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Spotify’s Billion-Dollar Bet on Podcasting Has Yet to Pay Off

@EQUITYMATES|27 June, 2022

Spotify has spent more than $1 billion over the past four years to solidify their position at the top of the podcasting heap. That spend can be broken into four buckets.

  • Buying podcast creative companies: For example, Gimlet for $230m and The Ringer for $200m
  • Buying podcast tech companies: E.g. Megaphone for $235m and Anchor for $100m
  • Exclusive licence deals with existing podcasts: E.g. Joe Rogan for $200m and Call Her Daddy for $60m
  • Exclusive licence deals with celebrities for new podcasts: E.g. $25m deals with The Obama’s and Prince Harry and Meghan

This Bloomberg piece covers an internal report commissioned by Spotify that looked at the return on this investment. It can be hard to measure whether such investments have been worth it. How many new listeners did these shows attract to the platform, and how many are just listening to the shows because they’re already on the platform? But according to this reporting from Bloomberg, Spotify’s conclusion was that these investments haven’t yielded the returns expected. Or at least, not yet.

In the first quarter of 2022, podcasts accounted for just 7% of listening hours on Spotify and just 2% of revenue. On the positive side, Spotify has surpassed Apple Podcasts as the number 1 podcast platform globally and podcasting has contributed to Spotify’s steady, consistent user growth (now at over 420m users, 182m paid). But on the negative, podcasting is still a loss making part of the business and Spotify’s big spending convinced others to join the fray – Amazon paid $300m for podcast studio Wondery and Sirius XM acquired podcast app Stitcher for $300m as well.

All of this comes at a difficult time for Spotify. The company’s share price has fallen 70% from its all time highs and it, like many of its unprofitable growth peers, is tightening its belt and preparing for some lean quarters ahead. Yet, Spotify cannot take their foot off the gas in the race that they created – paying top dollar for exclusive podcast content – for fear of losing listeners to Sirius XM, Amazon, or probably their worst nightmare, Apple if they ever decided to get into the exclusive content game.


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