By tech and by acquisition: inside Spotify's podcast expansion plan

The Drum 17 Mar 2020 02:00

Spotify’s big podcast bet hinges on growing its stable of original content while hoping other podcasters will put their inventory in the hands of a competitor.

As of the audio streaming giant’s 5 February earnings report, Spotify has over 700,000 podcasts on its platform.

That number is set to grow once Spotify closes on its acquisition of The Ringer, which boasts an array of popular podcasts, at the end of the first quarter for between €130 to €180 million ($141 million to $196 million).

“We're making aggressive strides in that marketplace,” Spotify global head of advertising sales Lee Brown tells The Drum.

Podcasts expose all of Spotify’s 271 million monthly active users, whether or not they use the ad-free version of the platform, to ads. Over half of Spotify’s users are on the ad-supported tier, but only 12% of the company’s overall revenue comes from that set of users.

Over the last year, the Swedish-based company has bought The Ringer, Parcast, Gimlet and Anchor. Depending on final considerations and deal incentives, Spotify is set to invest around $582m in podcasting.

“And as it relates to third-party content, [as in] content that we've just licensed and put on the service, right now, all monetization is their own, and we're not participating in that.”

“Our studio business is getting started cranking out production for our owned and operated [podcasts],” says Brown.

A Spotify spokesperson said the company is currently focused on testing SAI with its originals and exclusive podcasts, and will "continue to explore" other possibilities for the product.

“That's the model that we're innovating,” says Brown, who joined Spotify last September following the departure of former sales boss of Brian Benedik.

Spotify declined to comment on this potential conflict.

“If you have a really great editor, and you have a host that's really flexible, you can actually do [SAI],” says Smyk. “It's just very hard to do it well.”

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SpotifySpotify globalDaniel ElkLee BrownBrown