Alex Norström doesn’t need you to consider Spotify as a tech big. He needs you to consider it as “a giant, 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 practically twenty years as CEO, assuming the function of Government Chairman. He defined the technique behind the transfer on a name with analysts yesterday, which you’ll 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 operating a lot of Spotify’s day-to-day operations for practically three years, with Ek more and more taking over what Norström calls “a training function.”
The timing of the transition coincides with what Norström describes as Spotify hitting “each mark” – citing person development, 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 complete 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 business 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 current launches together with lossless audio (arriving as a Premium characteristic somewhat than a part of a super-premium tier), direct messaging capabilities throughout 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 companies is likely to be “loopy,” he doesn’t assume 10-15% is unimaginable.
That might translate to round a billion subscribers, a quantity he explicitly references as a longer-term aim.
The expansion, he believes, will come from markets like India, Bangladesh, Pakistan, and international locations 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 development 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, generally 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 aims as Spotify’s incoming co-CEOs, overlaying subjects corresponding to subscriber adoption, pricing technique, geographic development, Spotify’s relationship with the music business, and extra.
Credit score: Sir. David/Shutterstock
What’s on the prime of your to-do listing on day one as co-CEOs?
To start with, I might say every little thing goes rather well for us proper now. We’re hitting each mark on person development and subscriber [acquisition]. And what’s extra is that we’ve got, over the previous 5 years, constantly elevated engagement, which is a good proxy for individuals persevering with to like Spotify.
We’re taking market share. We’re not dropping a whole lot of customers after we increase costs. We’re rising the payouts to the music business, to artists, to podcasters, to authors, and so forth. So we’re actually in a very good place.
After which if you consider, what our focus goes ahead, you may give it some thought in two methods. One is, we’ll relentlessly hold including worth again to subscribers and customers. We are going to push the boundaries in terms of innovation, and we’ll proceed to work actually arduous, hold our bar actually excessive, and attempt to ship.
“Do I feel we’re going to get to 99% of the world’s inhabitants? Perhaps 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 an extended, 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 listing simply goes on and on. So I’m tremendous happy concerning the tempo of delivery [products], as a result of it’s about the identical factor: it’s including worth again. That’s vital to me.
After which there’s an additional, longer outlook. I have a look at the expansion alternative of Spotify. There’s nonetheless a lot left. Take into consideration the subscriber rely we’ve got right now – we contact roughly 3% of the world’s inhabitants.
Do I feel we’re going to get to 99% of the world’s inhabitants? Perhaps not. That’s loopy. Nevertheless it’s not so unimaginable to get to 10% or 15%. So we predict there’s nonetheless heaps and many development 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 intently with Daniel for an extended, very long time. We’ve got spent a whole lot of time speaking to one another each day for 15 years, and have been pushed to regularly 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, nearly 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 completely different domains and specialties, however what’s vital is that we handle every little thing collectively.”
And in that second, we determined to work collectively, nearly joined on the hip, to deal with Spotify’s alternatives and issues. We’ve got assembled an built-in workforce to develop new instruments that may lead the corporate, and the outcomes have been substantial. The influence has been large during the last two to a few years.
And to return to your query, the break up there on the floor is clear: Gustav’s area experience lies inside product and know-how. Mine is inside subscribers on the buyer finish, after all, together with promoting and content material. I oversee our renewals, interface with the music business and artists, and handle the opposite verticals as properly. Additionally, the advertising and markets.
We do have our completely different domains and specialties, however what’s vital is that we handle every little thing collectively, and we additionally know one another’s areas. There may be a whole lot of respect for one another’s area experience. Gustav is deeply excited about enterprise. I like to consider myself as a product man as properly. So, we achieve 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 Government Chairman. Does that imply that main M&A choices 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 loads about him taking over the teaching function and being extra of a coach than a participant. And to be sincere with you, he’s been doing that function actually, rather well.
And as he transitions into Government Chairman, he’ll deal with the lengthy arc of the corporate.
And once more, that’s one thing that we get pleasure from coping with collectively. And so far as the function of coach right here, clearly we take that very critically. And we predict that’s largely how we’ve got operated prior 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?
Crucial factor right here is that music is one thing great. Virtually everybody on this planet has a relationship to it – generally even earlier than they get uncovered to language. And so it’s our job to determine the best way to deliver 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 may 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 clear up issues for customers and subscribers.
On yesterday’s name with analysts, You in contrast present development 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 companies and subscriptions. However there’s a whole lot of development nonetheless available in these areas.
Now LATAM, which you’re asking about, is just not as far alongside. So we’re seeing numerous development there in and round Mexico and Brazil [for example].
