The Scandinavian streaming platform Spotify has long conquered the music world and continues to be its undisputed leader. But Spotify would not be itself if it did not continue to rapidly develop in different directions. And today, one of the most important areas of Spotify’s development is the podcast market, where Apple Music has traditionally led, which has been especially evident in the US.
Podcast Investments
In just 16 months, the Swedish audio platform has invested more than $600 million, mainly in content publishers, to become a giant in this sector. Spotify is positioning itself as a leading player in the world and is accelerating the transformation of this format, causing some resistance along the way.
According to specialized company MIDiA Research, Spotify has already surpassed Californian Apple, the historical benchmark, as the first means of listening to podcasts in the first quarter in North America and the UK.
“They have achieved success very quickly,” – said Mark Mulligan, director of MIDiA Research. “Podcasting is a great opportunity for Spotify to diversify its revenue,” – he explained. “But it’s going to take a long time,” – he said.
However, he said, direct revenues are currently low, with podcasts accounting for just 1% of Spotify’s ad revenue.
This economic model is beneficial in the long term because, while it costs a fortune to create its own work, the platform doesn’t pay royalties on podcasts, unlike what happens with music.
Another benefit is that Spotify’s free version places ads next to podcasts, and content creators don’t get any money.
A Broken Ecosystem
The format’s longtime players, as well as many current users, are deeply attached to the open architecture that has long allowed any platform to offer all podcasts. But newcomers have long been trying to make their mark with exclusive content, notably Luminary and Majelan, which are betting on the paid subscription formula, another block in the sector. “To some extent, we should be concerned that Spotify is successfully locking out entire parts of this open ecosystem,” Arment warned on his Accidental Tech podcast.
The concerns fall on podcast producers, who will lose out on some of the advertising revenue Spotify generates, but especially on competing platforms, whose survival could be at risk.
Other podcast heavyweights, like radio giant iHeart, do not practice this exclusivity policy and are available everywhere to the roughly 104 million Americans who listen to at least one podcast per month (37% of the population).
The general consensus is that while Spotify is worried about more than one player in the podcast space, it does not threaten the diversity of content. Behind the most popular programs are many others that depend on direct financial contributions from listeners, mandatory or not.
Incidentally, the Scandinavian streaming platform has begun testing its own voice assistant, which will work when the app is open and the mobile phone is unlocked. The device also activates with the “Hey Spotify” command and has been shipped to some Premium users in the US. However, the company has said it has no plans to sell it at this time.
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