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On Thursday (May 21), Spotify hosted its Investor Day in New York City — its third public deep-dive into the company since it went public and the first under the new leadership of co-CEOs Gustav Söderström and Alex Norström.
“The Spotify you see today is very different from the one you saw four years ago,” Norström said in his opening remarks.
Through presentations about the company’s new advertising stack, growth in its audiobooks division and the unveiling of a new AI licensing deal with Universal Music Group (UMG) and Reserved — a ticketing initiative that identifies an artist’s most passionate fans and holds a pair of concert tickets for them — the company attempted to persuade investors it can achieve its long-term goals of a 35-40% gross margin and 1 billion users.
Below are the biggest highlights from the day’s presentations.
Spotify thinks a slim percentage of super-dedicated users are willing to pay as much as $100 a month for subscriptions
“There is no such thing as an average user,” Nörstrom said, describing the streamer’s users as freemium, premium and super-users. The company estimates that more than half of Spotify users will continue to use it for free in the coming years. But it also projects that roughly 25-30% of its total user base will have premium subscriptions and around 10-15% will be super-users — consumers who are willing to pay more than $12.99 a month. Within the super-user segment, the company said it sees signals that a small percentage — less than 5% — appear to be willing to pay as much as $100 a month.
Audiobooks will generate $100 million in annual recurring revenue by July
Söderstrom said internally Spotify used to speculate about what new Spotify premium add-on — podcasts, audiobooks, etc. — would appeal to super-users enough that they’d pay more. “We all thought that music [could be it], but it turns out that it was our newest vertical, audiobooks, that got there first,” Söderstrom said. Since launching audiobooks in 2023, it has observed a segment of audiobook streamers hit their monthly usage limits more frequently than most other segment users. This led Spotify to roll out the option to pay for additional audiobook streaming hours, a service called Audiobooks Plus, which has proven popular among those dedicated users, executives said. Spotify is now on track to generate $100 million in annual recurring revenue from Audiobooks Plus by July, the company said — up from roughly zero about two years ago.
Overall, audiobooks are Spotify’s fastest growing segment, with roughly 20-30% annual growth in the United States, and listening hours increasing 60% in 2024 to 2025.
Honk: Spotify’s engineers use AI a lot, and when they stop spending money on it they’ll save a ton
Spotify executives have said tailored versions of Claude, which it uses for its background coding agent Honk, have helped it speed up internal processes over the past year. Niklas Gustavsson, Spotify’s chief architect, vp of engineering, said more than two-thirds of the coding Spotify’s developers do over the 4,500 production changes they ship daily is AI-assisted, driving coding productivity up 76% since last year.
“We’re no longer primarily scaling through head count; we’re scaling by increasing the impact from the people that we already have,” Gustavsson said. “You can also see this in our economics, revenue per engineer is rising. Our ability to scale our R&D has changed with AI, and once these systems are built, the cost to serve each additional user will further improve.”
The company said it expects investments will continue to cause operating expenses to increase to the tune of around 200 million euros ($231.7 million) in the second and third quarters this year and slow down toward the end of this year and into 2027.
Spotify wants fans to go offline with Reserved
Spotify’s global head of music, Charlie Hellman, announced the launch of Reserved, a new ticketing initiative that identifies an artist’s most dedicated fans and holds two tour tickets for them. This is a service designed to reward Spotify premium subscribers for their dedication to their favorite artists and to combat the rising challenges associated with ticket buying in a time when scalpers, bots and endless queues have become commonplace. Reserved will kick off this summer for U.S.-based premium users, and the first concerts will be from Live Nation specifically. More promoters and partners are expected to take part in the program soon.
Spotify and UMG are ready to remix with their new AI licensing deal
The streaming service announced a new AI licensing deal with UMG for master and publishing rights, allowing Spotify to launch generative AI music models in the near future. With this deal, Spotify’s models will allow fans to create covers and remixes of their favorite songs from participating artists and songwriters signed to UMG, but this does not come as a total surprise. Last fall, Spotify announced that it was partnering with the three major music companies — UMG, Sony Music Group, Warner Music Group — as well as Believe and Merlin to create “artist-first” AI music tools and included a list of core principles to go along with it.
Spotify says it will get to 1 billion users by 2030 and other forecasts
While this has long been a target of the company, they shared they expect to achieve the goal within four years, with free users making up more than half of users. Executives said they also anticipate growing revenue by percentages in the mid-teens and that they anticipate achieving gross margins in the range of 35-40% with an operating margin of more than 20%.
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