trillion KRW), a 20% increase from Q2 last year. Our free-tier policy is essential for enhancing profitability. The more users listen to music, the more artists are discovered, and the quality of personalized services improves. This creates a cycle where listening satisfaction rises, encouraging users to try premium subscriptions.
In 2023, Spotify was able to pay the global music industry over $9 billion (about 12.3 trillion won) in royalties, which is three times the amount paid in 2019. From that, independent artists earned around $4.5 billion (about 6.1542 trillion KRW), marking a historic high, quadruple the amount from 2017.”
What sets Spotify apart from competitors?
“We are the R&D center of excellence for personalization. Take, for example, our recent advancements in personalization: personalized playlists, editorial playlists, and curated playlists. One exciting feature we’ve rolled out is a playlist called ‘Daylist,’ which evolves throughout the day based on each user’s listening history and tastes. Your Daylist will look different from another user’s because your listening behaviors are unique. With 626 million users, we have the opportunity to create 626 million unique Daylists.”
What are some insightful data related to K-pop?
“If you look at the top 10 markets for K-pop, there is outsized growth, and the best years are ahead. Today, we generate about 5.8 billion monthly streams for Korean music globally, 70% more than three years ago. These audiences span every continent, including the United States, Brazil, Mexico, and India. We have large audiences in Indonesia, the Philippines, and Thailand, and Japan is a growing market for Korean music. The diversity of artists is also increasing. Approximately 3,600 Korean artists are discovered globally on Spotify’s editorial playlists, with 2.2 times as many South Korean artists being discovered by first-time listeners.
We are in 180 markets, and that global reach is vital to the Korean industry. We’ve supported the Korean industry for over a decade, launching our first Korean music playlist in 2014. Today, known as K-Pop ON!, it has 5.5 million global listeners and is one of Spotify’s top playlists. This effort has brought us closer to Korean artists and labels, allowing us to connect them to global audiences, nurture their fan bases, and highlight their creativity for a worldwide fanbase.”
In 2023, revenue generated by Korean artists on Spotify was around $138 million (about 188.7 billion KRW), tripling since 2019 and increasing eightfold since 2017. We’re seeing opportunities for genres beyond K-pop, such as hip-hop.”
If you could introduce a Korean artist or music genre to the global market, who or what would it be?
“I’m really excited about the next generation of K-pop artists. Beyond K-pop, we see emerging hip-hop artists, indies, ballads, and even rock, which we feel has untapped potential.”
