Good day, and thank you for standing by. Welcome to the Spotify First Quarter 2021 Earnings Conference Call. At this time, all participants' lines are in a listen only mode. I would now like to hand the conference over to your speaker today, Brian Goldberg, Head of Investor Relations at Spotify, thank you. Please go ahead.
Great. Thank you and welcome to Spotify's Q1 2021 earnings conference call. Joining Today will be Daniel Ek, our CEO and Paul Vogel, our CFO. We'll start with opening comments from Daniel and after the remarks, Daniel and Paul will be happy to answer your questions. We'll again be taking questions exclusively through Slido.
Questions could be submitted by going to slido.com, slido.com and using the code Spotify Earnings Q1 'twenty one. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. We'll start by taking one question per analyst. Once everyone's had the opportunity to ask a question, we'll be happy to address follow-up questions time permitting. If for some reason you don't have access to Slido, you can e mail investorrelations@irspotify.com, and we'll add in your question.
Before we begin, let me quickly cover the Safe Harbor. Actual results could materially differ because of factors discussed on today's call, in our letter to shareholders and in filings with the Securities and Exchange Commission. And with that, I will turn it over to Daniel.
All right. Hi and thanks for joining us. I'm pleased with the continued momentum we're seeing across many aspects Our business this quarter, including our subscriber growth. 2020 was a very strong year for Spotify and as We reported our Q4 results. I discussed the high degree of uncertainty we knew we would continue to face in this unprecedented environment.
I also shared that we likely pulled forward some growth as evidenced by our outperformance in MEU throughout this past year. In Q1, this uncertainty played out largely as expected. Several metrics like subs, revenues, gross margin and ARPU came in a little higher, While MAU came in a little lower, but still well within our range. And some markets that we have previously seen really strong performance from like parts of Latin America and Southeast Asia showed some softening on the MAU side, while others in both new and mature markets continue to Demonstrate really impressive growth. And while it's worth noting that of our 4 quarters, Q1 historically tends to be the quarter with the lowest new user activations.
We also know that the world is in various stages of recovering from the pandemic and we see that reflected in aspects of our business. And while I expect the puts and takes that we saw in Q1 to continue throughout much of this year, I still feel very Confident in what's on the horizon looking up the remainder of the year and beyond. And as always, I want to focus the bulk of my time with you looking ahead. I am more confident than ever in our ability to deliver on our ambition to become the world's number one audio platform. And if you tuned into our StreamOn event in February, you probably understand why I'm so bullish.
Our strategy to move from being a streaming service So being an audio platform is really starting to come to life. Look no further than the clarified messaging we launched yesterday around how we will enable access to paid audio I really think this positions us to truly be the audio browser of the world. And for those who may have missed it, we detailed several new innovations and enhancements in our pipeline that will benefit both creators and the users. And this includes our recent launch into more than 80 new markets, which has opened up a new exciting opportunity for growth and I will share more on that in a minute. I also shared more on why I continue to believe that the opportunity in audio is still largely untapped with tremendous growth potential, far beyond what most of us can imagine today.
Take music as an example. The latest numbers from IFPI just out this quarter reinforce the It's seen an increase of 54% in global recorded music revenues since the 2014 low And streaming revenues with a growth rate of more than 600% over the same time period continue to propel the industry forward. Industry sources recently forecasted that the streaming market will triple reaching $79,000,000,000 in revenues by 2,030 And Spotify continues to be the primary driver that is pushing global music revenues to record highs. Related to this, look no further than the price increases we just announced across 12 key markets including the U. K.
And U. S. And we did this on the back of successful rollouts in the previous two quarters when we implemented price increases in more than 30 markets. The positive data we continue to see in terms of the value users see in Spotify underscores the significant opportunity here And you should expect that we will continue to leverage increases as we evaluate market conditions. I hope you've also checked Our new site, Loud and Clear, which is increasing transparency on the economics of music streaming.
