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Amazon has laid off around 150 employees at its recently launched live-radio app Amp, according to a report at Business Insider. Though Amazon would not comment on the numbers in the report, the company confirms to Billboard that it has chosen “to consolidate a few teams” at the division.
“At Amazon we think big, experiment, and invest in new ideas to delight customers,” said the company in a statement. “We also continually evaluate the progress and potential of our products and services to deliver customer value, and we regularly make adjustments based on those assessments. We’ve made the decision to consolidate a few teams so we can focus on the growth and scaling of Amp.”
Amazon is working to identify other opportunities within the company for affected employees.
Launched in March, Amp allows users to host their own shows by streaming music from a catalog of tens of millions of licensed songs from the three major labels, as well as Indies including Beggars Group, PIAS, Believe and CD Baby. Though it’s designed primarily for non-celebrity creators, Amp also hosts or has announced shows from high-profile artists including Pusha T, Tinashe, Travis Barker, Lil Yachty, Lindsey Stirling, Big Boi and Nicki Minaj, who brought her Apple Music show Queen Radio to the platform at launch. In September, Amp announced it would launch a monthly fund to reward emerging U.S.-based creators for building loyal audiences on the app.
The cuts at Amp come on the heels of Amazon’s Q3 earnings report on Thursday (Oct. 27), when the company revealed it had grown its headcount by just 21,000 employees — a sharp year-over-year drop after it added 133,000 employees over the same period in 2021.
On a call with reporters, Amazon CFO Brian Olsavsky said the company was “preparing for what could be a slower growth period” in an anticipation of an economic slowdown, citing inflation and rising energy costs, among other factors. “We are going to be very careful on our hiring,” Olsavsky added. “We certainly are looking at our cost structure and looking for areas where we can save money.”
Apple services, the category which encompasses Apple TV+ and Apple Music, saw another slight drop in revenue during the fourth fiscal quarter ending in September.
The category generated $19.2 billion in revenue, down slightly from the $19.6 billion reported during the third fiscal quarter ending in June — a figure that was another decline compared to the record $19.8 billion in sales the services collectively generated during the second quarter. But compared to the previous year, Apple’s FY Q4 services revenue represented a five percent year-over-year increase.
Apple now has more than 900 million paid subscriptions, up from the 860 million reported during Q3, according to Apple CEO Tim Cook.
Accounting for the tech giant’s product sales, Apple brought in $90.1 billion during the quarter — a quarterly record for the company driven by continued iPhone sales. “Our record September quarter results continue to demonstrate our ability to execute effectively in spite of a challenging and volatile macroeconomic backdrop,” Apple CFO Luca Maestri said in announcing the results.
The company’s earnings report comes just days after Apple instituted price hikes across Apple TV+, Apple Music and the Apple One subscription bundle. Apple TV+ — home to Ted Lasso and Severance — now costs $6.99 per month, compared to the $4.99 per month price point the service has maintained since its 2019 launch, while the annual plan for Apple TV+ now costs $69, compared to $49.
Speaking with analysts on the company’s earnings call, Cook said the increased price for Apple TV+ was a reflection of the increase in content available on the streamer. “We’re very focused on originals only, and so we had four or five shows or so in the beginning and priced it quite low,” he said. “We now have a lot more content and are coming out with more each and every month, and so we we increase the price to represent the value of the service.”
Apple Music subscriptions now start at $10.99, making it more expensive than Spotify, while the family plan costs $16.99 per month and the annual plan costs $109.
Apple also quietly updated its App Store rules to require iOS publishers to give the company a 30 percent cut for any boosted, or sponsored, posts purchased within their respective apps. The move has frustrated platforms like Meta, which sells sponsored posts.
This article was originally posted on THR.com.
French music streaming company Deezer posted revenue of 115 million euros ($112.5 million at the Sept. 30, 2022 exchange rate) in the third quarter, up 13.8% from the prior-year period (11.4% at constant currency), the company announced Thursday. Following the news, Deezer’s stock closed up 0.59% on Friday (Oct. 28).
The quarter was bolstered by a 13.8% improvement in average revenue per user (ARPU) to 3.9 euros ($3.81) from the third quarter of 2021. Deezer attributed the improvement primarily to price increases implemented in France in January 2022 — individual plans increased from 9.99 euros to 10.99 euros per month and family plans climbed from 14.99 euros to 17.99 euros per month.
