To put it in layman’s terms, Spotify is delivering for publishers and authors. But don’t expect any retraction or apology for getting it so wrong from the UK’s Society of Authors.

Initially dismissed as a joke, Spotify’s entry into the audiobook market has proven its worth, with Goldman Sachs’ recent report highlighting audiobooks and their potential to boost revenue and profits for publishers and creatives as well as Spotify.

The financial markets now recognise Spotify’s value, with Goldman Sachs raising its price target to $550 from $490, maintaining a Buy rating.

Expanded Significance: Spotify’s foray into the audiobook market has been transformative. Initially met with skepticism, Spotify has now become a significant player, paying hundreds of millions annually to audiobook publishers and doubling the number of titles available to premium members. This move has not only expanded access for consumers but also significantly grown the audiobook market.

Goldman Sachs’ positive stance on Spotify, with a “GREAT” financial health score of 3.09, underscores the company’s strong performance and potential for future growth. The upcoming fourth-quarter earnings report is expected to provide further insights into Spotify’s strategic initiatives and financial health.

Key Metrics:

  • Price Target: Increased to $550 from $490
  • Stock Return: 135% over the past year
  • Gross Profit Margins: 28.7%
  • Revenue Growth: 18.5% over the last twelve months
  • User Base: 640 million users, with projections of 665 million MAUs and 260 million subscribers for Q4

Investor Focus Areas: Goldman Sachs highlighted several areas of interest for investors, including Spotify’s management commentary on pricing and product decisions, which have implications for monetisation, new subscriber growth, customer retention, and competitive dynamics within the industry.

Broader Implications: Spotify’s expansion into audiobooks represents a significant opportunity for the publishing industry. The company’s strategic focus on the creator economy and its ability to scale offerings are expected to drive further growth in 2025.

Additionally, Spotify’s approach to audiobooks as a premium feature, rather than an ad-supported product, has shown strong engagement and success.

Spotify’s entry into the audiobook market has shifted from being a joke to a serious contender, with significant implications for the publishing industry. The company’s continued investment in its platform and products, along with its strong financial position, supports its potential for sustained growth and profitability.

In Layman’s Terms

Or to put it in layman’s terms, Spotify is delivering for publishers and authors.

But don’t expect any retraction or apology for getting it so wrong from the UK’s Society of Authors, which under then CEO Nicola Solomon, OMG (oops, sorry, OBE), told Britain’s creatives that the Spotify deal would have a “devastating effect” and lied to SoA members about Spotify giving away audiobooks for free.

This post first appeared in the TNPS LinkedIn newsfeed.