Spotify, the world’s biggest music streaming company, is looking to the future with new investments and innovations. The Swedish streaming giant, that recently launched in India, has set its eyes on podcasts. Spotify’s plan is to become a major player in the podcast sector. The company is already taking its first steps towards the new direction.
Into the World of Podcasts
Spotify had recently purchased New York podcasting companies Gimlet Media and Anchor FM. This prompted industry experts to believe that Spotify wants to become a major-league player in the podcasting world. The company’s overall strategy is now becoming clear.
According to a report by The Verge, the Swedish company said it intends to spend between $400 million to $500 million this year on podcast-related investments. This includes the acquisition of Gimlet Media and Anchor FM. The decision comes as Spotify looks for new opportunities to increase audiences along with subscription and ad-supported revenue. But the big question remains: how will Spotify itself into the go-to podcast destination?
Podcasts already generate substantial revenue for Spotify – bringing in an estimated $659 million by 2020. But the most difficult part of the problem is the discovery of podcasts. Helping listeners find the podcasts they want is critical. As The Verge states, there is no equivalent algorithm for podcasts as those used by Netflix for video. Spotify succeeded with music recommendations and wants to do the same for podcasts.
“The music that we feed to you through our discovery engine, through our machine learning is pretty darn good. Well, guess what? That team is now working on podcasts,” said Courtney Holt, Spotify’s head of studio and video.
The second big step being taken by Spotify is investment in content.
“You’ll see us double down on investment spending in podcast content, and increasingly you’ll see more of that become exclusive on the platform,” Spotify’s CFO Barry McCarthy told a Morgan Stanley conference.
McCarthy further said that Spotify wouldn’t be an “arbiter of taste”, but will optimise content creation and back shows it believes will succeed. He also that Spotify has lots of exclusive content as they are successful at predicting how much to spend and what to invest in.
Spotify is also looking to expand its podcasts to countries like Japan. It was reported by Japan Times that Spotify recently unveiled several platform-exclusive podcasts for the Japanese market namely The Nakajima Hiroto Show: Life Album and Pop Life: The Podcast. It also plans to focus on podcasts that teach the English language in Eastern countries.
Future of Podcasts
Spotify isn’t the only one turning towards podcasts to grow its subscriber base. Apple currently has a reported 55% of the podcast market as of 2017, according to Bloomberg.
The podcast market is still in its infancy with a mere $314 million spent in 2017, according to the IAB. That’s in comparison to almost $12 billion spent on the online video. But, in the US, podcast spending was up a huge 86% year-on-year. Globally, PwC estimates that by next year global podcast ad-spend will clear $1 billion.