Good afternoon, everyone. I'm Paul Vogel, Head of Investor Relations and Financial Planning and Analysis at Spotify. It's my privilege to welcome everyone in the room and everyone on the live stream for our Investor Day. One of the main reasons we decided to pursue a direct listing instead of a traditional IPO was our desire to be more transparent and more accessible to a wider range of investors. We believe hosting Investor Day prior to our public listing will do just that.
So today, you'll get a very detailed look inside our business from the folks who run Spotify, senior management team. We hope to provide you with a greater understanding of our aspirations and strategies for growing the Spotify platform and ecosystem. Before we begin, I want to share a couple of few dates. First, we expect to begin trading on the New York Stock Exchange on April 3. On March 26, prior to trading, we will announce financial guidance for both the Q1 and full year of 2018 and we'll furnish that guidance to the SEC.
And one last item, please let me share one of the true thrills of running Investor Relations, disclosure of the Safe Harbor provision. And with that, let's get started.
Please welcome to the stage founder and CEO, Daniel Ek.
All right. Good afternoon, everyone. Thanks for coming today, and welcome to Spotify's 1st Investor Day. And as Paul said, we're approaching things a little differently here with our direct listing. For us, going public has never really been about the pump or the circumstance of it all.
So you won't see us ringing any bells or throwing any parties. And despite the enormous respect I have for the New York Stock Exchange in this process, I also won't be on the floor doing any interviews. And this is because I think the traditional model for taking a company public just isn't a very good fit for us. The typical IPO requires a lockup, and we don't think that's the right thing to do. Our most valuable asset is our people, and we want to treat them fairly, and we want to empower them.
And we have allowed shareholders and employees to buy and sell stocks for years. And that shouldn't stop just because our stock is becoming more widely owned. And since Spotify isn't selling any stock when we go public, we're really entirely focused on the long term performance on the business. So for us, the most important day isn't our listening day, but it's the day after and the day after that. And this is when we will continue the hard work of helping 1,000,000 artists to be able to live off of their art.
Another thing you may notice today is that we're actually live streaming today's events to anyone that wants to watch. And one of the reasons for this direct listing is that we want to be as transparent as possible and give everyone equal access to information about the company. So today, we're really excited to walk those in the room and those on the live stream through what we feel makes Spotify so uniquely positioned for growth. Spotify is often still considered a start up, but we're actually over 10 years old. And in that time, we've become a pretty big company.
So we now have active users in 65 markets. And we've got 71,000,000 premium subscribers, more than 3,500 employees around the world and more than 35,000,000 tracks. But we're just getting started. I'm not really a baseball guy, really soccer is more of my game. But as big as we are, I think a good analogy would be to say that we're just in the 2nd inning of this game.
And I think you'll learn today that Spotify is a lot bigger than you thought, that the opportunity ahead is much, much greater than you might have realized and that there's really no other company competing the way we're doing. But before we get into where we're going, let me back up a bit and talk to you about how we got to where we are today. The story of Spotify, of course, starts in Sweden, where I'm from. And at a young age, I found 2 loves, music and technology. And over the years, I pursued them both with equal passion.
And at the age of 14, I was building websites for people and I was making a fairly good living for a 14 year old. And then, of course, I was playing guitar. So over time, even though I still loved music, it became clear that I likely had a better shot of success in technology. So in high school, I created a few small tech companies, and I found myself suddenly achieving a lot of my goals, albeit a bit early. So as I entered my 20s, I really felt that I wanted to do something big.
I wanted to do something meaningful. And I wanted it to be connected to both technology and music. So one night at a party in Stockholm, a friend who's a musician told me he had to take another job to pay his bills. And he was really quite upset because music piracy really disrupted his ability to make a living. And this was especially true in Sweden, where the idea of piracy enjoyed widespread support even among the Swedish governments.
So as I searched for the next thing to do, I really kept coming back to music. I thought it was just too important to let piracy take it down, and I identified a kindred spirit of my co founder, Martin Lorentzon. And of course, nobody wanted to make any bets in music after Napster, so we had to bootstrap the company ourselves and we focused on Sweden and the neighboring countries. And it took us about 2 years, but we were able to get licenses and launch the service in the region, and it grew and became very popular very quickly. And I think it all worked because we recognized the consumer behavior.
Fans wanted all the world's music for free immediately. So what we did was to build a better experience. We built something that could compete against piracy and make sure artists were compensated for their work. And we since have grown very rapidly in the U. S.
And around the world. So today, Spotify is the largest subscription music streaming service in the world, and this by a factor of roughly 2x to that of our closest competitor. And our brand is very popular with younger audiences around the world, And in fact, 72% of our users are under the age of 34 and 43% of them are under the age of 24. We have a strong and growing business in markets like North America, Europe and Latin America, and we're starting to see meaningful growth in Asia as we continue to open new markets. So based on this success, I'm sure you're all wondering where are we going from here and how are we thinking about long term creation?
Well, there's really 3 key strengths that are fundamental to our growth today and in the future. 1, our premium offering. So you'll hear in detail today about how our free product drives premium subscription growth, it leads to better personalization and drives use among younger demographics with greater potential lifetime value. 2, our unique embrace of ubiquity across all platforms. So we see the world dividing into multiple platforms.
So there's Amazon in the home, you got Android in the car and in emerging markets, and you got iOS on the phone in the Western world, and Spotify can be accessed across all of it. And that makes it easier for us to grow our business in both existing and newer markets. And then 3, personalization. So as you'll hear today, our ability to deliver a personalized experience using the incredible amount of data that we're collecting really sets Spotify apart from other streaming services. But we will also be showing you in more detail than we've ever publicly shared a crucial aspect of our approach to the Spotify mission, a 2 sided marketplace strategy.
So we're not just serving fans, but we're really also building tools for the entire artist community. And we will walk you through what this looks like today. And I think both of these efforts really complement each other as the music industry transition into music ecosystem on the Spotify platform. But as big as we've gotten and as strong as our leadership position is, there's still a lot of growth ahead for Spotify. Let's consider these stats for a moment.
Only 12% of smartphones that are payment enabled in our 65 countries and territories are using Spotify today. And there's an estimated 1,300,000,000 payment enabled smartphones in those markets today. And through 2021, that number is going to grow to 1,700,000,000. So as we enter more markets around the world, we believe that there will be another 1,300,000,000 payment enabled smartphone. That's 3,000,000,000 smartphones in total.
And we only recently launched in Japan, Indonesia and Thailand, and we're working on launching in some of the biggest markets in the world, places like India, Russia and most of Africa, which have very rich musical cultures. And through our investment in Tencent Music China, we also have great exposure in the growth of the Chinese music market. And then of course, our advertising business, which is also growing super fast and it's one of the largest digital audio ad platforms in the world. And we've just begun to invest in non music audio, and in our 1st year, we became a top 3 podcast player in 2017. And Spotify is one of the most used apps in the world, with average use of over 49 minutes across both of our tiers.
And radio still has about 4 hours of usage, so we think that there's a huge opportunity to capture share here. So I think it's safe to say that if we only focus on MAU and subscriber growth with what Spotify is today, we will continue to put out some pretty big numbers. But we see a bigger opportunity. I want to take you through our mission statement. So our mission is to unlock the potential of human creativity by giving a 1000000 creative artists the opportunity to live off of their art and billions of fans the opportunity to enjoy and be inspired by these creators.
And the great thing about having a goal like this is that there's really no other company that has this as the sole purpose of their company. There's nobody else that's doing what we're doing. We're creating an ecosystem of mutual discovery and benefit for millions of artists, billions of fans and really the entire music industry. Looking back, I kind of think that we could have done a better job of telling this story before today. And as I'm sure you know, our arrival on the scene caused some concern from others who really didn't understand our intention.
But today, I think Spotify's impact speaks for itself. Everyone agrees that music streaming has returned the music industry back to growth after many years of decline. And to put this in context, the industry declined 40% from 1999 through 2014, but it increased 3% in 2015 and then another 6% in 2016. And streaming led this growth and Spotify is the dominant global streaming platform. So every day, our users share with their friends the joy of exploring music through Spotify, which creates an incredible word-of-mouth engine for our business.
So I think the opportunity in front of us is even bigger than we thought when we started out simply trying to help people access the music they wanted to hear. So at one time, radio was the consumption and discovery tools for new music. But we think that streaming and Spotify in particular has an even greater opportunity to scale, reaching billions of people around the world. So when I said they were still in the second inning, it's really because as successful as we are in streaming, we don't really think of Spotify as just a streaming music company anymore. Instead, we're building a vibrant ecosystem of macro and micro markets around the world that is creating new opportunities for artists of every level of fame.
It's everything from the superstar to the artist whose musical career is really just still a dream. And a very important piece of this puzzle, and I think something that's not widely understood because it's really outside of our consumer experience, is our Creator Experience platform. And this is a set of tools that we're still expanding, but it helps creators, labels and managers not only optimize their experience on Spotify, but really their fan engagement overall. In our data and insights, it enables artists to connect with their fans and learn from their fans in ways that's never before been possible. So for example, they can see where they have a significant engaged audience plan their touring schedules accordingly.
