Published on April 7th, 2019 | by Alan Cross1
The real reason Spotify is getting deep into podcasts
A year ago, the number of people accessing my Ongoing History podcast through Spotify was negligible. I mean, the number was really, really, really small. But one day in the fall of 2018, someone must have flipped some kind of switch because overnight–literally overnight–the number listeners jumped to almost 25% of the total. We’re not complaining, but it was a bit…weird.
Then Spotify went shopping, buying up a couple of podcast networks. That cost them hundreds of millions.
Why? What’s their endgame?
There’s a clever bit of thinking behind this–and it’s designed to save Spotify a lot of money.
Writing at Medium, Tom Webster of Edison Research, a company that looks works with the terrestrial radio industry, makes the point that Spotify wants to become more than just a platform where people stream music.
- Spotify wants to become the top audio platform on the planet. If that’s the case, they need to get into the spoken word space.
- By diverting more listeners away from music, Spotify won’t have to pay as much in streaming royalties.
“In its current form, Spotify’s best customers are not necessarily the ones who use the platform most. Every song that is played for every listener, Spotify has to cut royalty checks to pay the performer, composer, and other rights holders. The longer a Premium listener stays on the platform, the more of those checks get cut, and the more music-per-dollar value the Spotify Premium listener gets from the platform. If you are Spotify, the answer is NOT, “please listen less…” Instead, it’s to introduce content they actually own, like, say, podcasts. If the Spotify listener converts from 100% music to even 90% music, 10% podcasts, that’s a 10% decrease in checks cut to other entities on behalf of that listener.”
Like I said, clever.