Other subscription services have followed — or likely will follow — Deezer’s lead in raising prices. Apple’s decision on Monday to raise prices on Apple Music “was extremely good news for us,” said Deezer CEO Jeronimo Folgueira during Thursday’s earnings call.
Folgueira also encouraged by comments made Tuesday by Spotify CEO Daniel Ek about possible price increases in early 2023. “We have been the first ones to raise prices very successfully and now that the competitors follow, obviously that is a good thing for the industry as a whole,” Folgueira said. “It also makes us more competitive once competitors increase prices.”
Folgueira does not expect Deezer to further raise prices in 2023 but he didn’t rule it out, either. “We always remain flexible when it comes to pricing,” he said.
Deezer’s ARPU growth was partially offset by a higher proportion of family plan subscriptions, which carry a higher price than individual plans but allow up to six subscribers per account. At the same time, Deezer saw strong business-to-consumer subscription growth in France, adding 300,000 to 3.4 million in its home markets. The ARPU gain more than compensated for a 2.5% decline in total subscribers to 9.4 million — the same number as the second quarter of 2022.
Outside of France, Deezer’s B2C subscribers fell 15.8% year-over-year, from 2.7 million to 2.2 million, although the loss in the third quarter was a more modest 4.4%, or 100,000 subscribers. That decline was due to Deezer’s decision to focus more on a smaller number of larger markets — including France, Germany, U.S. and Brazil — and reducing unprofitable spending in elsewhere. Also, Deezer shut down its business in Russia at the end of the first quarter.
The company expects to finish the year with about 455 million euros ($445 million) of revenue, a 14% improvement from 2021. Deezer expects to see benefits from its new partnership with media company RTL in Germany in the second half of the year. More price increases should help bolster ARPU and revenues, too. In an Oct. 4 investor presentation, Deezer revealed it plans to raise prices in the U.S. and Germany in October and Brazil in December. Additionally, Deezer will increase the price on all existing iOS users in November, which Folgueira said “willl have a substantial impact” on fourth-quarter earnings results.
Now that Kanye West has been dropped by the talent agency CAA and lost his deal with Adidas, Spotify needs to remove some problematic content from its platform. West’s music isn’t the issue, though.
On the Oct. 6 episode of Joe Rogan‘s podcast, Pink Floyd co-founder Roger Waters says that Palestinians are concerned “that the Israelis seem now to have a policy of murdering so many of them that they are absolutely trying to create another intifada so they can make it an armed conflict,” in Waters’ view, “so they can just kill them all.” Rogan did not ask Waters for any evidence of this. Waters accused Israel of behaving “like people in the past behaved toward Jews in northern Europe” and complained that the Jewish community uses accusations of antisemitism to “smear anyone who dares to suggest there’s something bad about Israeli policies.”
Roger Waters attends the “Roger Waters Us + Them” Photocall during the 76th Venice Film Festival at on Sept. 6, 2019 in Venice, Italy.
Vittorio Zunino Celotto/GI
There’s nothing wrong with criticizing Israel. But over the years, Waters’ advocacy for Palestinians has curdled into bigotry that features comparisons between Israel and Nazi Germany and antisemitic conspiracy theories about media control. In a recent Rolling Stone interview that he complained to Rogan made him look bad, Waters says that Jewish Israelis “are not the descendants of indigenous people who’ve ever lived there” and suggests that some Jewish people in the U.S. and U.K. bear responsibility for the actions of Israel, “particularly because they pay for everything.” (Neither Spotify nor Waters responded to requests for comment on this matter.)
This kind of overblown rhetoric that feeds into antisemitic stereotypes is dangerous, and Spotify should edit or remove this interview and either drop Rogan’s podcast or make sure he’s prepared to ask hard questions of controversial guests.
But it shouldn’t remove West’s music — or Waters’ for that matter.