They can talk to their fans directly if they design and sell concert merchandise or even invite super fans to special events. They can of course better understand what songs are gaining traction and which ones are being skipped. And I think this transparency is unheard of in our industry. And this is the other half of our 2 sided marketplace strategy, the complement to the consumer platform. So why does this matter?
Well, because we all know information is power. And for many, it really helps bridge the gap between the struggling and the successful. And I think through this, once again, the power is rebalanced. There are, of course, more talented artists in the world than the pipes of the traditional music industry could handle. And this industry always had to pick winners and losers, and it wasn't really driven by any kind of bad intent.
It was just the reality of doing things in the traditional world. It's always been too expensive to do proper marketing for a concert in a theater with 500 seats. It has been too expensive to record and properly promote an artist who doesn't have an obvious path to a hit. And if you were doing a global marketing campaign, you really needed to choose an artist of proven value. With Spotify, those filters are now starting to fall away, which creates more economic opportunity for everyone in the industry.
So all of the sudden, Metallica is adjusting its concert set list from city to city to make sure that they play the most popular songs in each of those markets based on Spotify data. And this scales not just through massively popular artists like Metallica, but really again through those smaller artists who none of us even heard yet, artists like Dermot Kennedy. So in 2015, Dermot was performing on the streets of Dublin. And today, after being streamed by over 500,000 users on several of our Discovery Weekly playlists, Dermot is now about to hit 2,000,000 monthly listeners on Spotify, and he's a full time musician, and he's playing shows around the world. I think this is such an important part of the Spotify opportunity because this is the part that nobody else is doing.
And some people say that Spotify is disrupting the music industry, but I think we're really just part of the evolution of the music industry. We don't want to replace anyone. We want to make everyone better, more efficient and have more impact. And if it's easier for people to discover and enjoy new music, people will listen to more music. And that's the foundation for our flywheel.
The more people discover, the more they listen. And the more they listen, the more artists will be successful. And that in turn, of course, will attract more people to Spotify. So I know it's popular to make comparisons, but at Spotify, we're not focused on selling hardware. We're not focused on selling books.
We're focused on music and connecting artists with fans. And I think that in itself is a huge business. Nobody else has more than 3,000 employees focused on just this one thing, and nobody else has the global scale that we've already built. And of course, as we continue to grow Spotify and to pursue this mission, we will update you on our progress against these goals and how we're doing as a business. And we will do so in a transparent way and hopefully over time earn your trust.
And as you'll see today, we have a very strong management team that is committed to building a great business. But to put a finer point on it, transparency is really a key pillar of our culture. It's always been. It's just who we are and how we do things. We just haven't done it externally to the same degree as internally.
But we're really excited to change this now. So as you start to follow Spotify as a public company, I hope you'll let us know if you think that there are areas where we can do better in terms of meeting that standard. And as the team takes you through the business this afternoon, you'll get a closer look at how we gain our leadership position, and you'll also get a detailed view of how we're going after the even bigger opportunity now before us. And this is a team that's proven its ability to execute, grow and win on a global scale. So I'm very excited for you to hear from them directly.
Thanks for indulging me as I'm taking you through this overview of Spotify. And I will be back in a bit to tell you a bit more about our marketplace strategy. But for now, let me hand it off to Gustave, who will talk more about our product and platform growth. Thank you, everyone.
Good afternoon, everyone. It's great to have you here. Thanks for coming. My name is Gustav Soderstrom and I head up the R and D team at Spotify. This team accounts for about 40% of Spotify employees today.
We maintain the features and functionality of our product, but also the technology that sits behind our products that supports operations at Spotify. I joined Daniel and the team when Spotify was, I don't know, maybe 30 employees. That was a long time ago, and Spotify has obviously grown tremendously since then. But our core identity as a user obsessed engineering company still remains the same today. Spotify is software.
It's what we do and we're good at it. Back in 2,008, we helped lead a shift from music being hardware, an iPhone that you bought, to music being software, an app that you download. And the great thing about software is that it sits above the underlying systems and it can spread across them with very little friction really at the speed of an idea. This has allowed us to grow not just our user base but also our data very quickly. Today, we have over 200 petabytes of music data.
That's 200,000,000 gigabytes. To put that into some sort of perspective, if you were to let's say you were to stream 1080p HD Netflix video for 24 hours a day, 7 days a week, It would still take you over almost 1500 years to get to 200 petabytes. It's a lot of data. And this advantage is now helping us deliver significant value to both fans and creators. And as I will show you, we believe that with our larger user base and our higher user engagement, the distance to competition is actually only increasing.
As Daniel mentioned, Spotify's progression is based on 3 core fundamental principles: ubiquity, personalization, and freemium. These elements have helped define how Spotify has become the largest music streaming company in the world over the course of 10 years of crazy technological evolution, even as other companies have entered our space and tried to replicate what we've built. These three principles still define our competitive advantage today. It's a simple recipe, but sometimes the simple solutions to complex problems are the ones that actually prevail. To help you better understand how these three principles and how innovation has played out as Spotify has grown, let me share a little history.
When we started, the world was in file sharing mode. Music was digital, but it was a file that you needed to physically have in your possession. Then Napster and Pirate Bay introduced free music and the access model. We actually didn't do that part, but it still took many minutes to download a song. And of course, nobody was getting paid.
The idea that Spotify started with instant on demand all the time access to all music ever created as if it was here, not over there on the server. It was really pretty ridiculous at the time, to be honest, but we knew it was what consumers wanted. The instant part was a bit of a challenge though. The human perception of immediacy is maybe 500 milliseconds, half a second. And at the time, not only did it take many minutes to download a song, but it took several seconds to even start a stream.
So right out of the gate, we had to figure this out, something no one else installed. We solved it by building our own custom end to end delivery network from servers to clients, and this end to end control allowed us to hack otherwise standardized protocols like TCP and codecs and all kinds of stuff. Basically, we built a better way for streams to happen that was much, much faster, fast enough to feel instantaneous. And for users, the effect was as if all of recorded music was sitting right there on your hard drive waiting for you for free. I mean, it was like a magic trick, and user growth just took off.
Then a few years later, the world went mobile and all of a sudden everyone had a smartphone. And of course, people wanted from their smartphone what they had gotten used to getting from Spotify on their computers, instant on demand access to all music ever made. But how do you achieve that in a world of poor and sometimes very expensive mobile connectivity? This time, the solution was a combination of technology innovation and licensing innovation. We built a way to seamlessly offline sync your music, and we worked with labels to design new contracts that allowed you to stay offline for up to 30 days while still reporting royalties correctly.
And as we rolled this feature out, we saw subscriber growth skyrocket as people wanted Spotify to travel with them on their phones. These are just two examples of how these principles have played out over the years, and there are obviously many more. But let me take you through our 3 guiding principles, ubiquity, personalization, and freemium, in some more detail. Starting with Ubiquiti, from the very beginning, we believe that you should be allowed to use Spotify on whatever device you want. And as software keeps eating the world, as Marc Andreessen famously put it, our opportunity also keeps expanding.
Most recently with the home now becoming a software platform through these connected speakers that you've all heard of. We have more than 250 partners today that help make Spotify a service that you can use on pretty much any connected device or social network. These are partners like Samsung, Apple, Google, Amazon, Sony, Microsoft, Tesla, GM, Facebook and Twitter. Back in 2014, we believed that connected speakers were about to take off. We figured that they would simply replace your home stereo because it was a much better solution.
So we invested early and we were on the very first Amazon Echo and Google Home voice speakers ever shipped. And as we're watching the really incredible growth of these voice speakers, we're not just watching the home become software, and that's available to companies to services like us, but we're also watching the home become multiplatform and more heterogeneous running different operating systems and different devices from different providers, not these single platform ecosystems. And this is exactly why we made a bet on Ubiquiti. Our cross platform protocol, Spotify Connect, is in the firmware of nearly every speaker shipped today. It lets users transfer control and playback between TVs, cars, receivers, phones, laptops and game consoles.
And being everywhere allows us to get a more complete understanding of our users. And what we see is that people who use Spotify on more than one device are much more likely to stay with lower churn and higher lifetime value. And today, more than 3 quarters of Spotify subscribers are using Spotify on multiple devices, thanks in large part to things like connected speakers. And Barry will take you through this in some more detail in his presentation. Of course, the car has always been a very important place for music listening.
30% of music listening in the U. S. Still happens in the car today, and it's where most of the radio market share that Daniel mentioned exists. We're investing heavily in the car use case. We have deep integrations into the audio platforms of the leading automakers today, ranging from in dash navigation that uses your phone as a connection all the way to deep integrations with data streaming costs covered for the life of the car with Tesla in Europe.
