Gustav Söderström
speaker
294 appearances
1 recordings
1 series
first heard May 2025
last heard May 2025
Gustav Söderström’s voice in public audio — every appearance, attributed to the second.
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Appearances
And then over time, maybe we can capture some of that value by price-raising. We price-raised a few times, which is part of why we're profitable now. But that's because we had a user surplus in value. That's because we kept just stacking value. And value are two things. Value are features like personalization and just a really good product. But the other value is different types of media.
So what we see is that you have a user that uses music. They have a certain amount of consumption. When you add podcast, it's just more. It's not more. It's an infinite game, it looks like, at least for now. We haven't run out of time in the background yet. Then when you add audiobooks, it's just more retention, more time spent, and more willingness to pay.
So that's how we think about it as a business model. Then on the back end, they have very different business model. I think we may be one of the most complex companies in the world on the back end, because music is a pool-based royalty model. Podcast, as you know, is advertising-based largely.
But now we also have this Spotify partner program where you don't have Spotify ads in the premium tier if you're paying, so you get more uninterrupted. So that's another business model, which is part of the premium bundle.
And then you have audiobooks, which the publishing industry works in a third way, very different, where we also have a certain amount of time included in the premium tier and then a top up if you run over that. One of the really complicated things about Spotify I don't think is appreciated is on the front end, it's one app, one consumer, just go between them.
But there are very different implications of where you click in that UI in terms of triggering different business models and so forth. So to model a company financially is actually quite hard. We have to predict your user behavior, where you click matters. And we have the personalization that has different impacts in terms of cost and so forth. So we've had to build a system.
We call it the Spotify machine. And that's why I said I have one experience organization. And the job of this experience organization is to make sure that all of this complexity, all of these teams who theoretically could be set up to compete with each other to fix their P&L, that never ships to the user. There's one person who is the responsible person for the consumer experience.
And that person's job is to make sure that as you go between mobile and desktop and car and speakers, the thing makes sense. It's like the gatekeeper against the org, holding them back from the user, behind them, protecting the user. But it's also the same in personalization. I have a personalization organization.
Because you have the same incentives of programming music versus podcast versus books. Everyone wants to take market share and so forth. So it's the same problem. We have to optimize for the user and sort of protect the user from the internal incentives of teams and business models. That makes Spotify a pretty... unique company.
We're like one thing on the front end and we're many different things on the back end with different products.
If you think about, let's say, five years from now and you dream as big as you can possibly dream for where Spotify might go from where it is today to where it will be in five years, paint us that picture.
Certainly, I hope we've cracked the billion user line, but as a subscription, I hope we're becoming one of the biggest media subscriptions in the world and we add more and more value to that. So hopefully, music is bigger than any of us. I'm hoping that audiobooks is a mainstream phenomenon, as it is in Scandinavia, where it's almost as many people who listen to music listen to audiobooks.
I think that would be a net good for the world. But I also hope we've added a few more of these verticals. I can't say what they are. The subscription model, the bundling model that we didn't talk so much about, we can differentiate on product or on content. But largely, we tend to license commodity content. We don't work with exclusivities, at least not anymore. We tried in podcasts for a while.
So you can differentiate on the product and consumption of the commodity content, but you can also differentiate it on the offering. So, for example, if you look at Spotify now versus other offerings, some other offerings have the same music, some other offerings have some of the same podcasts. You can not really find the combination of music, podcasts and audiobooks. That's a unique thing.
So to use bundling theory to create more and more of a differentiated, unique thing that is Spotify, I think is very exciting. And I think you will see more innovation on the bundling business model in addition to the product. I'm the product guy, but I'm very interested in business models. I've been a CEO myself, so I think you will see a lot of innovation there.
What's the key to a good bundle? And I'm also curious, you said you experimented with exclusive content that was only available on platform and less of that now. What drives a decision like that? And how do you think about other people that might want to create a bundle somewhere else?
When we looked at podcasts, you look at something like Netflix and this beautiful business model and insanely good execution as well on top of that. And it looked to us like that could be interesting. I think when you're a product company that works with commodity content, you always have this envy of what if we could differentiate through content? Then life is going to be super easy.
You always think the other thing that someone else is doing is easy and your thing is hard. And it's usually very hard to do the other thing. So... We tried exclusivity in podcasts as a way to differentiate the service, but I think it was ultimately a bad bet because the macro trend for the whole thing with podcasts was that the production cost was so low.
Joe Rogan was initially sitting in his trailer. The production cost was low. And then go in and do exclusivities on top of that. It's kind of counter-purpose in a way. The whole point is more like YouTube in that this is very cheap content, so you can get a lot of it. You don't have to be right. As soon as you go into an exclusivity game, you've got to be right. You've got to be a content picker.
And that's a very hard skill that Netflix does extremely well. But we had this opportunity. We didn't have to pick content. We could just get all of it and use machine learning to serve you what you wanted and me what I wanted. And there wasn't this capital intensive need there that there is in producing costume dramas. It's a bad strategic decision. that we did.
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