Weeks ago, Twitter and Instagram did the right thing by locking West’s social media accounts, while Revolt, Diddy’s media company, was wrong to show a lightweight interview with the rapper — and right to take it down afterward. West has the right to free speech, of course, but private companies also have a responsibility not to amplify his antisemitism. (West intends to solve this by buying his own social media company, Parler, which seems like a really bad idea for everyone involved.) Finally, on Tuesday, even Adidas dropped him. West’s deal with the Gap ended last month, but the company said it’s now taking “immediate steps” to remove his products from stores, Balenciaga ended its partnership with him, and stores like TJ Maxx and Foot Locker have also pledged to pull his shoes. At this point, West no longer even has a label (his recording contract with Universal Music ended last year) or a publisher (his administration deal with Sony Music Publishing expired earlier this year, although it will continue to administer his work for some time).
Now questions are being raised about what should happen to his old music, just as they were with R. Kelly and others. I object to West’s recent behavior about as much as anyone could: I’m Jewish (although I certainly don’t think one has to be to in order to object to antisemitism), and I think we all have an obligation to stand against racism (which West’s “White Lives Matter” shirt represents). But there’s nothing objectionable about West’s music. President Obama had it right: “He is a jackass. But he’s talented.”
There are two main reasons why activists usually call for the removal of music, or other work, from online platforms: It promotes hate, or it will benefit someone who promotes hate. Neo-Nazi bands fall into the first category, which is why almost all major platforms have a policy to take their music offline. For the same reason, Spotify should edit or remove Rogan’s interview with Waters.
West’s music isn’t hateful, though. And removing his music would also punish his label, his publishers, and numerous collaborators and songwriters who haven’t done anything wrong. (I think it behooves companies that own or distribute his music to condemn his behavior, but both his former label and publisher have done so.) That doesn’t mean other steps can’t be taken in order to put pressure on him: Apple pulled its West “Essentials” playlist, while Spotify leaves editorial playlist decisions up to individual editors, some of whom seem to have removed West’s music. These seem like smart decisions – and hopefully, if West apologizes, temporary measures.
Until West commits to changing his behavior, the music business should refuse to give West him platforms to spew his hate — and it should do the same with Waters (who should continue to advocate for his politics without crossing into hate or conspiracy theories). But it seems self-defeating to pull their music offline. If nothing else, it reminds fans of what great art they made before their genius was eclipsed by hate.
For the Record is a regular column from deputy editorial director Robert Levine analyzing news and trends in the music industry. Find more here.
A raft of equity analysts lowered their price targets for Spotify’s stock following the company’s third-quarter earnings report on Tuesday, helping send the music streaming company’s share price down 13.1% to $84.42 on Wednesday (Oct. 26).
KeyBanc dropped its price target from $135 to $125, Barclays lowered its target from $164 to $135 and Raymond James cut its target from $150 to $110. J.P. Morgan analysts, who dropped the price target from $130 to $115, wrote in an investor note they were “encouraged” by fourth-quarter guidance on monthly active users and subscribers — 479 million and 202 million, respectively — but believes investments and foreign exchange will pressure fourth-quarter profitability. Spotify expects this quarter’s 300 million-euros ($303 million) operating loss to include a 95 million-euros ($96 million) negative impact from foreign exchange.
For most of its four-plus years as a public company, Spotify prioritized growth over profit and attracting new users. This year’s emphasis is winning over investors with larger margins while maintaining momentum. In an interview on Spotify’s For the Record podcast released Wednesday, CEO Daniel Ek admitted gross margins were hurt by “advertising [being] a bit softer than we would have liked” but insisted the results were fundamentally on point with the company’s expectations. “We still feel really good about the underlying core trends in the business,” he said. “We feel really good about where we think we’re going to end up over the next one to three years.”
That long-term vision is part of the company’s transition from a music-focused company to one that embraces many forms of audio entertainment. The early results show promise: Spotify users spending more time with the service and its churn rate – the fraction of subscribers that leave in a month – is “the lowest across our competitive set,” said Ek during the earnings call. Podcasting advertising is growing faster than music advertising, and the number of monthly active users that listened to a podcast great “in the substantial double-digits” year-over-year, according to a letter to shareholders.
But investors aren’t showing a great deal of patience — and not just with Spotify’s stock. Numerous tech stocks have fallen this week on less-than-stellar results and guidance. Alphabet’s stock price fell 9.6% after the company’s third-quarter earnings on Tuesday showed that revenue growth slowed to 6% from 41% a year earlier. What’s more, ad revenue at Alphabet’s YouTube, which beat Netflix in U.S. streaming TV viewership in September, according to Nielsen, fell 1.9% year-over-year in the third quarter.