We also have integrations with Apple's CarPlay, Google's Android Auto, and we're working with many more to roll out integrations into the market. But already today, we believe that more than 50,000,000 Spotify users are using Spotify in the car according to our data. So as different companies keep taking out different part of your life as a consumer, One company owns your phone, another company owns your speakers, 3rd company owns your car, 4th company owns your TV. We believe that the right bet is on ubiquity, doing what is best for the user, not for the company, and trying to solve the user's problems by being everywhere. This brings us to the principle that is really defining the next phase of differentiation and innovation at Spotify, personalization.
Our early users loved to playlists. I mean they were literally soundtracking their lives, not just connecting music by traditional genres, but also by other interesting angles like the mood they had or activities that they were doing. And as we watched all of the music in the world get organized by music fans on Spotify back in 2,008, neatly bucketed into playlists and labeled with names, it slowly dawned on us. It took a while, but it slowly dawned on us that we were also watching the largest crowdsourced music classification project ever undertaken. Today, that project is powered by people, and we're collecting 3,000,000,000 music related events every day.
And we're using this data to deliver deeply personalized discovery that keeps driving engagement ever higher, as you will see in the data that Barry shows you. To put this into perspective, one way to think about Spotify is to think about the vast music catalog as a landscape and really to think about the playlist as the way you navigate that landscape as your car. Now until recently, you had to be a pretty good driver to get the most out of our catalog. If you knew enough about music history and you really stayed up to date on new releases, you could use our search box and our playlisting tools to create really great sessions. And in the early days, we had a lot of users who were really, really good at music and they created literally billions of playlists.
But all of this data is now unlocking what we think of as self driving music, automated discovery for people who aren't music experts, accurate predictions on music that we think you will like based on your past behavior and other signals that we see in the Spotify ecosystem. With users now spending more than 49 minutes a day on Spotify, our lead is constantly expanding, And we estimate that already today we have more than 5 times the amount of music data that our nearest competitor does. So going back to the car analogy, think of it this way, being analysts who cover technology, you all know that the race to win in self driving cars is about miles driven. It's what every company reports and what everyone looks at, right? The one with the most cars on the road that drives the most miles per day and collects the most data is going to win that race.
Well, we have the most cars on the road in terms of users, but importantly, they're also driving more hours per day than anyone else, so more miles. And we're putting more new cars on the road than anyone else because of our free tier. So as the platform keeps getting smarter, we're now starting to deliver meaningful discovery not just to average music listeners, but even to the experts. I mean, no matter how much you know about music, it is physically impossible to go through every track in our catalog. Today, we have over 35,000,000 tracks in our catalog, and we're adding 20,000 new ones every day.
This is self driving music. But the machines haven't taken over. We're leveraging the taste and expertise of the world's best music curators to add a human layer to machine learning at Spotify. We call this our algatorial approach, and here's how we know it's working. Today, over 30% of the music that is being listened to on Spotify is programmed by a combination of our algorithms and our editorial teams.
So more and more this is not just a vision. People really are handing over the wheel to us. People are finding new music that they like through services like Discover Weekly, the unique personalized playlist that we build for every Spotify user every Monday, And they're amazed to see us accurately rebuild the mix tapes of their youth through services like Time Capsule, which I hope you've had a chance to try. That uses predictive analytics to look back at the catalog that was popular when you were a teenager. And what's so interesting to us about this is how it's changing consumer behavior.
We see people listening to many more artists than they used to, and they're listening across genres. It's really an amazing phenomenon. And suddenly, if you think about it, we're not really in the same business as everyone else anymore. We're in the business of discovery, and we think everyone else is still mostly playing the game of access, but access alone isn't enough anymore. In a world where the capital can be found anywhere, value shifts to discovery.
This is where we are today. And the deeper we go into discovery, the more we see the leading indicators of growth, engagement, time in the app and what a month just go up. So this brings us to the 3rd and last principle, freemium. As you think about how we built Spotify for growth, the free experience has really been the linchpin of our business, and it continues to be the most important growth driver today. As we already covered, our strategy is to be everywhere by being pure software, integrating with anything and then try to deliver on the promise of personalization better than anyone else using our data advantage.
That seems like a pretty coherent strategy, right? But if you really want to reach the most possible users in what is a very competitive world, what is the most aggressive strategy you could have? Well, it would have to be to lower the price point to 0, right? Something or nothing. It's the greatest value proposition in the history of the world, and simple math ensures that you won't be undercut on price.
And if you think about it, it's really nothing new. This is how people have been consuming music on the radio forever. So while we will talk a lot about our premium tier today and we are very proud of our premium product, We actually invest quite a lot in our free product, a personalized music experience that stays free for the rest of your life. And we believe that this is the unique offering in the Google Play and Apple App Stores and that there's huge demand for it. If you think about it, pretty much everyone likes music, right?
It's like one of the few use cases that is truly global and still exists that no one has taken. So we're happy to meet this demand because the free product does a few critical things for us that may not be obvious to you at first glance. First, it reaches the millions of consumers who are still on the fence about paying for music. And as they continue to think about that, they're in our ecosystem, which obviously gives us a huge advantage down the road. Secondly, it allows us to learn from the biggest possible group of listeners in the world, and the data from these free users not only improves the experience for them, but also for everyone else.
And third, once they have Spotify on their phone, in their car, on their speaker, on their PlayStation and all of these devices, what we see is that music simply becomes a much bigger part of their life. And the more they engage, the more likely they are to decide that paid music is for them. So simply put, the more you play, the more you're going to pay. And as they come to that conclusion, they are deeply onboarded into our system and very, very likely to choose Spotify Premium as their paid music provider. If you think about it, why would you pay upfront for a product that you have no experience with?
That doesn't really happen anywhere else. So promotional offers can only take you so far. Spotify's 3 tier is one of the only free streaming solutions for people who are interested in streaming. It allows us to reach much, much deeper into the market, way beyond people who self identify as music people to the true mainstream. And as our business has grown and changed and we've gone deeper into technology and deeper into music over the years, A lot of things have changed, but the prize that we envisioned more than 10 years ago is still the prize today, the opportunity to change the way everyone experiences music.
This is what keeps inspiring us, and this is why we keep trying to raise the bar both for fans and for creators. Thank you for listening. I hope this has been helpful to you. Now I'm going to ask our Chief Marketing Officer, Seth Fardman to come up on stage and take you through our brand and platform growth. Thank you very much.
Hello, everyone. Fun stuff, right? I'm Seth Bartman. I'm the Chief Marketing Officer at Spotify. And today, I'm going to take you through one of our most valuable strategic assets, the Spotify brand.
And I'll share with you the impact it's having on our growth. I'm going to highlight how we create demand, how we then capture that demand and how we nurture our audience to become advocates of our brand. Today, Spotify enjoys 69% aided brand awareness globally, 86% in the U. S. That's very high for any brand, let alone one that didn't even exist before 2,008.
But you should also know that our brand is loved by the very consumers every marketer is scrambling to attract. Our audience is young. Spotify was built off the needs and passions of the millennial generation, and we have strong demand with that audience still today. In fact, as Daniel mentioned, 72% of our monthly active users are under the age of 35 years old. We continue to focus on growing this segment globally, especially considering its high potential lifetime value.
Millennials and the younger Gen Z consistently favor the Spotify brand above our top competitors, which include some of the most powerful and valuable brands in the world. When asked, they say that Spotify is the only service I need for listening to music, that it's for people like me and that it's a brand that I trust. And while these numbers are for the is truly a global business. The global net promoter score for Spotify Premium is an industry leading 79. We're seeing phenomenal growth in Latin America built off the strength of our product and brand.
Our LatAm business, home to 21% of our MAUs, I believe that's pretty remarkable by any standard. And even in markets where Spotify has yet to launch or just recently launched, the brand is popular, the audience is primed. For example, in India, aided awareness of Spotify is 36%. And in South Africa, which we only launched a couple of days ago, it's already at 45%. And this, before we've spent a single dollar on marketing.
It's come solely through word-of-mouth. Nearly half the people who try Spotify do so on the recommendation of others. One reason is we've become connected to culture. When cultural events happen, the very things that bring us all together, they are reflected in the music people listen to on Spotify. When culture happens out there, we see it in here.
For example, during the solar eclipse in the U. S. Last year, we saw spike in streams of Bonnie Tyler's Total Eclipse of the Heart. When Sweden, our home country, played to get into the World Cup, we saw a rapid increase in the streams of the playlist, Go Sweden. And when David Bowie recently died, fans went to Spotify to share and celebrate his music.
Culture happens on Spotify. But sometimes, we actually create culture. A year ago, a little more, as President Obama was leaving office, we decided to publicly offer him a job. He's a music fan who regularly puts playlists on Spotify. So we figured, why not?
Now, it turns out he had other things he wanted to do, but it still worked out pretty well for us. Take a look at
this. As
2017 rolled in, Obama had just a few weeks left in office. On January 4th, he joked to the Swedish ambassador about wanting his next job to be at Spotify. By Friday 6th, the press was reporting it worldwide. So on Monday, January 9th, we posted a job on our careers page. They called for things like at least 8 years experience running a highly regarded nation, experience in programming playlist at a federal level, anything from an eclectic summer playlist to a celebratory I just found my birth certificate playlist, Someone with good team spirit, excellent work ethic, a friendly and warm attitude, and a Nobel Peace Prize.