“It’s fascinating to see the numerous development rising from these areas, and I feel it’ll observe within the footsteps of Latin America, ultimately additionally reaching Western Europe and the US.”
I additionally talked about yesterday that we’re seeing a whole lot of development popping out of India. India is a improbable 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 truth, I feel it’s bigger now than China. Moreover, you may have 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 implies that they’ve a whole lot of younger customers, and so they’re nearly taking over streaming merchandise like ours.
It’s fascinating to see the numerous development rising from these areas, and I feel it’ll observe within the footsteps of Latin America, ultimately additionally reaching [the adoption levels of] Western Europe and the US.
You particularly talked about India, Bangladesh, Pakistan and markets inside Africa as development alternatives. However these are additionally a few of the lowest ARPU markets. How do you stability quantity development in these areas with sustaining and driving that international profitability Daniel Ek talked about attaining for the primary time final yr?
We think about each market particularly and the best way to handle the alternatives there.
And it’s apparent that our ARPU is completely different world wide, however we have a look at every market in another way, not simply in terms of the best way to package deal and worth a product, however clearly additionally in terms of content material and the best way to do advertising, and so forth.
And we’re equally glad when there’s development 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 out there through Spotify. There was a whole lot of discuss round ‘SUPER PREMIUM‘ tiers this yr. How a lot of a possibility do you see in Spotify’s subscription choices turning into ‘segmented’ with higher-priced tiers on prime of the present Premium providing, or do you see an even bigger alternative in additional frequent worth will increase of your present tiers?
It’s a very good query that’s been requested many occasions. We’ve got a really excessive bar at Spotify in terms of delivery merchandise, and we’re working actually arduous to realize that in terms of add-ons and several types of extra merchandise to our present portfolio set.
And the way in which to consider it’s for those who take a peek at what’s occurring 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 in terms of delivery merchandise, and we’re working actually arduous to realize that in terms of add-ons and several types of extra merchandise to our present portfolio set.”
You’ll be able to think about the identical recipe for music, or comparable recipe, the place you principally have your free product, you may have a Premium product, and you’ve got add-ons on prime of that.
Proper now, it’s one in audiobooks. Perhaps there will probably be extra. And proper now, we’re seeing an excellent pure segmentation and self-selection into these completely different merchandise inside that vertical. And it’s working.
And for music, there are a whole lot of completely different segments of individuals and audiences. Trying lengthy into the long run, it’s nearly like a layer of mosaic on prime of this base layer that we’ve had for therefore a few years.
We’ll hold investing in additional worth there. However on prime of this, we’ll have a look at all of the completely different segments and attempt to construct merchandise and add-ons.
Daniel Ek wrote that Spotify has “helped reshape an business that’s not 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 keep Spotify’s positioning out there?
We clearly can’t communicate to the competitors, however Gustav and I each nonetheless view Spotify as a startup – a giant, 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 business.
“Clearly, we control competitors and what’s occurring out there – however we positively focus extra on ourselves and the way we differentiate, and the way we hold fixing issues for customers.”
Clearly, we control competitors and what’s occurring out there – however we positively focus extra on ourselves and the way we differentiate, and the way we hold fixing issues for customers.
I imply, it’s fairly insane. We’ve talked concerning 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 crucial 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 danger with reference to AI for Spotify?
At each paradigm shift, the door opens up for enormous development and a whole lot of new alternatives. Gustav and I’ve each lived via a few these, beginning with the dot-com growth of the late Nineties and early 2000s, and persevering with via to Internet 2.0, which formed the business during the last 10 years. After which the smartphone got here alongside as a giant shift, [followed by] social media, and the globalization of all these companies as properly.
“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 coming 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 right now, with the footprint we’ve got right now, the potential is simply immense for us. So we’re each very, very enthusiastic about what’s coming, each on the know-how facet, however in addition to, clearly, the chance for doing extra enterprise and fixing extra issues for customers, and in addition supporting the expansion of the music business.
On that time, when it comes to the music business, you talked about the renewals that you simply’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 business right now?
Such as you stated, we’ve simply accomplished renewals with UMG, Sony, Warner, Merlin, and the listing goes on. You’ve written about it.
And the underlying philosophy we’ve got in these renewals could be very primary: we view the music business’s issues as our personal right now. As a result of in the long run, 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 word that acquired me fascinated about Spotify’s positioning within the enterprise of music and tech but additionally within the public house. 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 completely different stakeholders – buyers, creators, and shoppers?
One of many issues that Daniel has pushed us to study and get extra publicity to prior 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 whole lot of time within the music business the previous three years, main our renewal efforts.
Gustav has hung out on the know-how facet; I spend time on the enterprise facet. 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 performed.