Another bellwether of online advertising, Meta, fell 14.9% in after-hours trading Wednesday. The social media giant’s third-quarter earnings missing expectations on both revenue and earnings per share, according to Bloomberg, and its third-quarter revenue declined 4% from the prior-year period. Three months ago, Meta posted the first year-over-year quarterly revenue decline since going public in 2012.
Since Spotify is primarily a subscription business, it doesn’t face the same threat from advertising weakness as Alphabet or Meta. “Any headwinds in the advertising business for us, it’s just a lot smaller than it is for platforms that solely rely on ads,” Ek said during Tuesday’s earnings call. But advertising is crucial to the company’s podcasting business, an increasingly vital part of its long-term strategy to boost profitability. So far this year, Spotify’s heavy spending on its podcasting business has been a drag on margins. That’s to be expected, however, Ek and chief financial officer Paul Vogel repeatedly said during the earnings call and on the For the Record podcast. Next year, they pledged, podcasting will start to contribute to the bottom line.
Over one year ago, alt-pop sister duo Aly & AJ released their first album in 14 years — and the pair has been on a steady release streak ever since.
Now, Billboard can announce that the act’s upcoming single, “With Love From,” will arrive Nov. 2, ushering in a new deal for the duo. The single doubles as the title of a new album, coming in the spring, which will be the first through a new distribution deal with SoundCloud that will also see the company provide Aly & AJ with marketing support.
“We couldn’t be more thrilled to have the support of SoundCloud entering this new album cycle,” Aly & AJ said in a joint statement. “They’ve allowed us to have the creative freedom we need to make our best possible music to date.”
The signing comes at a crucial time for SoundCloud, which cut 20% of its workforce in September. Not long before that, the company had added new features such as “the roster” — which signs artists to more traditional record deals (initial members included Lil Pump and Tekno) — and Repost, a distribution service offered at $30 annually that allows artists to keep up to 80% of the royalties they make from other streaming services. Aly & AJ’s deal fits into neither category, proving artists can still choose their own path when partnering with SoundCloud.
With Love From follows Aly & AJ’s independently-released 2021 album A Touch of the Beat Gets You Up on Your Feet Gets You Out and Then Into the Sun. Also last year, Aly & AJ scored a top 10 hit on Billboard’s Digital Song Sales chart with the re-released hit “Potential Breakup Song (2020),” which went viral on TikTok years after its initial release.
Following the arrival of A Touch of the Beat, Aly & AJ hit the road performing at festivals including Lollapalooza, Governors Ball and Austin City Limits. They just wrapped an opening gig on Ben Platt’s national tour, including stops at New York’s Madison Square Garden and Los Angeles’ Hollywood Bowl. Next up, a performance at Corona Capital in Mexico City followed by a string of overseas dates in Europe and the U.K.
For now, as fans patiently wait for Nov. 2 to arrive, a snippet of Aly & AJ’s new single can be heard in the teaser for an upcoming collaboration between Rowing Blazers and Seiko watches, with the collection set to drop Friday (Oct. 28) at 11 a.m. ET.
YouTube’s ad revenue dropped down to $7.07 billion during the third quarter, marking a 1.9 percent decrease compared to the previous year, parent company Alphabet reported on Tuesday.
The $7.07 billion figure is also a decline compared to the second quarter, when the video platform reported $7.34 billion in advertising revenue during the second quarter, slightly missing analysts’ expectations but representing a 4 percent year-over-year increase.
YouTube’s ad revenue growth has slowed down considerably since the earlier years of the pandemic, when the company saw massive gains; in July 2021, the company had even outperformed its first quarter ad revenue earnings by $1 billion, representing a whopping 84 percent year-over-year increase.
But the video giant isn’t the only tech and social platform to be impacted by a declining digital ad market. Snap, which has previously warned of macroeconomic headwinds impacting its ad business, reported a net loss of $360 million during Q3 as the company has seen engagement in the U.S. decrease by 5 percent year over year.
