![]() Podcasts at the time were a small but-growing medium that drew young, educated listeners, a demographic appealing to advertisers. Spotify in 2018 set its sights on podcasting after executives noticed a spike in demand for audiobooks and podcasts in Germany. Whether or not Spotify’s investment pays off, it has helped lift podcasting from a medium to an industry, said Donald Albright, co-founder of Tenderfoot TV, the maker of hit podcasts, and a producer of “Kim Kardashian’s The System."īy casting as broad a net as possible, Spotify now hopes to capture enough listeners and sell enough ads to make good on its billion-dollar bet. News Corp’s Dow Jones & Co., publisher of The Wall Street Journal, has a content partnership with Spotify. Among its original shows are the Pulitzer Prize-winning nonfiction podcast “Stolen," as well as “Heavyweight," which explores people’s regrets, and “Serial Killers." It also carries thousands of podcasts from other publishers and media companies. Spotify’s library of more than five million shows includes fiction, nonfiction and personality programming. ![]() “We have a very strong portfolio now which does that." “We’ve been very focused on pursuing shows that drive really loyal audiences and also attract advertisers," said Sahar Elhabashi, head of Spotify’s podcast business. The company expects podcast ad revenue to grow 30% this year, ahead of Spotify’s overall revenue growth, executives have told staff in recent months. While the company probably overpaid for some content, Ek said, the investments helped Spotify achieve its goal of becoming the top podcast platform. ![]() Spotify reported €11.7 billion in revenue in 2022. ![]() Podcasts are only the first step toward Spotify’s goal of evolving from a music-streaming company to an audio giant, generating $100 billion in revenue by 2030. Sirius, iHeart, NPR and other podcast rivals have gone through their own podcast-related layoffs and budget cuts, part of a larger cost-trimming trend among media and technology companies this year.Ĭhief executive Daniel Ek has said he wants Spotify to be the world’s largest audio company, spanning audiobooks, education, sports and news. Spotify intends to pursue similar deals, executives said. The company recently agreed to pay comedian Trevor Noah $4 million in a deal that allows the company to collect revenue from the podcast to cover its investment, according to people familiar with the matter. Spotify has started to share more of the risk with its talent. In July, Spotify raised the price of core subscriptions by a dollar to $10.99 a month. It did away with its Parcast and Gimlet brands, consolidating its original work into a unit called Spotify Studios. Under pressure from investors to meet that profitability goal, the company in June laid off 200 employees, about 2% of its workforce, and culled shows to focus on a more limited stable of original and exclusive content. Spotify said it is on track to make its podcast business profitable in 2024. The company, which had 220 million paid subscribers to its premium service in June, said it has more than 100 million podcast listeners on its platform, 10 times what it had in 2019. Podcast costs at the company rose €29 million in the first half of this year. Facing competition across genres and formats, Spotify found that exclusive podcasts generally don’t draw subscribers away from its rivals. The pool of podcast listeners is growing, but the flood of shows on various streaming platforms makes it tough to break new hits. “The size of the bet up against the size of the market just seems irrational in retrospect," Evan Shapiro, a media consultant and producer, said of Spotify’s podcast investment. Spotify spent its way to the top of an industry that turned out to be less lucrative than it appeared when it began its podcast quest in 2018. That represents a tiny slice of the $200 billion digital-ad market. is expected to reach $2.3 billion this year, a 25% increase from 2022, according to the Interactive Advertising Bureau, an industry group, and is expected to more than double by 2025. Spotify’s competitors, including Amazon, Apple and Google, tech behemoths with their own audio streaming services, have other, more profitable businesses. No one in the business is making much money on podcasts, but Spotify, which has spent far more on the medium than its rivals, has more to lose than most. The company, which has struggled to report consistent profits, lost €527 million, equivalent to about $565 million, in the six months ending in June, on €6.2 billion in revenue. Most of its shows aren’t profitable, according to people familiar with the matter, and the company has recently cut staff and programming to slow its losses.
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