And as for what they do, analyze data and performance of playlist in a clear and transparent manner using all available intelligence, attend daily briefings. We then sent it out with one small tweet from Spotify CEO.
A big night for President Obama tonight. He is giving his farewell address, but you know he's got about 10 days left. Already got his first public job offer. Comes from Spotify. They are looking for a president of playlists.
Well, guess what? The president of Playlist.
It was picked up in over 175 TV segments. Over 300 press outlets became the number one trending moment on Twitter and claimed the number one spot on Reddit. In under a week, we received over 14,000,000 visits to the site and over 900 applications. But we're still holding out for the perfect candidate.
This was a cultural news story and it created massive social engagement. If we were to buy that level of attention, we believe it would be roughly around $9,000,000 And in case you were wondering about that job, we're still holding out for the right candidate. This approach to creating demand for Spotify, it's highly effective, yes, but it's also highly efficient. All of our marketing is designed with earned media, social sharing and word-of-mouth in mind. And it's not just music fans who share, it's also artists like Katy Perry, who proudly shared her connection to Spotify with her legion of fans who viewed this single Instagram video more than 2,300,000 times.
Look, it's no secret that some of our competitors have sizable media budgets, but we're not looking to out spend them. Instead, we are leaning on authenticity, data and culture to drive the kind of popularity that just is not for sale. It's also why we created Wrapped, our end of the year campaign that is built on insights from audience data and taps into this common desire we all have to share things about ourselves. If you're one of the more than 100,000,000 people who received a personalized dashboard of your listening habits for the year, you already know what I mean. The results can be inspiring.
They're always interesting. And occasionally, they're quite humorous. Here's 2017 wrapped.
As 2017 came to an end, many felt like there wasn't a lot worth celebrating. So to make sure Spotify listeners saw the bright side, we launched a data driven experience all about the music they loved through the year. Your 2017 wraps didn't only look back. It invited fans to collect playlists that make 2018 goals along song, and genre of the year. And after digging deeper into someone's favorites, we revealed more unexpected insights.
For example, do you skip songs more often than the average? And what is your true musical age? Over 20,000,000 people relived their 2017 with us before deciding if they were brave enough to share a snapshot of their listening data. So many fans proudly shared their 20 17 rap that it became a talking point. And even inspired a holiday meme as comical share cards spread across the
web.
By the end of December, one little microsite reminded millions that music gives us a reason to keep listening.
And it worked. This holiday campaign contributed to over 6,000,000 new premium subscriptions, 2.35 incremental free MAU, And it generated over 1,000,000,000 streams of the wrapped playlist in just over 10 days, making it our fastest growing playlist ever. Companies often talk about the power of influencers, but what I'm describing is really something more, brand evangelists. This doesn't happen by accident. It's strategic and it's purposeful and it's powered by our data advantage.
Just as Spotify's user data enhances our products, it also helps our ability to grow efficiently through marketing. Our data allows us to deliver the right message to the right audience at the right time, maximizing the impact of every dollar spent through performance marketing channels like paid search, paid social and programmatic display. Last year, performance marketing alone drove 12% of all registrations and 21% of all subscriber conversions. And we continue to see our data help us drive even more efficient growth. Lastly, I want to share more about how we are differentiating Spotify by creating unique sub brands from some of our most popular curated playlists like Rap Caviar and Viva Latino.
As Daniel said, we believe that Rap Caviar is bigger than any hip hop radio station in the world. But it's not just a list of songs. It's a virtual gathering place for the global hip hop community, a passionate community of artists and fans. We are turning the playlists into a lifestyle brand with artist focused video content, live concerts and experiences and a targeted marketing plan. This past December, we created Rap Caviar Pantheon, an annual program to give the 3 most influential hip hop artists the attention that they deserve.
But it went beyond just promoting them on the platform. Instead, we put on a public exhibit at the Brooklyn Museum supported by a short documentary film narrated by Pharrell. It brought us an incredible amount of attention. The film alone was viewed online more than 3,500,000 times with a click through rate, 35 times higher than the industry benchmark. And in the 1st week it launched, we saw a nearly 700% increase in people saving the wrapped caviar playlist.
And what Rap Caviar is to hip hop, viva Latino is to Latin music. Now Latin music has become mainstream music. You remember Despacito. At Spotify, we saw this coming and we invested in Viva Latino. It quickly attracted an audience that we believe made it bigger than any Latin music radio station in the world.
And through marketing, including this television commercial that aired during the Latin Grammys, brand awareness grew by more than 15%. And this is just the beginning. Spotify is different. We're not just about access to music, we're about discovery. We connect artists and fans to each other and to culture.
We have a product that is best in class and getting better every day, and we have a meaningful data advantage. But we also have a brand that is loved by millions of fans and artists who talk about Spotify day in and day out. Thank you for your time. Let's take a quick 10 minute break, and then we're going to continue with the program. Thanks so much.
Okay. Welcome back everybody. Let's get started. There is a widely held belief that the music industry is controlled by select few gatekeepers and that it's nearly impossible to make it in music. And for many artists trying to be a professional musician is considered more of a heroic act.
It's a dream. It's really not a viable career path. I think in part because there really isn't a clear road map. There's no transparency. There's really no guide to help an artist unlock the keys to success.
At Spotify, we don't think it has to be this way. Our mission is to enable 1,000,000 people to live off of their work. And today, the Spotify marketplace consists of over 3,000,000 artists who contribute over 20,000 new pieces of content every single day. And we believe the number of creators on our platform, including podcasters, will likely continue to grow. And our goal is to reach 10,000,000 of these creators over the coming years.
So there are more great artists who could find success if only people could find them. So how do we unlock this massive opportunity? Well, we believe the solution is pretty clear, but it's really a goal that would not have been possible in the old industry. And to succeed, we need to help more artists connect with more fans. And as simple as it sounds, it's really been the age old problem in music.
The first challenge for an artist was to have their music heard outside of their garage. But even if an artist could find it in, they also had to find an audience that wanted to engage. And that's where we can solve a big problem. And the solution should be easier, and it should be a lot more open. And the solution is software, and we excel at software.
And we believe we can build an ecosystem that support artists that's accessible, that's transparent and that's democratic. And this is an ecosystem that's about promoting opportunity rather than picking winners or losers. And this is why we're building a platform that serves both sides of the 2 sided marketplace, consumers, of course, but also the broader creative community. It's really everyone from artists to writers to publishers and labels. The general perception of Spotify is that it's only a few artists and a few big labels that matters.
But something very powerful is happening underneath the surface of the global music industry. Our top tier of artists, those that are representing the vast majority of streams, has grown from about 16,000 artists to almost 22,000 in just the last 2 years. And that means a 28% growth of the pool of the most popular artists in just 2 years. It's really a quite significant change. And that means as we paid out now more than EUR 8,000,000,000 to the music community that we're providing real opportunity to more artists around the globe, both established as well as up and coming.
But we still have plenty of room left to grow. So my goal over the next 5 years is to increase that number of creators to 100 of 1000 that have material success on our platform. So this is not like a streaming video service where only a few thousand items of content matters. On Spotify, there will be more creators and the number of creators that matter will also increase. And I know this sounds like a big leap, but I think to understand what's changing, you also have to understand that Spotify is really a very different service than it was just even a few years ago.
So up until recently, Spotify was kind of more like a search box. Listeners had to come to us and they had to know what they wanted to listen to. And it used to be that artists needed to drive demand elsewhere and then bring it to Spotify. But today, Spotify is much more powerful. Over 30% of consumption on Spotify comes from music that we suggest to listeners through our sophisticated programming.
And that is a massive transformation. So by constantly giving people the right content, we create a better experience, which in turn means people will listen more. And the key to providing a better user experience, as it turns out, is serving them new personalized discoveries. And this also perfectly serves the artist's needs of wanting to grow their audience, and it becomes a very powerful virtuous cycle. It puts Spotify in control of the demand curve.
And this opportunity is one that we're really just beginning to uncover, but it's one that excites us a great deal. And this is why we're in the business of discovery. And this is a problem the software is well suited to solve, and we're getting better and better at it each month. But the impact we're seeing already is quite staggering. So 10,000,000,000 times every month an artist is streaming on Spotify, but someone who's never heard that artist's music before.
That means 10,000,000,000 discoveries every month. There's 10,000,000,000 chances for an artist to win a new fan. And 5,000,000,000 of those 10,000,000,000 discoveries were programmed by our Spotify content team and our algorithms. We are driving discovery at scale around the world. And I think these statistics highlight a big opportunity to artists.
People are listening to more music and they're listening to more artists and they're doing it on Spotify. So if you're an artist in search of an audience, you really want to be on Spotify. And making it onto one of our playlists can literally change an artist's life. And the global appetite for Spotify playlist is only increasing. So we believe that today's top hits today has a bigger audience than any U.
