Alex Norström doesn’t need you to consider Spotify as a tech big. He needs you to consider it as “an enormous, large startup that’s rising.”
This mindset from Spotify’s incoming co-CEO might sound incongruous for a corporation whose 276 million paying clients account for 3% of the world’s inhabitants, and which in 2024 achieved its first full yr of profitability.
Nevertheless it speaks to the ambition (and alternative) that Norström sees forward as he prepares to take the helm alongside Gustav Söderström on January 1, 2026.
The management transition, introduced on Tuesday (September 30), will see founder Daniel Ek step again from day-to-day operations after almost twenty years as CEO, assuming the function of Govt Chairman. He defined the technique behind the transfer on a name with analysts yesterday, which you’ll be able to examine right here.
For Norström, who’s spent 15 years at Spotify and presently serves as co-President and Chief Enterprise Officer, it represents each continuity and alter.
“The change you’re seeing is gradual,” Norström tells MBW in an unique interview the morning after the announcement.
He and Söderström have already been working a lot of Spotify’s day-to-day operations for almost three years, with Ek more and more taking up what Norström calls “a training function.”
The timing of the transition coincides with what Norström describes as Spotify hitting “each mark” – citing person progress, subscriber adoption, and elevated payouts to “artists, podcasters, [and] authors.”
Spotify’s Premium Subscriber base (of 276m) on the shut of Q2 was up by+8 million web subs on the 268 million that the agency counted on the finish of the prior quarter (Q1 2025). Spotify’s whole Month-to-month Energetic Customers, which mix paying customers and ad-supported customers, grew 11% yr over yr to 696 million. Spotify paid out $10 billion to the music trade in 2024 – a full $1bn greater than in 2023.
The corporate can also be “delivery” merchandise at a tempo that pleases the chief, pointing to latest launches together with lossless audio (arriving as a Premium characteristic slightly than a part of a super-premium tier), direct messaging capabilities inside the app, and playlist mixing instruments.
However maybe most putting is Norström’s imaginative and prescient for the place Spotify goes subsequent.
Whereas acknowledging that reaching 99% of the world’s inhabitants paying for its providers is perhaps “loopy,” he doesn’t assume 10-15% is unimaginable.
That will translate to round a billion subscribers, a quantity he explicitly references as a longer-term purpose.
The expansion, he believes, will come from markets like India, Bangladesh, Pakistan, and nations inside Africa, areas the place streaming adoption continues to be nascent however accelerating quickly. He compares the present alternative to “the start of LATAM,” when Spotify started its explosive progress throughout Latin America.
“I would like individuals to really feel a way of marvel once they come to Spotify.”
Alex Norström
“Music is one thing great. Virtually everybody on this planet has a relationship to it, typically even earlier than they get uncovered to language,” Norström says. “Name me loopy, however I consider that is the most important alternative there’s in shopper merchandise.”
As he and Söderström put together to formally take the reins, he outlines his long-term imaginative and prescient for Spotify: “I would like individuals to really feel a way of marvel once they come to Spotify, which they’re doing now already, however much more,” he tells us. “I would like us to deal with that large alternative in entrance of us: getting nearer to a billion subscribers”.
Right here, Norström discusses his and Söderström’s targets as Spotify’s incoming co-CEOs, overlaying subjects akin to subscriber adoption, pricing technique, geographic progress, Spotify’s relationship with the music trade, and extra.
Credit score: Sir. David/Shutterstock
What’s on the prime of your to-do checklist on day one as co-CEOs?
To start with, I might say all the pieces goes very well for us proper now. We’re hitting each mark on person progress and subscriber [acquisition]. And what’s extra is that we’ve got, over the previous 5 years, persistently elevated engagement, which is a superb proxy for individuals persevering with to like Spotify.
We’re taking market share. We’re not shedding a variety of customers once we elevate costs. We’re rising the payouts to the music trade, to artists, to podcasters, to authors, and so forth. So we’re actually in a very good place.
