Spotify’s Multi-Million Dollar Bet on Their Podcast Service May Not Be Working Out As Planned
Sometimes listening to your same favorite songs on a playlist can be repetitive and predictable. There are times you may opt to hear a discussion on a particular topic of interest, or a conversation between two or more hosts. Podcasts are a form of entertainment that serve as a great substitute for music. They are very similar to radio shows, however they are more interactive in the sense that the listener is almost engaged in a conversation, rather than listening to one. As many know, Spotify has been one of the top contenders for podcast distribution and have been looking to use this service to expand their company as a whole.
Spotify placed a multi-million dollar bet on their podcast streaming services by claiming that by introducing exclusive content to their platform, the company would strengthen its advertising business and attract more premium users. Some podcasts are already exclusive to the app such as “The Joe Rogan Experience” podcast. Many investors seemed to have liked this message, and put their money towards Spotify's stock in hopes that this prediction would earn them a high return on their investment. So much so, that in 2019 they raised the stock by 31.76% and in 2020, 110.4%. However, after nearly two years since this claim, analysts are looking to see that these investments were worth the money. According to Citi analysts, “To date, we have not seen a material positive inflection in app downloads or Premium subscriptions”. This has been disappointing to the company’s investors, who are seeing little to no return on their investment.
In addition to the lack of results brought by Spotify’s podcast service, Apple is now coming out with their own podcast subscription service, putting them in direct competition with Spotify and other podcast services. Although Apple has been known to distribute podcasts, they are now introducing a service in which Apple Music users can fully subscribe to a show and receive notifications when a new episode is released on their platform. Apple has also been known as the “sleeping giant” in the podcast industry. However, now that they are “waking up” both companies are racing to find different ways in which they can make their podcast streaming service look more desirable to the market.
Overall, while Spotify’s podcast streaming service has not brought in the results it predicted two years ago, it is still considered one of the most popular podcast distribution and streaming services in the industry. With Apple finally taking part in the action, Spotify is met with its biggest competitor not only in music streaming, but now in podcasting. At this point, it is only a matter of time before one of both companies starts advertising new deals and exclusive content in an effort to persuade more subscribers towards one platform.