As YouTube continues to fend off competition, the video platform is preparing to launch one of the biggest updates to its ad revenue sharing program with creators. Beginning next year, short-form creators posting to YouTube Shorts — the company’s TikTok competitor — will receive a 45 percent cut of ad revenue, which will be calculated based on the creator’s share of total Shorts views.
To come to this calculation, YouTube will count the total amount of ad revenue from all ads displayed on Shorts each month. Of that total, an undisclosed percentage will be allocated toward creators, while the remainder will be used to cover the costs of music licensing, Neal Mohan, YouTube’s chief product officer, said at an event on Sept. 20 announcing the program. Creators will then receive 45 percent of the funding allocated toward creators, though each individual will receive different amounts based on their contribution to the total number of Shorts views.
The decision to opt for a 45 percent cut, rather than the 55 percent share that long-form YouTube creators receive, could also signal the start of platforms beginning to reassert themselves as they contend with declining ad revenue.
This article was originally published by The Hollywood Reporter.
Music streaming giant Spotify reported 195 million paid subscribers in the third quarter of 2022, up from 188 million paid or premium subscribers in the previous quarter and above expectations.
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The company had forecast it would hit 194 million premium subscribers this quarter.
Spotify also exceeded its monthly active user expectations, reaching 456 million monthly active users in the third quarter, above its forecast of 450 million. In the second quarter, monthly active users hit 433 million, up from 422 million in the previous quarter.
The company now says it has 4.7 million podcasts. At the end of June, Spotify had 4.4 million podcasts on the platform, up from 4.0 million at the end of March. New additions this quarter included the launch of Meghan Markle’s podcast, Archetypes.
Total revenue came in at €3.04 billion compared to a forecast of €3.0 billion.
Still, the continuing focus is on the company’s margins (which came in below expectations at 24.7 percent compared to the company’s estimate of 25.2 percent). The company said this was due in part to “slower than forecast advertising growth given the challenging macro environment,” as well as the expected renewal of a large publishing contract outside of the U.S. and currency fluctuations. Advertising was particularly impacted in Europe, according to the company. However, advertising only makes up a small segment of the company’s results.
While podcasting has been gaining traction and ad revenue, the $1 billion investment to get there has weighed down the company’s profitability. In June, the company said it expected podcast margins to turn positive after 2022 — this year marked the peak negative impact on the margins — with the segment becoming profitable in the next one to two years.
Speaking on the earnings call Tuesday, Spotify CEO Daniel Ek said the results are still in line with that pledge, as well as the theory that this is an investment year for the company.
“This is all playing out largely as we expected, despite the macro environment,” Ek said.
Asked whether Spotify would consider raising prices in the U.S., as Apple Music and other competitors have, Ek said “it is one of the things that we would like to do,” and that the company will be having conversations with its label partners on that.
In July, the company said it was preparing for an economic downturn — though it had not yet had much of an impact on its business — by slowing its pace of hiring by 25 percent.
“I do believe only the prepared survive, and we’re preparing as if things could get worse,” Ek said at the time.
On Tuesday, Spotify said it had not seen any “material impact” from the economic downturn, other than on its ad business.
However, moving forward, Ek said the company will be “more selective” with its “overall spending.” Future investments will be made only if they are accretive to the company’s margin over the investment period and if they strengthen the company’s value proposition to users. Ek also noted that there may be new opportunities in an economic downturn.
The company has also taken on other cost cutting measures. Earlier this month, Spotify canceled 10 original shows from its studios Parcast and Gimlet. This led to the layoff of 38 employees and pushback from their respective unions.
On Tuesday, Spotify did not address the cancellations directly, but said that the restructuring should lead to “improved productivity at select studios” and appear as a one-time charge in the fourth quarter.
At the same time, Spotify officially launched its audiobooks business in September, which it had been long promising as the next step in its business plan after its podcast push. The company chose an à la carte model at launch, in which users can check out individual books from a library of 300,000 titles. There are no ads yet for the audiobooks business, but the company has said it may explore that and other business models.
While management did not release numbers yet on the launch, executives said they had seen “good engagement” with the segment, even as the purchasing experience has been not been ideal for iOS users. Ahead of the earnings call, The New York Times reported that Apple had rejected the Spotify app three times.