S. Radio station. And as Seth mentioned before, Rap Caviar has more followers than any hip hop station in the world, and Viva Latino has the biggest audience of Latin fans in the world. And then, of course, Discovery Weekly, which features more than 150,000 artists every single week. I talked about how our vision for the industry is different and how we don't believe in gatekeepers.
We're simply providing more outlets for artists and labels to build their audience. And from this foundation of a more open and accessible ecosystem, we're also building services not just for listeners to have a great experience, but really for the entire creative community to thrive. It's artists, songwriters, labels and publishers. And I think as we grow the opportunity for great art to find its audience, that the opportunity for those supporting creators and artists also grows. And that means audio engineers, studio musicians, songwriters, publishers, labels and potentially even new members of the creative community we can't even currently predict.
Now I think it's safe to say that the role that those service providers play will shift and evolve, But the need to nurture great talent is really larger than ever before. And we believe that great music and artists in the future will come from specialized talent incubators like the labels of the past. And that gives opportunities to the next Berry Gordy, who founded Motown or Rick Rubin, who founded Def Jam or Achmed Erdogan, who founded Atlantic Records. And those small labels really shaped cultures and labels like this will be economically viable again in this emerging ecosystem. And that, of course, means a lot more great music.
So as the platform grows and the ecosystem flourishes, we will continue to build out a marketplace of services for the industry. This so that artists can take advantage of the fan relationships that are being formed. So in closing, music has changed dramatically in the last decade, and there's really no doubt in my mind that the industry will continue to evolve. And as we look ahead, we believe the new digital marketplace not only gives artists a better opportunity to take control over their destiny, but that Spotify is uniquely positioned to accelerate progress to this new world through software. So we're confident that what seems improbable today really isn't that far away.
You'll next hear from Charlie Hellman, who leads our Creator Marketplace team. He will talk to you more about the incredible suite of tools that we're giving artists and labels so that they can have more control. And soon, we believe, millions of artists will be using our platform to solve the inefficiencies in creation and distribution and marketing and discovery that today limit their opportunities. And after Charlie, Troy Carter, our Head of Creator Services, will tell you a bit more about the services that we're providing on top of the tools with artists and labels at all levels of the industry. And Troy, he's spent his career helping artists like Lady Gaga, Meghan Trainor and John Legend build their careers as one of the top managers in the business.
And he's now doing this work at Spotify, providing very similar advice about things like what song should be a single, where and when to tour, how to manage an artist's brand. And is really helping both artists and labels on how they best use the platform and the services we're building. So with that, I will now turn it over to Charlie to share some more. Thank you so much.
Hi, everyone. I'm Charlie Hellman. I lead our Creator Marketplace team here at Spotify. As we pursued our mission to enable a 1000000 artists to thrive, we saw that fundamentally the old system around artists needed to change. Our vision is something new, a music meritocracy, where an artist's success depends on how they connect with fans, not how they connect with gatekeepers.
Other Internet marketplaces have enabled people with the tools they need to bootstrap a business, whether it's as an Amazon seller or an Airbnb host. And now we're doing that for artists. Our creator marketplace team comes to work every day thinking about the life of the artist and what things might help them succeed. No matter where an artist is in their career, all of them have some core fundamental needs. They need to understand their audience.
Like any industry, they've got to know what's working and what's not. They have to grow that audience and engage their fans. They need to monetize those fans and earn a living from the audience they've built. And at the core of it all, they need to create to fulfill their artistic potential. We've crafted tools and services in each of these areas.
And last year, we released those tools in a product called Spotify for Artists. It's still in its early phases, but artists are already doing powerful things with it. Spotify for Artists provides valuable analytics to artists and their teams. We were the 1st music service to provide this level of transparency to artists directly. The tool allows artists to segment their fans.
They can see which playlists they're being discovered on. They can see which songs are resonating and which ones aren't. They can see the demographics and the taste of their fans. And they can see where in the world their audience is growing. And these are insights that artists and their teams can act on.
Let's take Lucy Rose. She's a singer songwriter from the U. K. And she decided to tour through Brazil based on the data she saw in Spotify for artists. She told us that the data she found gave her the confidence to tour in a totally new continent.
And when she got to Brazil, she saw fans singing along at every performance. That's an amazing opportunity and one she easily could have missed without Spotify for Artists. Creators are also using Spotify for Artists to grow their audience and engage their fans. In the app, artists can cultivate their image. They can share a new release with their fans, And they can showcase what moves them.
Last week, for example, SZA and many other artists celebrated Women's History Month and they did so by sharing on their Spotify profiles female musicians that have inspired them throughout their career. That's just one of the many ways that artists can connect with their fans directly on Spotify. With the tools we provide, artists can also tap into Spotify's unique fan targeting. Spotify has a deeper understanding of each fan's taste than any other platform. And with that intelligence, we can enable an artist to narrowcast their latest release to exactly the people that are most likely to enjoy it.
For example, for Lil Pump's debut release last year, their team used a targeted mobile promotion. And typically, online ads see click through rates of less than 1%. But with our fan targeting, we see much stronger performance. In this case, over 30% of everyone who saw the promotion clicked through, driving over 1,000,000 streams for a debut release. And that's way ahead of where the music industry has been historically.
Historically, there hasn't been narrowcasting. There's only been broadcast promotion. And that's meant that promotional dollars were confined to safe, predictable bets, but not anymore. Now this is where it gets really exciting. Artists aren't only using fan targeting to promote their latest release.
They're also using it to promote their tours and drive other important revenue streams. Artists use that same intelligent targeting to give their biggest fans the opportunity to buy concert tickets before they go on sale. We call it fans first. And last year, hundreds of artists gave their Spotify superfans the opportunity to buy tickets before they went on sale. Both superstars like Katy Perry but also many indie artists like Valerie Joon.
And through these targeted campaigns, in 2017, artists sold more than 1,000,000 concert tickets. So word is getting out about the services we provide to artists and how powerful they can be. We launched Spotify for Artists less than a year ago and we already see more than 100,000 artists using the product every month. Now to put that in perspective, those 100,000 artists make up about 2 thirds of all the streams on Spotify. So that lets you know that the most successful artists have been early to adopt.
And as awareness grows, we know that Spotify for Artists will proliferate throughout every level of the artist community. With the services that we have in Spotify for Artists and the products we're still building into it, we're providing new options for how artists, labels can succeed in music. Now fame and fortune aren't the only things that artists care about. For most artists, nothing is more important than realizing their creative vision, the music itself. But in yesterday's music industry, creating professional quality music was the privilege of a limited few, the people who had access to high end equipment or knew the top producers.
But today, things have changed completely. We want to make sure that the kid who's growing up with the talent to be the next Paul McCartney or the next Adele has access to the tools she needs to have a shot. So we have dedicated research and innovation teams working on software to help musicians make their best work. 1 of those teams is Soundtrap, who we acquired at the end of last year. Soundtrap is an online studio that lets people from anywhere in the world collaborate in real time.
They can make a podcast or a song together and they can do it from any type of device. We're continuing to invest in Soundtrap to make it easier to use and more powerful so that anyone with talent can produce professional content. Now our position as the leading listening platform allows us to think about creation tools a little bit differently. For the last 70 years, music has been an audio recording and a square piece of cover art because that's what LPs, CDs, and downloads could support. But our phones can do so much more than that and we want to let artists take advantage.
Since Spotify is both the interface for over 100,000,000 fans and the artists, we can give artists new ways to express themselves creatively. We can give fans more than just an audio file. We're building new formats that exist only within Spotify. Let me show you one example of what that can mean. We're starting to give artists the capability to add visual layers to their music, not just cover art, but a dynamic experience that they program for their fans as the music plays.
We've only begun to test this capability, but we're already blown away by what artists are doing with it. For example, recently, Migos, a hip hop trio from Georgia, embraced this format for the songs on their new release. And the fan reaction was amazing. This is a whole new canvas for artists. And as it develops, fans will benefit from a totally new experience on Spotify.
We're also extending this type of capability to our growing podcast business so that hosts can go beyond just talking about the day's news, but they can also highlight key points in the story with glanceable visual elements. We started piloting this format a few weeks ago with partners like BuzzFeed and Crooked Media. And generally speaking, we know that podcasts are just scratching the surface of their potential on Spotify. With the same creation, promotion, and monetization tools that we're building for musicians, we know we can open up opportunity for all types of audio creators. So these are the problems we're working to solve for creators every day.
When music first met the Internet, technology was hurting artists, but we flipped that on its head. The tools we're building now will power the next wave of artists to understand their business for themselves, to grow a fan base, whatever their genre, to earn a living both on and off Spotify and to create in new ways, releasing music when and how they want to. In tomorrow's music meritocracy, Spotify isn't the gatekeeper. It's the enabler, enabling musicians, podcasters, labels to have new options for how to succeed. Serving artists in these new ways can be transformational.
The opportunity is huge for artists, for fans, and for Spotify. Next, I'm going to hand it to Troy because as we build this marketplace, we're guided every step of the way by creators themselves. We're hearing from them directly. And that connection to the artist community is largely made possible by Troy and his team. So he'll now tell you about how we're partnering with artists.