After which if you concentrate on, what our focus goes ahead, you may give it some thought in two methods. One is, we’ll relentlessly preserve including worth again to subscribers and customers. We are going to push the boundaries on the subject of innovation, and we’ll proceed to work actually laborious, preserve our bar actually excessive, and attempt to ship.
“Do I believe we’re going to get to 99% of the world’s inhabitants? Possibly not. That’s loopy. Nevertheless it’s not so unimaginable to get to 10% or 15%.”
We’ve got been delivery greater than we’ve shipped in a protracted, lengthy whereas. We simply improved our free tier. We simply launched messages inside Spotify. We launched the playlist mixing instruments, lossless, interactive DJ, and different new AI options. Video has been scaling. We’ve launched audiobooks in additional markets. The checklist simply goes on and on. So I’m tremendous happy in regards to the tempo of delivery [products], as a result of it’s about the identical factor: it’s including worth again. That’s necessary to me.
After which there’s an extra, longer outlook. I have a look at the expansion alternative of Spotify. There’s nonetheless a lot left. Take into consideration the subscriber depend we’ve got at this time – we contact roughly 3% of the world’s inhabitants.
Do I believe we’re going to get to 99% of the world’s inhabitants? Possibly not. That’s loopy. Nevertheless it’s not so unimaginable to get to 10% or 15%. So we expect there’s nonetheless tons and many progress available, and we’re fortunate to have music as our core enterprise as a result of it actually has a really massive TAM [total addressable market].
May you clarify to our readers the way you and Gustav Söderström [pictured inset] will break up decision-making going ahead as Co-CEOs…
After all. To start with, each of us have been at Spotify for a decade and a half. We each labored actually carefully with Daniel for a protracted, very long time. We’ve got spent a variety of time speaking to one another daily for 15 years, and have been pushed to steadily tackle extra accountability and be extra accountable for Spotify. And so the change you’re seeing is gradual.
And extra not too long ago – we’re speaking two and a half, virtually three years in the past now – Daniel gave us much more accountability to tackle extra of the day-to-day and overseeing technique and operations of Spotify.
“We do have our totally different domains and specialties, however what’s necessary is that we deal with all the pieces collectively.”
And in that second, we determined to work collectively, virtually joined on the hip, to deal with Spotify’s alternatives and issues. We’ve got assembled an built-in crew to develop new instruments that can lead the corporate, and the outcomes have been substantial. The influence has been large over the past two to 3 years.
And to return to your query, the break up there on the floor is apparent: Gustav’s area experience lies inside product and expertise. Mine is inside subscribers on the buyer finish, after all, together with promoting and content material. I oversee our renewals, interface with the music trade and artists, and handle the opposite verticals as effectively. Additionally, the advertising and markets.
We do have our totally different domains and specialties, however what’s necessary is that we deal with all the pieces collectively, and we additionally know one another’s areas. There’s a variety of respect for one another’s area experience. Gustav is deeply keen on enterprise. I like to consider myself as a product man as effectively. So, we acquire extra mind capability by combining our particular person capacities, integrating one another right into a single function and accountability set.
Spotify
The announcement talked about that Daniel Ek will nonetheless decide capital allocation in his new function as Govt Chairman. Does that imply that main M&A selections would nonetheless sit with him, or would that be a joint decision-making course of between you and Gustav in collaboration with Daniel? How would that work?
Daniel has been speaking lots about him taking up the teaching function and being extra of a coach than a participant. And to be trustworthy with you, he’s been doing that function actually, very well.
And as he transitions into Govt Chairman, he’ll deal with the lengthy arc of the corporate.
And once more, that’s one thing that we take pleasure in coping with collectively. And so far as the function of coach right here, clearly we take that very severely. And we expect that’s largely how we’ve got operated up to now few years already. So there needs to be no large surprises.
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You highlighted a statistic about 3% of the world’s inhabitants paying for Spotify, and also you stated reaching 10-15% of the world’s inhabitants as paying subscribers is “not unimaginable” – what must occur to get there?
An important factor right here is that music is one thing great. Virtually everybody on this planet has a relationship to it – typically even earlier than they get uncovered to language. And so it’s our job to determine easy methods to convey artists’ work to customers wherever on this planet.
