While podcasts require an investment, eventually 'we'll grow faster and be more profitable as a consequence,' Spotify CFO Barry McCarthy says.
exclusively for its users. For Netflix, before there was streaming available, the company used to send DVDs by mail.Gimlet Media and Anchor, and said it would spend $400 million to $500 million in podcast acquisitions in 2019."Now it's an audio service," McCarthy said.
With the exception of live sports, McCarthy argued that everything else "you're going to consume on-demand streamed, in your home, in your car, in your office, when you're commuting, and there is a lot of that," he said., even if it's weighing on profitability right now. After Monday's rally, the stock is still down over the past year and fell below $111 a share in October, dropping close to 40% over the prior 12 months.
"I think the reason it rolled over was because we said to investors, 'Hey, don't expect the operating leverage we've been demonstrating to continue in the future because we're going to start investing in this thing called podcasting,'" McCarthy said. The investment will initially "be a tax" on Spotify's financials, which is similar to when Netflix began building out its streaming operation, he said.
But over time, because podcasts as costs become fixed, "we'll grow faster and be more profitable as a consequence," McCarthy said.
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