There, you'll see the number of the most listened Artists in the world is growing and it's more diverse than ever. As more artists are finding success, the bigger the impact we As a platform can have in serving them and their teams. And the more successful artists there are, the more impact we can have on creating an even better consumer Speaking of consumer experience, we continue to see lots of opportunities to enhance our user experience across the board And you should expect us to move quickly and invest aggressively when we do. Because the broader audio market is still in its infancy compared to music, The opportunities to innovate there are immense and evolving fast and furiously. We have long enjoyed a first mover advantage and we will continue to prioritize introducing new capabilities across all facets of audio.
Our recent acquisition of the live audio room locker room is an example of this commitment to improving our experience. We want to be the absolute best partner to creators by giving them opportunities to create And we have some exciting plans for locker room and we will share more details in the coming weeks. And while we decided early to go all in on audio, it's giving us a head start of more than a decade and unrivaled size and scale. Others are of course taking notice. This isn't surprising at all given the enormous size of the audio market, which some projections indicate could be valued at $200,000,000,000 by 2,030.
Competition is nothing new for us. We saw it in music and always expect Others to jump on the audio train when they realized how attractive it is to billions of listeners around the world. We believe we have at least 5 to 7x Growth left in the business we are in today, music, podcasting and paid audio, and we intend to win in those businesses. All that said, you should expect us to remain focused on our core pillars. For consumers, this is delivering a great Consumer experience through freemium, ubiquity and personalization.
And for creators, it is a maniacal focus on serving them through a personalized marketplace set of offerings and not one size fits all. Set of offerings and not one size fits all. As always, when we see opportunities that we believe will strengthen our capabilities And to help realize our ambitions, over the last couple of months, we've led our most sweeping geographic expansion to date, Turning Spotify on in more than 80 new markets across Asia, Africa, Europe and the Caribbean and Latin America. And in doing so, we're introducing the passions, the creativity, the sounds and cultures of creators in these markets to a global audience. We are ramping up quickly, evolving our content and adjusting our product as we learn about what makes the most sense on a hyper local level.
These are only a few examples of the tangible efforts underway and we will continue to aggressively pursue opportunities And with that, I'll turn it back to Brian for questions.
All right. Thanks, Daniel. Again, if you've got any questions, please go to slido.comspotifyearningsq121. And our first question today is going to come from Doug Anmuth at JPMorgan. You noted that the percentage of MAUs consuming was consistent quarter to quarter, but you saw a strong increase in podcast consumption hours.
Can you explain potential reasons for the delta there? Can you comment on how much of total consumption hours are currently podcasts? Yes,
I'll start with that one. So, yes, at a high level, Doug, the consumption hours were very strong. They're up about 20% quarter over quarter. So, we feel really good about that. When you look at the percentage of podcast MAU relative to total MAU, some of that is kind of dependent on the point in time that the quarter ends.
And so December had a very strong month, particularly with Joe Rogan going exclusive. But when you look at the Average podcast MAU over the average MAU over the period, it was up from Q1 over Q4. And when you look at the trend over the last, Really 6, 7, 8 quarters, but particularly last 4 quarters. That average growth in podcast MAU to average MAU Has been up about 150 basis points quarter over quarter. So we feel really good about the overall trends in podcast MAU.
And sometimes there's a little bit of lumpiness in the actual reporting just on how any one quarter ended with respect to new releases or launches or exclusivity. And in terms of how much consumption, we don't break out how much consumption is on podcast. I will say that March hit an all time high in terms of the amount of podcast consumption
Our next question comes from Rich Greenfield at Lightshed. Everyone appears to be getting into the live audio business following Clubhouse. I'm curious how you think about live audio as a feature versus a standalone product and how creators will decide Where to go live, whether it be Spotify, Clubhouse or another platform?
Yes, this is Daniel. I think live audio is clearly something that you should expect as capabilities go pretty much every major platform will have. And my expectation, it's really no different than how you think about Stories. Stories today exist on a format on a number of platforms, Including Spotify, including of course Instagram, Snap and many others. So I do look at this A compelling feature set and I think creators will engage in the places where they have the best sort of Creator to fan affinity for the type of interactions that they're looking for.
And I think this is very similar to Say how stories played out historically.