Thanks.
Thanks, Charlie, and thank you guys for joining us today. I'm Troy Carter, Global Head of Creator Services for Spotify. As Daniel said, I joined Spotify after about 17 years in the music industry being a talent manager. I dedicated my career to helping budding stars like Stephanie Germanotta become Lady Gaga and to help to assure that John became a legend. But when Daniel told me he wanted to empower artists at scale, I joined the team to be part of what I deemed our legacy bet.
My group at Spotify has a very, very simple focus, is to break new artists, give creators global reach and to bring their stories to life. We make sure artists and labels understand how they can best leverage Spotify to grow their careers and to reach as many fans as possible. And in many ways, it's about connecting people and kind of being this bridge between the different constituents in the music industry. And let me explain what I mean by that. The first era of Spotify was really about the consumer experience.
And as you heard today, the consumer's response was very positive, but on the creator side, the experience wasn't quite understood. So as Spotify grew, not all of the artists were really sold on stream and being good for them. And you have to remember that piracy had just blown up the music industry. And unfortunately, I experienced it and saw it firsthand and it was a very uncomfortable Daniel mentioned in his opening, we And as Daniel mentioned in his opening, we really didn't do a great job at explaining to the industry that labels and artists how important Spotify was. And to me this was really just a misunderstanding that could easily be fixed through direct dialogue and some relationship building.
And that's one of the reasons why I joined the team. It was to better help to help Spotify understand the industry, but also for the industry to really understand the power of Spotify and its tools. And today, most of the artist reservations about Spotify have been addressed. The creative community now understands that we're a driving force behind the growth of the music industry. And these days superstars, major labels, independents, developing artists, they all work with us, and they really found a committed partner in Spotify.
We're helping them find and build new audiences. And in some cases, we're even serving as their creative partner. We're becoming their preferred destination for storytelling around their music. Sam Smith, when Sam was ready to release his latest album, he wanted to present his work in a really unique way and he came to us for a partnership. We worked with Sam to help him tell the world that he was coming back.
He poured his heart and his soul into this project. He worked on this album for over a year. So introducing it to the world wasn't just important. For Sam, it was personal. And in Sam's case, that creative vision required a very intimate experience.
When we bought the Life through this Captivate and vertical video that Sam shot in the studio, we got it for you guys to take a look at. Any excuse to play a Sam Smith song, by the way. But what was special about that video, when you watch it on your mobile phone, you have Sam Smith up close and personal. And that video is exclusive to Spotify, but it's unique formats like this that allow artists to explore new ways to creatively express themselves. But it also drives fans to Spotify where they can experience their favorite artists in many new ways.
So when it was finally time for Sam to announce this album to the world, he did it through us. He did it through a simple but very impactful Instagram post of these billboards that went up in his hometown. And it was covered by news outlets all throughout the world and Sam's album went on to become the debut at number 1. So congrats to Sam on that. But it's an incredible feeling to have superstars like this reach out to us for partnership and to have also to have the work this well received.
But it's not just the top artists in the world. We're breaking new artists at the speed of the Internet. And take Ghashi for instance. Now Ghashi was an unsigned artist, a first generation Albanian immigrant, living in a crowded house with his family in Brooklyn. But through our data and our editorial process, Gashi's music was picked up by Discover Weekly, which drove a huge increase in listening.
And within the last 3 months, 6,600,000 people discovered his music on Spotify. 75% of these discoveries are coming from our system of program sources. 2 years after discovering Gashi, we put them on a billboard in Times Square. And this type of support is game changing for independent artists. And to say he's appreciative of our support, it would be a huge understatement.
I'll let Ghashi tell it. I think he was excited. And as you guys can see, we stand with all types of artists. Our editorial process is a unique meritocracy in an industry that was once controlled by just a handful of gatekeepers And there's a win for both sides. Artists and labels, they've begun to realize that we're much, much more than just distribution.
We're giving them a powerful platform to grow their audience, get fans' attention and to keep people engaged. We have over 4,500 of our own playlists that range from pop to the most obscure genres you could possibly imagine. We even accommodate some artists whose formats have all but disappeared from radio programming. Charlie mentioned earlier, our fans first ticket and program. And let me explain why this is such a big deal for our artists.
We now live in a world where the most passionate fans are sitting in the nosebleed sections right now. And while the front row tickets are going to scalpers and platinum credit card holders, all taken away in a pre sell. And this is a pain point for both artists and the fans. Artists feed off of this energy in the front first few rows and the fans are kind of stuck in the back. So, and Super Fans, they want to be front and center seeing everything firsthand.
With Fans First, we were able to give those fans the front rows back and now we're filling entire venues. And just last year alone, we've executed over 1,000 campaigns for nearly 700 artists generating $40,000,000 in ticket sales and we have a lot more coming in 2018. But before an artist can even book a show, they first have to be discovered. This is one of the top priorities in the music business, signing and developing new talent. It's considered the music industry's R and D and is also where a significant amount of our resources are being deployed in the music industry.
When artists start to gain traction on the platform, Spotify teams and our technology are right there to provide support in terms of marketing, playlist and end strategy. We call that program RISE. And as you heard from Daniel and Charlie, we're helping artists at every stage of their careers now including some of the most popular artists in the world. Some of the biggest names in the music industry actually credit Spotify now. We're helping them become the biggest stars in the world today.
In fact, all five nominees for best new artist at the Grammys this year, We've all championed them from the beginning of their musical journeys and they all showed up to perform at our Grammy celebration this year. Khaleed, SZA, Lil Uzi Vert, Alessia Cara, Julia Michaels, they all gave electrifying performances in front of 300 of their super fans and several 100 industry execs and their fellow artists. They didn't come because they owed us something. They came because they wanted to support Spotify. They were proud to associate themselves with Spotify.
They didn't ask to get paid. They just came out to support same way we supported them. That's the definition of a true partnership. We've also begun to integrate these sort of live experiences into our Playlist brands as well. Last year with Rap Caviar Live and we did it in small night clubs and theaters with acts like Cardi B Amigos and this year we'll be producing them in arenas that can host tens of thousands of fans And we're just getting started on this.
The combination of Rap Caviar Playlist and the live experience is C Minute Rap Caviar as the voice of and the global authority in urban culture now. Artists know this isn't just the biggest hip hop playlist in the world. It's respected. It's become the most important signal of where urban music is going now and being part of that playlist can break an artist's career overnight. You also heard us talk a lot about the power of our data today.
We know which audiences want to hear which music and how to get it to them, not just in the U. S. But all throughout the world across all genres as well. Spotify helps music travel in ways that were previously unimaginable. Genres like K Pop are no longer just strained to Korea.
Our long running partnership with K Pop's mega group BTS is inspired in audiences all across Brazil, France, Germany, Indonesia and Mexico, all to unite. Our editors took their Korean language song and set it next to some of the biggest pop songs in the world and we exposed this band to millions of new listeners. And this is how a regional genre can go global. When I started as Gaga's manager, the industry looked a whole lot different. It literally took almost a full year to get our single Just Dance played on the radio.
We struggled. Now instead of spending years fighting their way through the industry gatekeepers, artists can break out in just weeks. And if you're really good, maybe even days. Now that's fair. We're helping artists and labels manage through this transition.
We're helping them see that success is within their reach and that we can help them achieve their dreams. Today, Spotify isn't just releasing music. We're actually connecting artists and labels with communities of fans all throughout the world. Industry looks a whole lot different now, I could tell you that. I dedicated my life to music and to artists and to be a part of such an incredible thing to be able to bring this to the world.
I'm very proud to be a part of Spotify and I thank you guys. Next up is Alex, our Chief Premium Business
This is so much fun. Thank you guys for being here. My name is Alex Nordstrom, and I oversee the premium business at Spotify, which as you may already know, accounts for 90% of Spotify's revenue. And in this role, my team and I pilot the growth of our subscriber base by to drive revenue and value for our company. And naturally, this happens by way of helping music fans to discover the benefits and value of unlimited music streaming.
Now overall, the premium product concept is fairly straightforward. When you sign up to Spotify, you receive a set of key enhancements compared to the free experience, and this includes unlimited on demand access, downloading music for offline listening, and no advertising interruptions. So with Premium, you have full control over what you listen to, when you listen to it, and on which device. The most common use case for premium subscribers is the smartphone. But as you've heard, Spotify also works on desktops, laptops, tablets, connected speakers, game consoles and TV sets and more.
We are the only streaming service that is truly platform neutral. That kind of control is a very compelling offering for our 71,000,000 Spotify Premium subscribers, a number that is up from 48,000,000 at the end of 2016. Of course, we are super pleased to see this kind of explosive growth, and as you can see, we have been adding 10,000,000 net subscribers every 6 months in the last 2 years, and it is continuing. As you heard from Daniel, we're just getting started. So before we take a closer look at what's behind this growth, let's ask ourselves an important question.
