Spotify shares fall, subscriber growth slows amidst Joe Rogan COVID-misinformation row

Shares of Spotify tumbled Wednesday after the music streaming service – roiled in controversy over its star podcaster Joe Rogan – projected lower profit margins in the coming earnings period as subscriber growth slows. The company reported solid increases in the fourth quarter in terms of monthly active users and 180 million premium subscribers, in line with earlier forecasts. But the streaming service forecast its first quarter 2022 gross profit margin would fall to 25 percent from 26.5 percent. And it projected adding just three million premium subscribers in that period, a marked slowdown from recent quarters. Over the last week, Spotify has been hit with the defection of several music superstars including Neil Young and Joni Mitchell over its handling of Rogan’s controversial statements on Covid-19 vaccines. Executives nevertheless touted the platform’s long-term growth potential and broadly defended their handling of the Rogan controversy, adding that it was too soon to know how it would affect the company’s financial performance. Spotify’s shares fell 10.9 percent to $171.00 in after-hours trading. The stock has fallen sharply steeply over the last year, along with other “stay-at-home” stocks that benefited from the disruptions to daily life caused by the Covid-19 pandemic. The company reported a quarterly loss of 39 million euros ($44.1 million) as revenues increased 24 percent to 2.7 billion euros. Spotify pointed to “continued momentum in our subscription business and meaningful advertising results,” adding that “we see a tremendous amount of greenfield on the horizon.” Spotify’s press release made no mention of the Rogan controversy, while emphasising that consumption trends on the podcasting platform “remained strong.” - Too early to gauge impact - On Sunday, Chief Executive Daniel Ek announced that Spotify would add a content advisory to any podcast that discusses Covid-19, directing users to government health authorities and other trusted sources. The move followed criticism from Young and other artists who left the platform after a call from medical professionals to prevent Rogan from promoting “several falsehoods about Covid-19 vaccines.” On Wednesday, Young’s former bandmates from Crosby, Stills, Nash and Young said they had asked their labels to remove their recordings from Spotify. Ek addressed the matter in opening remarks and again in response to repeated questions from analysts. While saying Spotify could have articulated its policy sooner, Ek said he was pleased with how the company responded. “We’re trying to balance creative expression with the safety of our users,” Ek said. “We don’t change our policies based on one creator nor do we change it based on any media cycle, or call from anyone else,” he said. “Our policies have been carefully written with the input from numbers of internal and external experts in this space.” Ek said it was “too early” to gauge the impact of the Rogan controversy on his business, adding “usually when we’ve had controversies in the past, those are measured in months and not days.”