All right. Our next question comes from Mario Lou at Barclays. Your recently announced pricing of podcast subscription for content creators undercuts your competition. Are there opportunities outside of the podcast subscription itself that you can monetize to receive better than 5% economics?
I think this is a long term play for us in terms of podcasting, but I do want to go back and just talk about here Why I think this is important. As many of you know, we have for now the better part of more than 2 years Talked about how we believe openness is what's going to be important and drive innovation across the ecosystem. And The most important thing for us is that we play by those rules. And I think what we announced yesterday is just a very, very compelling product For creators where they have control. They have control in how they can message their consumers.
They have control in how they can monetize their consumers. It's just a very attractive Proposition that creators are very, very excited about and want to work with us. As revenue opportunities goes Going forward from that, I think that there's so many tools that we can create for creators and for consumers alike. And there'll be plenty of Revenue opportunities that will be coming from that. So look at this as the beginning.
And again, as I've said many times before, we're in the early And the key thing right now is still moving offline linear audio listening to online on demand listening. And that's the trend line that we're pursuing and there will be lots and lots of opportunities for finding
All right. We'll go to the next question. Mark Mahaney at ISI. Why did you reduce your full year MAU guidance but maintain Your full year premium subscriber outlook. What's causing better than expected conversion of MAUs into premium subs?
Yes, I'll start with that I think for us, if you look at the guidance, a lot of it is just taking into account the coming to the bottom of the range Q1 on the MAU side and the sub side was actually stronger than expected. I think if you take a step back, when we started the year, we did say we expected some greater Variability within some of our metrics. I would say actually, we probably had more concern on the subsides. So the fact that the subs number came in better than expected It's really positive for us. And in terms of conversion, I would say kind of if you look at the subs to MAU ratio, It was up in Q1.
It's still a lower Q1 this year than it was Q1 last year. And typically what you see for us And you'll see this if you look at the history of Spotify. There's always some kind of waves where MAU seems to be the bigger driver and then subs becomes a bigger driver. And a big function of that is When you have periods of time where MAU grows very, very fast, it grows at top of the funnel. But it normally takes 6, 9, 12 months for us to convert those free users into Premium paying subscribers.
So it's actually very logical to see that growth in MAU that we saw last year then translate into subs down the line. So Actually, all the numbers are pretty consistent with what we expected. And I think we feel still feel really good about the overall trends in user growth and particularly subscriber growth.
All right. Next question comes from Ben Swinburne at Morgan Stanley. What percentage of your users have seen price increases thus far? If that's not having a material impact on top of funnel growth, can you I'll give you more on what you see as the drivers of MAU softness relative to expectations.
Yes, I guess I'll start with them as well. So we haven't disclosed the actual number of subs affected by price increases, but we're in over 40 markets right now. I think we feel good about what we have accomplished so far in terms of price increases. When you look at gross additions and churn, we've seen very minimal impact on either one of those metrics. So we feel good about The price increases, yes, price increases wouldn't really impact top of funnel because top of funnel is sort of the free user, so there's really no impact on there.
I think like a lot of folks, we saw exceptionally strong 2020. We did see a pickup in MAU growth starting in March of last year That in hindsight looks to be somewhat correlated to COVID in some ways. And so there's just a little bit of that comparison. But In general, I think we expected some variability. So it's not surprising to us.
It was in sort of the complete range of our expectations. And like I said, I think we feel really good about the fact that we're able to grow subscribers faster than expected.
Okay. Next question from Jason Bazinet at Citi. Investors tend to think of Spotify as very sticky implying low churn rates. You've made progress on churn, but it's still high relative to other subscription based businesses like Sirius, DirecTV, etcetera. What causes churn to remain elevated and what's your
Yes, I would actually argue our churn is not high. I think in markets where we're established Churn is at really good levels and we're growing really, really fast. And when you grow into newer markets where your newer product churn tends to be higher and it comes down over time. So the fact that our churn rate continues to come down is a positive for us. I don't think we've ever put out an actual churn target, But I do think you can expect it to continue to come down over time.