So name me loopy, however I consider that is the most important alternative there’s in shopper merchandise, and you’ll see that in how a lot individuals interact with artwork and music.
So I simply assume the chance could be very massive. And for us, we’re in a very good place. We’re going to proceed so as to add worth and ensure we remedy issues for customers and subscribers.
On yesterday’s name with analysts, You in contrast present progress alternatives to “the start of LATAM” – what particularly reminds you of that interval?
That’s a very good query. It’s apparent that the US and Western Europe are additional alongside of their improvement of adopting streaming providers and subscriptions. However there’s a variety of progress nonetheless available in these areas.
Now LATAM, which you’re asking about, isn’t as far alongside. So we’re seeing numerous progress there in and round Mexico and Brazil [for example].
“It’s fascinating to see the numerous progress rising from these areas, and I believe it’ll comply with within the footsteps of Latin America, finally additionally reaching Western Europe and the US.”
I additionally talked about yesterday that we’re seeing a variety of progress popping out of India. India is a incredible nation that’s rising its GDP by 8% yr over yr, and it’s going to proceed to do this for the foreseeable future.
It’s a really populous nation of 1.4 billion individuals. In actual fact, I believe it’s bigger now than China. Moreover, you’ve Bangladesh and Pakistan, in addition to Southeast Asia, which continues to develop. A variety of these markets are very bottom-heavy of their inhabitants pyramid, which signifies that they’ve a variety of younger customers, they usually’re nearly taking on streaming merchandise like ours.
It’s fascinating to see the numerous progress rising from these areas, and I believe it’ll comply with within the footsteps of Latin America, finally additionally reaching [the adoption levels of] Western Europe and the US.
You particularly talked about India, Bangladesh, Pakistan and markets inside Africa as progress alternatives. However these are additionally a number of the lowest ARPU markets. How do you steadiness quantity progress in these areas with sustaining and driving that world profitability Daniel Ek talked about reaching for the primary time final yr?
We think about each market particularly and easy methods to deal with the alternatives there.
And it’s apparent that our ARPU is totally different all over the world, however we have a look at every market in another way, not simply on the subject of easy methods to bundle and value a product, however clearly additionally on the subject of content material and easy methods to do advertising, and so forth.
And we’re equally comfortable when there’s progress in India in addition to LATAM, or any market in Europe or the US.
You talked about earlier within the name about driving worth for listeners when it comes to the merchandise obtainable by way of Spotify. There was a variety of discuss round ‘SUPER PREMIUM‘ tiers this yr. How a lot of a chance do you see in Spotify’s subscription choices changing into ‘segmented’ with higher-priced tiers on prime of the present Premium providing, or do you see an even bigger alternative in additional frequent value will increase of your current tiers?
It’s a very good query that’s been requested many occasions. We’ve got a really excessive bar at Spotify on the subject of delivery merchandise, and we’re working actually laborious to attain that on the subject of add-ons and various kinds of extra merchandise to our present portfolio set.
And the best way to consider it’s in the event you take a peek at what’s happening in audiobooks for Spotify. Three months in the past we launched an add-on for audiobooks [Audiobooks +].
“We’ve got a really excessive bar at Spotify on the subject of delivery merchandise, and we’re working actually laborious to attain that on the subject of add-ons and various kinds of extra merchandise to our present portfolio set.”
You’ll be able to think about the identical recipe for music, or related recipe, the place you mainly have your free product, you’ve a Premium product, and you’ve got add-ons on prime of that.
Proper now, it’s one in audiobooks. Possibly there might be extra. And proper now, we’re seeing an excellent pure segmentation and self-selection into these totally different merchandise inside that vertical. And it’s working.
And for music, there are a variety of totally different segments of individuals and audiences. Trying lengthy into the longer term, it’s virtually like a layer of mosaic on prime of this base layer that we’ve had for thus a few years.
We’ll preserve investing in additional worth there. However on prime of this, we’ll have a look at all of the totally different segments and attempt to construct merchandise and add-ons.
