Why Spotify Wants More Users to Listen to Podcasts
Guest Post
In the last couple of years, Spotify has become the second-biggest podcasting platform in the world – and through its strategic acquisition of Ringer, licensing of Joe Rogan’s podcast, acquisition of Gimlet, and now Megaphone, it’s poised to rise even further.
In the past, Spotify’s focus was squarely on music, but CEO Daniel Ek now believes that there are opportunities to engage users in an entirely new way. While competing with the billion-dollar video industry may be a challenge, he believes that people spend almost as much time on audio as they do on video, which means that demand for podcasts will keep growing. And with its roll-out of video podcasts earlier this year, it’s clear that the audio giant wants a bigger slice of the pie, or at least some of video’s market share.
Despite being a big hitter in the podcasting space, music still brings in the most revenue – and listeners – to Spotify. But Lydia Polgreen, the new head of content at Gimlet Media, wants that to change. “Our goal is to get people into the habit of listening to content on Spotify that’s not music,” she said.
This shouldn’t be hard to achieve. Podcasting is more popular than ever, claiming a 6 percent share of audio consumption in the United States alone. With much of the world living under lockdown, or spending more time alone, we’re consuming more digital content than years gone by. Spotify’s recent acquisition of leading podcast companies show that they want to up their game – and fast.
Radio is back – but not as you know it
To get the ball rolling, Polgreen has been busy experimenting with vodcasting and finding ways of providing short-form audio content using Spotify’s predictive algorithm. “Just as Spotify helped people discover the best music for them — it didn’t just know what you liked, but it was able to predict what you might like,” Polgreen said. “There’s a lot of really fascinating work going on at the company that’s trying to solve this problem for spoken word audio too.”
One example is a morning show that she launched in October called The Get Up. Available from 7 am on Spotify’s Made For You and Drive hubs, it’s just like morning shows on FM radio, but with a difference. Firstly, it’s pre-recorded, which means you can access it anytime, skip segments, or listen to it multiple times. And most importantly, the music you hear is selected using Spotify’s predictive algorithm. In other words, radio without the boring bits, or the songs that make your teeth clench. What it doesn’t offer is the interactive element of live radio, like contests and call-ins, but not everyone wants to win a jet ski or answer a poll on who wore it best. But who knows, that might change in the future.
Play it again, Sam
New programs and custom playlists are not the only ways that Spotify is redefining the podcast space. With the company’s extensive music catalog and licensing deals, podcasters can now incorporate more music using Spotify’s podcast creation platform, Anchor. This platform allows them to combine spoken word and full-length songs that you know and recognize. That’s right, no more royalty-free music or awkward silences. For years, content creators have been stymied by the prohibitive cost of using music in their podcasts. But with Anchor, creators can play their favorite songs without infringing copyright. Why? Because Spotify’s million-dollar licencing deals make it possible. You can even skip a song during the podcast or play it again later.
As you’d expect, this feature is only available through Anchor, which is exclusive to Spotify. So if content creators want to take advantage of this feature, they’ll need to join the platform. This is a boon for the Swedish-based audio giant. Not only does it have the potential to grow and diversify its podcast offerings, it’ll draw more subscribers and – best of all – more advertisers.
According to a podcast revenue study, US podcast advertising revenue is expected to increase by 14.7 percent in 2020 – despite the challenges of COVID. Podcasting has proven to be more agile and resilient that other media platforms, which means that advertisers want to cash in. Small businesses may be able to advertise on niche podcasts that are a closer match to their target market and therefore more likely to reap a better return on investment. There’s no doubt that Spotify’s recent acquisition of Megaphone (a Virginia-based podcast ad platform) was part of this strategic plan. With its expert planners and cutting-edge technologies, Megaphone could take their ad sales to the next level.
Where to from here?
Splurging on new companies is not the only thing that’s kept Spotify busy this year. They are following a set of core principles designed to produce rapid growth as an organisation. In addition to its new morning show, it revamped its drivetime program and launched a wellness series and sports show. Polgreen also has ideas for a daily, soap opera-style fiction podcast and a 60 Minutes-style series – but these are still in the pipeline.
Spotify has also been testing interactive features that could be rolled out in the future. In June it tested a new “In-App Offer” that allows podcasters to embed a link that takes you straight to an advertiser’s page without using a promo code. In September it tested an Instagram-style feature – polls – which allowed listeners to vote anonymously on a range of topics and see the results in real time. If this feature gets rolled out, hosts and listeners would get instant feedback without the use of email or tweets, which could boost audience participation and even shape programming.
Podcasting is experiencing unprecedented growth, and its potential to entertain, inform, and empower – even during pandemic-stricken times – is not lost on Spotify. The acquisition of podcast studios like Gimlet will allow them to harness industry expertise, while the purchase of Megaphone will enable them to deliver scale to advertisers. Not only will this have the potential to generate more income for Spotify, but it’ll help increase revenue for podcast creators – and that would be the ultimate reward.