So I think we feel really good about it. As I said, I think the churn in some of our more mature markets Or at levels that you expect of businesses that are mature. And I also think that When you kind of when you think about the mix between the mature markets and the growing markets, the churn is pretty appropriate for the level of growth we have right now.
Okay. Our next question is going to come from Matt Thornton at Truist. Can you talk about the Facebook partnership? How accretive you think it could be to the business as well as Car Thing, including how you're thinking about go to market?
Yes, sure. I mean these are obviously 2 very different partnerships, but they fall under the same strategy for us, which is ubiquity. So when you look at Facebook as an example, it's obviously one of the world's largest platforms reaching billions of consumers around the world. And one of the key insights for us has been just how many Spotify users are constantly sharing their tracks On Facebook and Instagram and other social platforms and expressing themselves that way. So you should look at this as a way of reducing friction, which will of course enable a much better experience.
So it's too early to say, what the overall impact will be. But generally speaking, when you reduce the friction for consumers, you tend to see great results. And I have high hopes that the Facebook partnership could certainly do that. And then when it comes to the car thing, I think Again, the most important thing as you think about audio products is that the car happens to be a major use case. So, if you look at the car radio, which is still today where most of the offline radio listening happens, It is pretty clear that it's an ongoing transformation that is going on.
If you look at Cars like Tesla, etcetera, you see it very clearly where these streaming services now is the de facto radio in the car. And so Car Thing is our attempt of speeding up that progress into a future where you will have Just as great experience as you have on your mobile in your car and you can now use that as your sort of in car entertainment Instead of this antiquated radio systems that most people have in the car and early results, it's just Very, very encouraging. It seems like we've really struck a chord with what consumers want. And so we're seeing a lot of excitement, but it's of course very, very early. And I think based on how people will use their product, etcetera, we will certainly think A lot more about what the appropriate go to market strategy will be and how we can most effectively roll it out.
Okay, thanks. Next question will be from Deepak at Wolfe Research. Given the recent launch of several new offerings, can you discuss your updated Thoughts on potential gross profit contribution from marketplace in fiscal 2021 and in the next few years?
Daniel, do you want to talk about marketplace at a high level and then I can talk about the gross margin directly?
Yes, sure. So I think I've said this before, but I'll say it again. We're very, very early in our efforts of Moving the entire music industry from this one size fits all to a more individual offering. And The way we're taking that approach is we're trying to create a really across the whole audio stack even beyond music as well. Just creating more opportunities for creators to create, for them to be able to distribute, for them to be able to grow their audience and for them to be able to monetize their audience.
And most of the marketplace products that we have today is just, enabling music creators, to be able to grow their audience. And the early response that we've had on those products have just been phenomenal with many artists seeing Twice the uplift that they have from other marketing channels and really, really strong retention from customers as well Engaging with these products there. I think there's a lot of excitement in the music committee among the people who have used these products and we're Gradually rolling it out and having more and more artists and teams experimenting where our products.
Yes. And then just from a gross margin, we haven't given out specific targets, but I would say, we talked about at the end of a year ago in terms of where we were. And then we had significant growth in 2020, expected significant growth again in 2021. And right now, marketplace was In line with expectations in Q1 and we expect to have another really strong growth year for us in 2021. And it is starting to be a positive contributed to gross margin and we expect it to continue to grow over time.
We haven't given any specific targets out, but we do feel good about Kind of the ramp over the last year or so.
All right. Our next question is going to come from Justin Patterson at KeyBanc On advertising, could you elaborate more on the strength in podcast advertising? And how are advertisers responding to SAI technology?
Yes, podcast advertising was strong in the quarter. Organically, it was very strong. And then when you throw on top of it, JRE or Joe Rogan and Ringer and Megaphone, it's really starting to see an accelerant to growth on the advertising side. SAI is in high demand. There's the feedback has been great as we roll that out into more areas within the advertising business And more areas in podcast and we expect it to be a big driver of growth.
I would say if you take A high level view of advertising in general. I think from a product to technology standpoint, from an innovation standpoint, We think we're really just scratching the surface of where we're going to go. And we feel really good about the tech stack we're investing in. We feel really good about all the incremental inventory we have with respect to megaphone and Joe Rogan and the ringer and Parcast and Gimlet And anchor products. And so I think we feel really, really good about the opportunity for us to really drive advertising across the business.
