Dawn Chmielewski & Supantha Mukerjee

STOCKHOLM/LOS ANGELES -Spotify forecasted Wednesday that current quarter subscribers would be lower than Wall Street’s expectations. However, executives tried to reassure investors by stating that the growth rate had not stalled despite the negative publicity surrounding The Joe Rogan Experience.

After Spotify (NYSE) announced the subscriber outlook, shares of the company fell 18% during late trading.

Paul Vogel, Spotify’s Chief Financial Officer and Interviewer after the publication was published, stated that Spotify would continue to grow its user base as well as their subscribers in this year.

Vogel stated to Reuters that while we do not yet have full-year guidance on subscribers, we expect no material change in net additions in users and subscribers between 2022 and 2021.

Following the initial shock, share prices fell by 3% to 9.9%.

Fourth-quarter revenue was higher than expected. The music streaming company had more ads and other services, such as podcasts. It also saw a 16% rise in premium subscribers.

To a new record, total active monthly users rose 18% and reached 406 millions.

The company however forecast current-quarter pay subscribers to be 183million, which is lower than the expectations of an expected 184 million. The revenue is forecast to exceed estimates at 2.60 billion euro.

Spotify announced that it will no longer provide annual guidance to subscribers.

Vogel explained, “So if we look at 21 as a kind of proxy for type of net additions that will be good in 2022 then it won’t materially differ.”

The streaming music service subscription has made over $1 billion investments in podcasting, with marquee shows like The Joe Rogan Experience.

However, the popularity of the podcast host also led to condemnation. His show airing controversial views on COVID-19 drew protests from Joni Mitchell as well as Neil Young.

Rogan apologized for his comments and Spotify stated that it will add content advisories in future episodes about COVID.

Daniel Ek, chief executive officer of the company said that they already have a substantial content moderation department in place.

Ek said to Reuters, “We have taken actions on more than 20,000 Podcasts since the outbreak of the pandemic.” That tells us a lot about this operation’s scale. It is truly global.

Ek admitted the Rogan scandal at the beginning of earnings conference calls and said it provided learning opportunities. Spotify CEO Ek stated that he is proud of the actions taken to address concerns expressed by scientific and medical professionals. Policies were also developed using input from both external and internal exports.

Ek stated that Joe is a huge podcaster, but he has to adhere to certain policies.

Spotify announced that podcast consumption hours reached an all time high. It also increased its podcast subscriptions to 33 markets, and made it possible for podcast users to access podcasts from Russia, Egypt, and Saudi Arabia.

The company’s premium subscribers, who account for the majority of its revenue, grew to 180 million. This is higher than analysts expected of 179.9million.

According to Refinitiv data, IBES data showed that quarterly revenue increased to 2.69 billion euro ($3.04 trillion) from the previous year. This is more than the 2.17 billion expected by analysts.

Users who listen to advertisements saw a 40% increase in revenue, which is 15% of total revenue.

Richard Greenfield, analyst at LightShed Partners said that investors largely neglected Spotify’s advertising businesses during Spotify’s initial years as an public company. However, subscriber growth dominated the narrative.

Spotify has transformed from being a music platform into an audio platform, with audiobooks, podcasting and live audio. This has opened up the possibility of a strong advertising business, which is too big for investors to overlook.

Spotify entered the podcast market in 2018, acquiring a number of companies to rival Apple Inc (NASDAQ). It has been the biggest podcaster to dethrone Apple since then, having launched a podcast subscription platform in the U.S.

Podcasts are a different business model than the music industry, which tends to be commoditized. It pays only a small percentage of revenue to rights holders. Instead, they engage listeners for hours and create valuable advertising inventory. This has helped Wall Street maintain its optimism about the future.

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