The news dropped like a playlist bombshell: Spotify is partnering with Netflix to stream select video podcasts like The Bill Simmons Podcast, The Rewatchables, and Conspiracy Theories starting next year. At first glance, this might seem like just another content collaboration, but under the hood, it could reshape how Spotify’s platform is valued—and how its stock behaves. The move comes as Spotify crosses 700 million monthly users globally and hits 100 million subscribers in Europe alone. But not everything is firing on all cylinders: advertising growth remains tepid, and margin improvements have been hard-won. Investors looking for levers to drive upside now have something new to chew on. With Spotify’s stock trading at over $660 and at a steep 146.82x LTM P/E, expectations are baked in. So, does this Netflix partnership move the needle—or add more questions? Let’s break down the key factors that could shape Spotify’s future valuation in the wake of this development.
Global Audience Expansion Through Netflix’s Scale
Partnering with Netflix gives Spotify an immediate pathway to expand reach beyond the borders of its app ecosystem and into living rooms and browsers worldwide—without needing to acquire a single new user. Netflix boasts over 270 million paid subscribers globally, many of whom are not currently Spotify users. By putting premium shows like The Bill Simmons Podcast or The Zach Lowe Show on Netflix, Spotify is effectively taking its most bankable content and placing it in front of a new, paying audience that values lean-back video experiences. This move could help Spotify sidestep the saturation risks in mature music markets like North America and Western Europe, where music subscription growth is plateauing. Moreover, these shows will run ad-free on Netflix’s premium tier, preserving the user experience, while Spotify retains monetization rights via advertising within its own platform for its native version. From a brand perspective, it also cements Spotify’s identity beyond “just music” and more as a full-fledged media platform. With 65% of global audio music streams already happening on Spotify, the Netflix leap could drive an even larger share of attention. Whether these viewers eventually convert into Spotify users—or stay as top-of-funnel media consumers—remains to be seen. But it certainly gives Spotify leverage in attracting future creators, advertisers, and brand sponsors who see broader reach as a prerequisite. And with scale being one of the few cost advantages in this industry, more eyeballs across platforms helps Spotify preserve its narrow moat against tech giants like Apple, Amazon, and YouTube.
Licensing Revenues & Margin Enhancement
One often overlooked detail is how this partnership might subtly nudge Spotify’s margins higher—particularly around its growing library of in-house video content. Under the current music subscription model, about 65% of revenue is paid out to rights holders—50–55% to record labels for recordings and another 15% to music publishers. But video podcasts, especially those produced by Spotify Studios or The Ringer, have a different rights structure. Spotify owns or co-owns many of these properties, meaning revenue from third-party licensing agreements (like this Netflix deal) flows with far less leakage. In contrast to music’s rigid cost structure, where scale doesn’t reduce royalty rates, video content—especially proprietary video content—offers flexibility in monetization and cost. If Netflix pays a licensing fee or provides exposure that results in higher ad demand on Spotify’s own platform, that could help grow high-margin revenue streams. This is significant because despite improving gross margins—31.5% in Q2 2025, up 230 basis points year-over-year—the firm remains constrained by fixed music costs. Management has acknowledged that podcasts and audiobooks offer better margin expansion opportunities than music. As Spotify repositions its content as multi-format rather than audio-first, more licensing partnerships (or content syndication plays) could push blended gross margins closer to the firm’s long-term target of 34%. Considering Spotify’s current LTM EV/EBITDA multiple of 58x and Price/FCF of 38x, even marginal improvements in gross margin could justify the elevated valuation—at least until free cash flow scales further.
Strengthened Validation Of Spotify’s Video Strategy
Let’s not forget that Spotify has bet big on video—really big. In 2024, it went all-in by converting over 430,000 podcasts into video, launching creator tools, and doubling down on AI-driven personalization. This partnership with Netflix is more than content distribution—it’s a form of strategic validation. CEO Daniel Ek has made clear that Spotify wants to be a multi-format platform that captures a larger share of user time and attention. And while some might’ve viewed the video push as a defensive maneuver against YouTube or TikTok, this deal signals to the market that Spotify’s content is not only viable in video—it’s exportable. In tech, perception often drives multiple expansion, and this partnership adds credibility to the idea that Spotify’s platform can succeed outside the constraints of its own app. Importantly, this comes as Spotify attempts to unlock more advertising dollars via automated ad tech and programmatic tools. Ads are still a small chunk of revenue (roughly 10%) and have grown slower than hoped, but video could help improve engagement metrics that advertisers care about—completion rates, view times, and interactivity. If this leads to higher CPMs or increased brand interest, it helps validate the ad stack Spotify’s been building since acquiring Megaphone and Chartable. So while this deal may not move the needle materially overnight, it reinforces the company’s long-term strategy and could help defend its LTM EV/Gross Profit multiple of 21x as investors weigh the future of digital media platforms with diversified format capabilities.
Potential Erosion Of Platform Exclusivity & User Retention
There’s another side to this coin: what if Spotify cannibalizes its own moat? The company has long pitched its proprietary content—particularly in video podcasting—as a differentiator to keep users within its ecosystem. The Netflix partnership breaks that wall. Once The Bill Simmons Podcast is available to Netflix’s 270 million subscribers (without Spotify’s ads or app interface), users may find less reason to engage directly with Spotify’s platform. This potentially weakens the modest switching costs Spotify benefits from, such as playlist portability or in-app personalization. The broader risk is that content becomes so portable that Spotify ceases to be the destination and becomes merely one of several distribution pipes. While Spotify has claimed that only clips (not full episodes) will be made available on YouTube moving forward, full episodes on Netflix may dilute exclusivity even further. If a listener can access the same content elsewhere—especially within their existing Netflix subscription—they might forego upgrading to Spotify Premium or using the app altogether. This could slow subscriber growth in mature markets or put pressure on user engagement metrics, both of which are key drivers of valuation. With Spotify’s forward EV/Revenue multiple at 6.19x and forward P/E above 55x, any perceived softening in user stickiness could have outsized effects on stock sentiment. It also raises questions about whether Spotify can truly defend a video-first platform without owning the video real estate. For all the reach that Netflix provides, it also introduces platform risk if Spotify users begin to decouple their content consumption from Spotify’s interface.
Final Thoughts
Spotify’s new partnership with Netflix to co-distribute top video podcasts offers both strategic upside and potential platform risk. On one hand, it expands Spotify’s reach into new audiences, potentially opens up new licensing revenue, and provides validation for its video-centric content strategy. On the other hand, it may erode exclusivity and reduce direct user engagement with the Spotify platform—at a time when margin growth and ad monetization remain works in progress. With Spotify now trading at 146.82x LTM P/E and 38.09x FCF, the stock reflects high expectations for both profitability and innovation. Whether this Netflix collaboration becomes a blueprint for future monetization or a cautionary tale in content dilution depends on execution. Investors may welcome the additional top-of-funnel exposure but will likely watch user retention, premium conversion, and ad growth closely in the quarters ahead. For now, the move adds complexity to the Spotify story—at a valuation that leaves little room for error.