Okay. Next question is going to come from Richard Kramer at Ariti. It's on pricing. Do you expect competitors to match your price increases in key markets like the U. S.
And the U. K?
So I'm not sure to be honest, but that was never a deciding factor in how we approach the decision. We focused on our business And the data that we're seeing, and there the it's very, very clear and very, very compelling data, which is We see enormous amounts of engagement with our consumer and it's been growing year over year over year as we've been improving the proposition both in terms of better better features, but obviously expanding the content library significantly with the addition Of podcasting and exclusives as well. So I think it's on the back of that that you should read that we feel very comfortable about doing And you should obviously look at our expansion of these price increases as that we see this strategy working.
All right. Next question from Jon Egbert at Stifel. Can You discuss how Locker Room complements your existing spoken word content strategy. What are some of the immediate synergies you see with your existing offering? Do you view linear consumption of spoken word audio as a more interesting opportunity than live music streaming?
Yes. So I think the first and foremost important thing is to visualize Spotify as a platform. So we have over 8,000,000 creators And obviously more than 350,000,000 users on this platform. And most of the time, the number one thing that our users And the number one question our creators are asking us is help me connect with my fans in more ways. So live, You should really view Live as the opportunity for creating new and meaningful ways to connect creators and fans.
That's how we look at it. And then as platforms mature and features on platform mature, usually the features in the beginning tend to be Creators that are experimenting a lot more are probably not the most successful creators that jump on the platform. And then, as more people start engaging with a feature and a medium, you start seeing more and more professional creators jump on board. So I think it's probably going to start out with spoken word content, but specifically as it relates to Spotify, I think that there will be a lot of musicians that want to engage in everything from speaking to their fans to having Listening parties and all other things because it's so clear to them that on the Spotify platform that engagement drives meaningful conversion
Okay. Next question is going to come from Maria Ripps at How does Spotify plan to integrate this feature within its audio ecosystem to make it just as useful when people are back in their normal routines?
I think it really just comes down to creating compelling content. As an example, Again, you can imagine as in the previous question, we may have an artist that has an upcoming Earlier than other consumers can or you can have an artist explain what the thinking around writing a certain song And you can obviously have comedians and other people engage on topics That they are currently experiencing or imagining. So I think it really comes down to the quality of the content. And I think when I look at our 8,000,000 creators, we have some of the world's best storytellers on the platform and that's ultimately What people will tune into, and that's what matters.
I would also just add, with our ubiquity strategy, we've been able to sort of pivot in both directions. And you think about when people first started being at home a lot more and interacting with game consoles and voice speakers, We sort of leaned into that, which was super great. And when people start traveling and being out again, they'll be able to use other devices just as equally. And so Having that sort of ubiquity strategy, having our platform and Spotify on as many devices as possible has allowed us to be successful no matter how you're How and where and when you're using audio content.
Okay. Next question from Lloyd Walmsley at Deutsche Bank. Based on the improvement in churn, it would appear that gross premium subscriber additions didn't really grow year on year in the quarter despite opening up new markets. Do you think gross adds, the growth in gross adds will be declining on a year on year basis going forward or can you grow those again?
I'm not going to comment specifically on gross adds. I will say our gross adds were very strong in the quarter. Without getting into too much of the technicals, I think because we give you guys rounded numbers and not actual numbers, sometimes Trying to back into our gross add numbers can be misleading, but I will say our gross adds were strong in the quarter. So we feel good about that And we feel good about the overall subs number in general. And so Yes.
No comment other than that, but I feel good about the gross adds and the net adds both for the quarter and for the year. And also just in terms of your new markets, obviously, as you can imagine, a lot of those new markets take a little while to ramp. So there wasn't really an Expectation that there'd be massive increases in subscribers in our new markets, although they performed in line with our expectations.
Okay. Next question from Nick Delfoss at Redburn. How do your DAUs compare to your MAUs? And are you seeing lower engagement? Is that why MAUs We're below expectations this quarter.