Who subscribes to Spotify Premium and how do they get there? The biggest growth driver of our subscriber base comes from users who start using Spotify in our advertising supported or free experience. In this case, free acts as a funnel into premium. Users try the service and they enjoy it so much that they're willing to pay for an enhanced experience. In fact, more than 60% of our premium users were free users first.
This model, this freemium model is a key differentiator. Not one of our major competitors have a free product like this. So, let's walk through a typical journey from free to premium. In most cases, after users downloaded the Spotify app, one of the first features they use is search. Users want to find a particular song, an artist or an album.
And as they explore the app, they start bumping into curated playlists and exploring them. They start digging deeper and deeper, saving songs and eventually building playlists of their own. So with more listening, we learn a lot about what they like and what they don't like. This allows us to make even more customized and relevant recommendations to the users, helping them discover more music. So bit by bit, users form new listening habits and they become more engaged.
Spotify becomes not just the app you use to find music, it becomes the way you think about music. So as you can see, the experience gets very rich very fast, and soon they start creating more control. And at that point, they want to learn more about Spotify Premium. So typically, new subscribers come on board through our standard 9.99 product, and this can be through a 30 day trial or by one of our seasonal promotional campaigns that we run twice per year. These campaigns allow new customers to test drive premium for 3 months at the token price of $0.99 We also offer options for specific affinity groups like Spotify Premium for Students and Premium for Family.
We launched the Student Plan in 2014, and man, has it been a huge success. Priced at $4.99 per month, student plan is designed to help us win meaningful relationships with younger users. Retention on this plan has been very strong. Spotify Premium for Family represents a different kind of value. Here, subscribers can have up to 6 individual accounts and the cost is fixed at $14.99 per month.
The family plan also has exceptional of course, many of And of course, many of these new users, these new listeners are younger users who then grow up using Spotify and represent high lifetime value. Our objective is to have a full life cycle of premium products that can meet consumers' needs across all ages, across all demos, and hopefully for multiple decades. So as these plans were rolled out over the last couple of years, average revenue per user has come down, but we've seen substantial retention improvement and much faster audience expansion. We are covering more parts of the demand curve. So these plans have been very meaningful for cohort retention, but make no mistake, our commitment to product R and D and the resulting user engagement has also been important.
And as you can see from the chart here, premium users are staying with us for longer. Over the last 3 years, each cohort of new subscribers shows increasing levels of retention. Okay, let's go back to the user journey. Once the user joins Premium, engagement goes up even further. Premium users stream on average more than 80 minutes of content per day.
So let me explain this for a bit. Remember, 60% of our users come from free. We've already learned a lot about them. They're not coming in cold. This means their experience from time of conversion is a much richer one.
Your daily mix is already trained. And as users gain full control over what songs they listen to, the machine learning gets even better. Users' recommendations improve, and they discover more music. You don't get engagement like this if people don't love your product. So another metric that we pay close attention to is our Net Promoter Score or NPS.
And as you heard, today that number is 79 for premium, and that's 79 globally. It's a big number. Of course, we are pleased by this, but we know we need to keep earning this positive sentiment every day because we know that the strength of our relationships with Spotify users is also our best growth driver. Again, remember, as Seth mentioned, more than 50% of our users tell us they first tried Spotify because it was recommended to them by a friend. And that friend was likely a satisfied premium customer.
So this willingness to recommend Spotify fuels a virtuous cycle that continuously fills the top of the funnel with new users, especially in free, which feeds premium, as I described. So new free users explore the product, habits are formed, engagement goes up, and at some point they join Premium, then with more control and even more personalization, user intake. And boom, we are full circle. I just wanted to check that you're still with me. So this cycle has enabled us to grow quickly.
The improving retention drives high lifetime value. The strong word-of-mouth results in low acquisition cost of new subscribers. This means that we are growing at a fast rate while maintaining excellent subscriber unit economics. Our lifetime value is 2.7x our subscriber acquisition cost. With these economics, we can and should continue to invest into customer experience and growth.
It allows us to add even more energy back into an already effective premium flywheel. And naturally, we do this by investing in marketing to acquire even more users. But we also commit to improve the experience of our existing customers, and we do this by leveraging our data advantage. We're only in the early stages of the potential of personalized programming, as you heard. And as you heard earlier today, we also do it by expanding the reach of Spotify through platform ubiquity and our many unique partnerships.
Premium users love this kind of stuff. They're the most avid users of these features and these platforms because it adds more value, So it creates more satisfaction. But we don't stop there. We also invest in our existing subscribers by adding value that we believe they want but don't necessarily expect. For example, we recently bundled Spotify for students with Hulu in the U.
S. This offer was an incredible success. It both amazed our existing customers and added new ones, expanding both Hulu's and Spotify's audiences. We also have a similar partnership with Headspace in Europe. We will continue to explore creative ways to add value back to our existing subscribers.
Again, this adds satisfaction, it adds retention, and it increases word-of-mouth, fueling the premium flywheel yet again. So here's a stat. It gives you a sense of the size of our opportunity in front of us. There are 1,300,000,000 payment enabled smartphones in use, and yet just 12% subscribe to a music streaming service, only 12%. Spotify, with our 71,000,000 subscribers, owns half of that existing 12%.
I think you can see the potential. Our unique operating model and ability to innovate has allowed us to grow to the point where we are nearly double the size of our closest competitor. As Daniel mentioned, we anticipate our total addressable market to grow to over $3,000,000,000 in the future. And as you can see, there's still significant opportunity remaining, both where Spotify is already available and in new markets. So that's Premium.
It's sticky, it's got brand love, and it's sitting on top of millions of free users that are moving closer to premium every day. The win is at our back. Smartphone adoption is growing, data costs are coming down, and the freemium flywheel catches these tailwinds perfectly. We have strong subscriber economics and we're adding energy back to the flywheel in innovative voice to keep delighting customers. And nobody else, nobody has our scale.
Thanks for your attention and your interest in Spotify Premium. I'll turn it over to Daniel.
Good afternoon. I'm Danielle Lee, Global Head of Partner Solutions. I'm here today to talk to you about our advertising business. But before we get to the numbers, I want to ground you in the reason why our ads business is fueling growth. As you've heard today, culture happens on Spotify, and advertisers want to be a part of it.
Here's what makes Spotify special to advertisers. Our audience is 100% logged in and authenticated. That means each user has one persistent identity across all of their connected devices. We understand the same user, whether they are streaming in their car, on a jog or listening from their connected speaker at home. This makes the quality of our insights so much higher.
This streaming intelligence is comprised of 1st party data and contextual data, revealing moods, mindsets, tastes and even habits. Music is like a mirror. It provides a rich and textured data set because it's personal, uniquely reflecting how you're feeling and what you're doing. Now, why does all of this matter? It matters because context is everything to advertisers.
They want to connect with the right audience in the right moment with the right message. We help them do just that in an impactful way. In a recent survey by Y Pulse, millennials named Spotify their number one music platform. They enjoy our music recommendations and the ability to discover new music. We're also the number one mobile app for time spent per visitor according to comScore.
We have their attention and we have their trust. So let's talk about the advertisers who love millennials. As you can see, we work with brands across a diverse set of categories. As a result, we've seen significant growth in our strategic partnerships with global agency holding companies. They're looking World class premium brands are our biggest partners.
World class premium brands are our biggest partners. The top 15 advertisers across multiple verticals are on Spotify, including Samsung, Unilever, Verizon and BMW. Now all advertisers are looking for the most effective way to invest their budgets, which are increasingly under pressure. Their goal is to drive brand outcomes. At Spotify, we believe we've proven our ability to drive brand outcomes across the metrics that matter most, ad recall, brand awareness, purchase intent and emotional engagement.
Here's how brands come to life on Spotify.
Spotify is more than just music,
way more. So when
the world's biggest brands tap into culture, they come to Spotify.
Smartwater is purity inspired by the cloud.
You deserve the fastest, most reliable Internet available. Switch to Fios today.
Dunkin's full bodied cold brew coffee. The all new Jeep company. Find your true north. It's me, Anna of the North, and this is how I fly.
Our ad experiences bring fans and brands together.
Get the next 30 minutes of your party music
is the Brilliant Minds podcast on Spotify, presented by HSBC. This episode of Showstopper is presented by Hulu.
And we build custom campaigns with top tier artists who are changing the game.
Our music in general is to help us envision a world that we want to live in.
Music is at the center of it all. Our common language for fans, for artists, for brands. Culture happens here.
Good afternoon. I'm Brian Benedicke. I'm the Global Head of Sales here at Spotify. And what I'd like to do is show you what all this has meant for the advertising business over the last 5 years. We have more than 90,000,000 free users today.
Our growth is amplified by the fact that people can access Spotify whenever and on whatever device they choose. Brands want to connect with this audience because we've built an advertising ecosystem that extends into the car, into the home and on the go, all of this while maintaining that user persistent identity that Danielle mentioned before. This allows them to engage with a relevant message in the right context. So we're everywhere, and mobile streaming is what's fueled our audience growth. It's eclipsed our desktop as our largest user platform.