The company has also been experimenting with selling tickets. In August, Spotify launched a ticket selling website for select artists. Paul Vogel, Spotify’s chief financial officer, has characterized it as a means of boosting average revenue per user on the platform, as well as increasing listening hours for those artists. The company would not disclose any numbers on that effort Tuesday.
This article originally appeared in THR.com.
In the third quarter of 2022, Spotify revenue improved to 3.04 billion euros ($2.98 billion at the Sept. 30 exchange rate), marking an increase of 12% at constant currency and 21.4% as reported, the company reported Tuesday (Oct. 25). Subscription revenue grew 13% (22% as reported) to 2.5 billion euros ($2.46 billion) while subscribers improved 13.4% to 195 million — 1 million ahead of guidance. Led by podcasting, the company’s ad-supported revenue grew just 3% at constant currency (19% as reported) to 385 million euros ($378 million).
Spotify’s gross margin of 24.7% — which is 50 basis points below guidance — was slightly better than the 24.6% registered in the second quarter, but it was still two percentage points lower than 26.7% in the prior-year period. The company attributed the decline to its spending on non-music content and product enhancements, increased publishing rates and an adjustment to prior-period accruals. Those negative effects served to offset a favorable revenue shift to podcasting and continued growth in Marketplace, Spotify’s hub for artist services.
Spotify shares fell 6.7% to $90.54 in after-hours trading.
Financial metrics
Revenue: 3.04 billion euros ($2.98 billion), +21.4% y/y, +13% at constant currencyGross margin percentage: 24.7%, down from 26.7% in Q3 2021 Operating loss: 228 million euros ($223.8 million), down from 75 million euros operating income in Q3 2021 Average revenue per user: 4.63 euros ($4.55)
Listener metrics
Subscribers: 195 million, +13.4% y/y Ad-supported monthly active users: 273 million, +24.1% y/y Monthly active users: 456 million, +19.7% y/y
This is a developing story.
Universal Music Group, Hipgnosis Songs Fund and other music stocks got a much-needed boost on Tuesday (Oct. 25) following news of Apple Music’s price hike, as investors bet it would trigger a wave of streaming subscription cost increases.
Universal Music Group’s stock closed 11.6% higher, Hipgnosis Songs Fund Ltd ended up 7.8% and Korean music companies SM Entertainment and HYBE finished the trading day 4.8% and 4.4% higher, respectfully, on Tuesday. On Monday, Apple announced that it was raising the standard U.S. and U.K. individual plan price to $10.99 from $9.99.
This 10% price hike — Apple’s first — comes amid high inflation and a darkening economic environment in many global markets. If Apple can raise prices at a time like this, that is a sign the music industry can charge more without turning off consumers, Wall Street analysts said.
“We see this as a further signal of the stickiness of music streaming subscriptions even in a weaker macro environment and believe the major markets will be able to absorb higher prices without leading to meaningfully higher churn,” Lisa Yang, Goldman Sachs’s head of European media & internet technology equity research, wrote in a note to investors on Tuesday.
“We believe that other major DSPs will likely follow suit with similar price increases in the near future, implying further potential upside to our music industry forecasts.”
Competitors Spotify and Amazon Music have already raised prices in some markets. Amazon Music raised the price of its unlimited individual plan for Prime members to $8.99 from $7.99 earlier this year.
Spotify, which will report earnings later Tuesday, raised the cost of its individual plans in the Nordics in 2021, although its standard plan for U.S. subscribers remains at $9.99.
“Despite positive management commentary around churn (with regards to recent price increases on certain plans/regions) as well as management’s views on pricing power over the long term, Spotify has highlighted the broader macro environment as a key consideration in terms of implementing price increases in the near term,” Yang wrote.
Apple’s price increase could also have positive impacts on the majors because companies like UMG and Warner Music Group typically get 65% of music-related revenues from streaming companies with a “high incremental margin,” Goldman estimates.
Music stocks have suffered in 2022 as the major U.S. market indices have fallen around 20% so far this year.
UMG’s share price of 21.10 EUR ($21.01 US) is down nearly 14% year to date, Hipngosis Songs Fund Ltd traded at 91.06 penny sterling ($1.03 US) and is down 28% so far this year. Meanwhile, Warner Music Group’s stock traded at $27.16 US, off almost 37% year to date.