The DAU to MAU ratio has been pretty steady, Both overall and for premium and ads, it's actually, in general, been ticking up a little bit across both over the average of the last So we feel good about that ratio. I mean, I think we've talked about the MAU a lot. There was some pull forward. We had a very strong 2020 in general, But we feel good about the overall trajectory. We still feel good about the overall number of net additions that we expected in MAU for the full year And engagement remains really solid on the platform.
Okay. Next question from Mike Morris at Guggenheim. And as your share of listening in the car compared to your broader share of overall listening, how significant is this segment of the market? Can broader distribution of Car Thing be a step toward meaningful engagement expansion.
Yes, I think that's exactly the right way to Good, Ed. I mean, if you look at audio as a category, it has 3 distinct use cases. 1 is in the home, 1 is on the go and one is in the car. In the home, it obviously competes with other forms of media like video, etcetera. On the go, there's a lot of things you can do, but audio happens to be a very strong medium there too.
And in the car, Obviously, video and other type of sort of immersive experiences is not very common. So audio There happens to be a very, very big part of overall what people do in the car and especially in the U. S, the car use case is obviously massive. So I think you should look at car thing as a way of us sort of full stack going in and reimagining what the user experience in the Car for the next gen car entertainment system should look like. And this is our version of that.
And I think this is also why it's so pleasing to see the early results of that and how Engaged consumers were and just sharing the message and being super excited about that. So we're very encouraged with it, but it's very early days.
Okay. Next question from Andrew Maroc at Raymond James. With Q1 podcasting MAU penetration consistent with Q4 levels, but consumption hours increasing. How are you thinking about the opportunity in terms of increasing podcast penetration versus driving more engagement with existing podcast users?
Yes, I touched on this in the earlier question. But in general, I think the podcast MAU penetration continues to move up. As I said, we had a really good growth last year in Q4 in particular where we're up about 300 basis points quarter over quarter. And December in particular was strong given some of the exclusivity that we had in December. But in general, again, if you look at the average Podcast MAU over the average MAU over the last couple of quarters that continues to trend up.
And so we expect that the overall percentage of MAU who engaged with podcasts will continue to move up. So we feel like that line is and that curve is really, really strong. And engagement has continued to move up. We're seeing it in new users and existing podcast users and it was up very strong Quarter over quarter. So we feel like the engagement is there and it will continue to lead to more podcast usage overall.
Okay. Next question from Mark Sze at Rosenblatt Securities. Could you discuss the variables In the low versus high end of your gross margin guidance, I assume that's for fiscal 2021.
Yes, I mean, there's always a number of things that go into that. I mean, I think one of it is content and the speed with which we continue to grow the content base. So there's an element of that that's in there. As I've said in the past, I think overall music margins will be Flattish for the most part. There's always some variability, but for the most part, flattish.
We do see some benefits from marketplace. So the upside or downside on marketplace as well could be a driver. And just on the other cost of revenue, we actually have seen a little bit more leverage on things like streaming delivery and payments than we expected, at least in the Q1. It was a little bit better than we thought. So How that trends over time will also dictate it.
So those are sort of the main points. As you did see, we did raise the gross margin guidance So we do feel like right now we're on pace to have a little bit better of a gross margin year than we expected when we started the
Okay. We've got a question from Steven Cahall at Wells Fargo. Excuse me. Well, it looks like can you tell us what per user consumption hours are in North America and Europe where they grew in the quarter And in developing regions where there was some COVID pressure in Q1.
Yes, I don't believe we've given out that number in the past. So there's nothing I can add to that other than to the and we haven't really said specific growth rates or regions. But as I did say that The overall consumption, I think it's in your question. It has above COVID levels in many markets and in some markets where it was weak That hasn't come all the way back. They are improving.
So again, we feel good in general about the consumption trends across the platform.
All right. Next question from Atlantic Equities. I believe that's Hamilton Faber. Can you talk about monetization models for Live and if how these differ from your current capabilities and what you need to drive this new opportunity?