Mobile and other connected devices now make up 73% of total streams. That's 2.5 times more than desktop. So as we look into the future, it's clear that our user experience aligns with our mobile first behaviors in emerging markets like Latin America, Southeast Asia and EMEA. In those markets, we have an opportunity to accelerate our growth. Now the ads business represents 10% of overall Spotify revenue and has grown significantly out of 46% CAGR over the last 2 years.
To date, we've seen the largest growth in North America, which is our most profitable and competitive market. Europe was launched a decade ago and is still driving 20% of our global revenue at 17% year on year. And we're also seeing fast growth in APAC and Latin America. Now you've heard Gustaf talk earlier today about our investments in R and D for artists and creators, but we're also building a great experience for brands. We were one of the first movers in the programmatic audio space, and we've seen this channel double in revenue in 2017, not just with audio but for video and display formats as well.
We've recently launched the world's 1st self serve advertising platform for audio. This new platform helps businesses of all sizes build audio campaigns and connect with their audience on Spotify. So in summary, Spotify ads represents 10% of total revenue and is close to a 50% growth business. We are a global brand across 65 markets with an audience that takes us with them everywhere. We will continue to lean forward with ad innovation that allows brands to connect with their most relevant audiences and drive business outcomes.
Thank you for your time, and I'd like to welcome our final presenter, our Chief Financial Officer, Barry McCarthy.
Good afternoon. I'm going to bring it home here for us. I know you're all disappointed to hear that. I'm Barry McCarthy. I'm Spotify's Chief Financial Officer, and I'd like to extend my personal welcome.
I haven't spoken publicly since leaving Netflix, and it's nice to see many familiar faces in the audience. So far today, you've heard about the reasons for our successful growth. I'm going to talk about what that growth has meant for our business, model and the implications for future margins. Now since my Netflix retirement, its stock price has increased about 10 times. So you have to ask yourself, should I buy the stock now or should I wait till this guy retires?
And I hope to answer that question for you today. So let's begin with a basic reminder of the profile of the business. It's a 10 year old startup, as Daniel mentioned, and Spotify is a relative newcomer in the U. S. As Daniel mentioned, Spotify services first launched here in 2011.
It's newer still in Latin America and APAC. And new as we are, all three regions have been and remain important drivers of growth. Growth, of course, has pressured our operating margins. And you should expect us to continue to invest in growth at the expense of operating profit because we believe growth increases our enterprise value, and I'll explain why in a few slides. Revenue has grown rapidly over the last 5 years as a result of investments we've made in launching new markets like Brazil, Mexico, Indonesia and Japan to name a few new products like our mobile free tier, which we launched in 2014 A better user experience is powered by machine learning and AI.
Plus our exclusive and personalized playlist, which the team has already discussed today, and new audio content like podcasts. Gross margin has improved significantly with the growth of MAUs in revenue. In 2016 'seventeen, we negotiated new label agreements with our 4 largest label partners. The new rates improved our gross margin by about 700 basis points on a year over year basis. That wasn't a magic trick.
The labels were acting in their own self interest to shore up Spotify's economically challenged margin structure because of the growing importance of a healthy Spotify to the entire music industry ecosystem. Now in some respects, this reminds me of my first 10 years at Netflix, when we transitioned from operating with a negative gross margin to operating with a 35% gross margin as the business scaled. And the point here is that scale can be a great enabler of margin expansion, particularly if you couple it with data insights to drive a better user interface, add a better content experience and in the process come to own demand creation and the margin that comes with owning demand creation. And you heard Daniel and Gustaf speak about that earlier today. Becoming the world's largest global music streaming subscription service has been expensive, costing more than €1,000,000,000 in cumulative losses.
But the trend towards profitability is clearly apparent when you look at operating losses as a percent of revenue. And keep in mind, that's in spite of the cost of launching 45 markets since 2013 and in spite of our continuing investment in content and R and D to drive a better user experience to drive faster growth. The trend in operating margin explains the trend in free cash flow, which has been positive for the last 2 years, generating EUR182,000,000 in cumulative cash flow. I'll talk more about how we intend to manage the trade offs between growth and free cash flow towards the end of my presentation. You've already heard about our premium model, which accounts for roughly 60% of our gross added premium subscribers.
Some of you may know that I began working with Spotify as an investor and a Board member. But it wasn't until after I stepped into my operating role that I realized the effect of the premium model on the overall economics of our business. So now some of you are looking at me like, okay, dude, are you kidney? Which in New York speak, Greens roughly means, Are you stupid? And the answer is yes and no.
It just took me a while before I realized that the ad supported service is also a subsidy program that offsets the cost of new subscriber acquisition. There are 3 ways to invest in growth: geographic expansion, marketing spending and developing a better user experience. The third of these three strategies produces by far the most viral effect and impact. And that's why the key to success in this business begins and ends with the user experience. I'll discuss why that's true in a moment, but first I want to make two points.
On this slide, you can see how the tech and dev investments we've made to improve the user experience have increased engagement. The number of hours of content consumed per MAU has increased by more than 30% since 2015 because the user experience is better. Why do we care about engagement so much? Because engagement drives conversion from free consumption to paid subscription. If you remain engaged with a Spotify service, then over time, more than 1 of every 2 free users will become a paying subscriber.
Now given our success with conversion, you may be surprised to learn that most free users drop off a service over time because it doesn't meet their expectations. And that's why Gustave and his team are constantly working to improve the user experience. But for those who remain engaged, more than 50% will become paying subscribers. Now once a free user converts, it takes us an average of 12 months to recoup the cost of acquiring that subscriber. The longer they stay, the greater their lifetime value to Spotify.
In this chart, you see the cumulative lifetime value measured in green and the net present value of monthly gross profit measured in blue based on our Q4 premium ARPU and consolidated gross margins. This chart offers 2 important insights. 1, the faster we grow new subscribers, the more money we lose when they join the service, particularly in periods of seasonally fast growth. 2, the longer they stay, the more profitable they become. And this second point has profound implications for the profitability and predictability of the business as it matures.
It also has important implications for competitive advantage, which I'll discuss in a few slides. Now the primary driver of lifetime value at Spotify is churn. And the primary driver of churn is customer satisfaction. And that's why our R and D and content teams are so heavily invested in improving the overall user experience on Spotify. The larger the sub base gets, the more operating leverage there is from extracting small improvements in the slope of the churn curve.
And you can see from this slide that we're seeing small, steady improvements in churn over time. Now this slide also shows us that over the life of an individual subscriber, churn declines. And that means that as the average tenure of the subscriber base increases, the average churn rate falls. So if you and I both run competing subscription businesses and yours is older than mine, then even if our services are equally light with exactly the same churn curves by customer cohort, your average churn rate will be lower than my average churn rate, which means that more of your marketing dollars are going to support new subscriber growth. And more of my marketing dollars are going to replace churn subs, which means you can grow faster than I can and beat me like a drum.
And that is a really good example of why scale matters. Now the asset test for whether our business model is working is the LTV to SAC ratio, which was, as Alex mentioned, 2.7 to 1 in Q4 of 2017. Now as long as this ratio is positive, then we increase our enterprise value each time we add a new subscriber, even though we lose money on each new subscriber when they first join the service. And this is one of the reasons you should expect us to continue to invest in growth at the expense of operating profit. Now after LTV to SAC, the next biggest driver of margin expansion over time is the ratio of newly acquired subs to legacy subs or recurring revenue.
We pay to acquire the new subs, but the recurring revenue is free from a marketing perspective. Over time, the ratio of free to paid shifts increasingly towards paid, which drives down marketing expense as a percent of revenue. And this was the 2nd largest driver of margin expansion during my 12 years at Netflix when marketing expense fell from 24% of revenue to 14% of revenue. So if your business and this is another example of scale. Now if your business is more mature than mine, then you're likely to have more recurring revenue than I do, which means you can use your higher margins to drive faster growth to sustain your leadership position.
And it also probably means that your installed base is larger than mine, which means you've got more subs telling friends about your service, which means you've got more free organic growth than I do, which means your overall subscriber acquisition cost, which is a combination of free organic plus paid growth is probably lower than mine. So not only can you beat me like a drum, but your drumsticks costs less than mine. So where does all this leave us in terms of operating goals for the business? As between growth and profit, you should expect us to manage for growth because scale drives the sustainable competitive and economic advantages I spoke about earlier. And as between operating losses and free cash flow, you should expect the business to continue to generate positive cash flow ex non recurring items like the build out of our U.
S. Headquarters in 2018. Now if the investments we make in R and D and content improve the overall user experience and if as a result of building our 2 sided marketplace, we come to own discovery and demand creation for users and artists, then we expect the long term margin structure of the business to evolve along the lines summarized on this slide. Now whether we're able to achieve these goals depends on whether we're able to continue to drive a virtuous cycle of increased investment, driving increased customer satisfaction and engagement, lower SAC, lower churn and higher lifetime value, which is our overarching goal. I want to thank you very much for your attention today and for your interest in Spotify.
And now I'm going to welcome Daniel back to the stage for a few moments of Q and A.