Daniel Ek wrote that Spotify has “helped reshape an trade that isn’t solely rising once more, however reaching new heights.” However you’re additionally competing with tech giants like Apple, Amazon, and YouTube for listeners’ and viewers’ consideration. How do you preserve Spotify’s positioning out there?
We clearly can’t communicate to the competitors, however Gustav and I each nonetheless view Spotify as a startup – an enormous, large startup that’s rising. And our focus is, once more, relentlessly to maintain including worth and fixing issues for subscribers and customers. That’s how we’ll win. That’s how we’ll proceed to develop and obtain a very good place within the trade.
“Clearly, we regulate competitors and what’s happening out there – however we undoubtedly focus extra on ourselves and the way we differentiate, and the way we preserve fixing issues for customers.”
Clearly, we regulate competitors and what’s happening out there – however we undoubtedly focus extra on ourselves and the way we differentiate, and the way we preserve fixing issues for customers.
I imply, it’s fairly insane. We’ve talked in regards to the 3% of the world’s inhabitants subscribing to Spotify, however there’s additionally a quantity that we haven’t shared that a lot, and that’s that 90% of customers say that Spotify is important to their each day life. That’s insane to consider.
Gustav stated on the decision that his prime three priorities are all AI-related and in contrast AI to the cell shift. I’m curious, from a enterprise perspective, what’s the most important alternative and what’s the most important threat with regard to AI for Spotify?
At each paradigm shift, the door opens up for enormous progress and a variety of new alternatives. Gustav and I’ve each lived via a few these, beginning with the dot-com growth of the late Nineteen Nineties and early 2000s, and persevering with via to Net 2.0, which formed the trade over the past 10 years. After which the smartphone got here alongside as an enormous shift, [followed by] social media, and the globalization of all these providers as effectively.
“Each of us are very clear-eyed on the truth that AI is the most important shift that we’ve got ever seen.”
And now we’re getting into the age of AI. Each of us are very clear-eyed on the truth that that is the most important shift that we’ve got ever seen.
And being the buyer enterprise we’re at this time, with the footprint we’ve got at this time, the potential is simply immense for us. So we’re each very, very enthusiastic about what’s coming, each on the expertise aspect, however in addition to, clearly, the chance for doing extra enterprise and fixing extra issues for customers, and likewise supporting the expansion of the music trade.
On that time, when it comes to the music trade, you talked about the renewals that you just’ve accomplished this yr with Common, Warner, Sony, Kobalt, Merlin. May you give us an replace on Spotify’s enterprise improvement momentum and relationship with the broader music trade at this time?
Such as you stated, we’ve simply accomplished renewals with UMG, Sony, Warner, Merlin, and the checklist goes on. You’ve written about it.
And the underlying philosophy we’ve got in these renewals could be very fundamental: we view the music trade’s issues as our personal at this time. As a result of ultimately, we’re tied to one another. Like I’ve stated many occasions earlier than, the present relationships are simply higher than they’ve ever been.
Daniel wrote one thing in his leaving notice that obtained me excited about Spotify’s positioning within the enterprise of music and tech but additionally within the public area. He stated “all eyes (and ears) are on us”. You’re a publicly traded firm, and your monetary and person metrics are closely scrutinized. You’re additionally a distinguished shopper product that acts as a conduit for creators to distribute their music, audiobooks, and podcasts to listeners. How do you view your and Gustav’s roles as leaders of Spotify in balancing the wants of these totally different stakeholders – buyers, creators, and customers?
One of many issues that Daniel has pushed us to study and get extra publicity to up to now three years is to have the ability to deal with a number of stakeholders, and we’ve got.
We’ve got actually engaged past the stakeholders that we’ve been addressing earlier than. So we’ve got been a part of analyst calls. I’ve personally spent a variety of time within the music trade the previous three years, main our renewal efforts.
Gustav has hung out on the expertise aspect; I spend time on the enterprise aspect. The coaching wheels have been on, however they’re coming off now, and we consider we’re very well-positioned to proceed doing extra of what we’ve got accomplished.