Yes, sure. So I'm really, really excited about this. And I think this is one of the areas where we can learn a lot from what's happening in China and particularly, which has a lot more Developed ecosystem when it comes to live products, etcetera. So obviously, right now, our primary focus is just Creating more meaningful engagement on live products across the base. And this is about getting our 8,000,000 creators to interact with the 100 of millions of consumers that are on the Spotify platform.
But over time, I think that this will be A very, very big potential from a revenue standpoint, in addition to these existing Models that we have today. But I also do want to kind of up level this question for a moment, which is if you really think about this, the real big transition For us in these past few years has really been obviously from music to being audio. But the other trend line that's very clear, as I said in my opening regards, is Going from a music service to being an audio platform. And if you think about that audio platform narrative for a moment, it really Has a few core pillars. One of them is Crate, one of them is, Distributed, another one of them is Engage and the 4th pillar is monetization.
So, we are investing massively in all four of these pillars, making it easier for creators to create. You can imagine that with sort of live experiences, Making easier for people to distribute their contents, Anchor being a great example where we're consistently just innovating on music and talk, Other types of format that just allows creators to express themselves in different ways. And then of course, growing people's Fan base and create new forms of engagement with their audience. And then lastly, of course, monetization where You have everything from SAI to subscription packages that we announced yesterday. This is a massive roadmap that the company has taken on and that you're seeing us execute on and I'm really, really pleased with The early innings of how that platform now is coming to life.
And I think over the long term, that's I'm super excited about because we have this audience now of 350,000,000 and these 8,000,000 creators and it's really about creating across this creates distribute, engage and monetize, creating more and more avenues for these two groups to connect with each other, engage with each other and monetize those engagements. So yes, very, very encouraged and very early days on the evolution of the audio ecosystem.
Okay. And we're going to go to the next question from Jessica Reif Ehrlich at Bank of America. Another one on Car Thing. What's the timing on a broader rollout for this initiative and what are the incremental revenue opportunities that SPOT can capture by targeting in the car?
So early days still, still shipping the product To the consumers that signed up, so it's too early to say I think from a broader roll up perspective. But as we mentioned there, when we roll it out broader, it will likely have a consumer price point As well and not be a free product as it has been in this early Early innings.
Okay. And We're going to go now to follow-up questions. We've got time actually for one more. And That's going to come from John Egbert at Stifel. How much interest are you getting among megaphone publishers and other podcast creators looking to participate in the Spotify audience network?
Are you sensing any hesitance to participate from larger, more established creators? And how quickly do you expect network inventory to scale in 2021?
Yes, I guess I'll start with that one. Yes, I think it's a little bit it's too early to tell. I think we're super optimistic about what the audience number will be able to provide Both to the publishers and the advertisers as well as us in terms of just broadening out the amount of inventory, the audience they can reach, The targeting capabilities and then you sort of throw on top of the things we're doing with SAI and we think there's a lot of opportunity to grow the overall market We know there's a ton of demand out there, from podcast advertisers and folks who want to advertise on podcasting And all of the recent enthusiasm about podcasting and audio content has only helped that. So I think we feel really good about where we are. I think we're Super pleased having made that acquisition last year in terms of where we're set up for the future.
All right, great. So, we're out of time now for Q and A. So, I will turn the call back over to Daniel for some closing remarks.
Well, thank you, Brian. In my experience, the key to our future success is to stay focused on our long term opportunity. And short term, we will continue to perform while rolling out with the ups and downs inherent in challenging and unpredictable environments. Put another way, we at Spotify are stubborn ambition, but flexible on the details of execution. We will continue to experiment and prioritize being nimble and accelerate And in this audio world where creators and consumers are at the heart of everything we do, we see ourselves as a huge catalyst for growth And we're committing to holding ourselves accountable to living in a constant state of improvement.
This is what drives me and the team to come to work each and every day. And I'll be talking more about our earnings report on our podcast For the record, which will go live on our platform tomorrow. Thanks again everyone for joining us.
Okay. And that concludes today's call. A replay of the call will be available on our website and also on the Spotify app under Spotify Earnings Call Replays. Thanks again everyone for joining.