Spotify’s grand plan to turn podcasts into riches

“Right now, most podcasts don’t make any money from advertising, because they aren’t big enough to sell ads directly to an agency,” says Evans. “But Spotify could aggregate podcasts and sell to advertisers based on who’s listening, rather than what they’re listening to, and make podcast advertising work more like ads on the web.”

In January, Spotify announced a suite of new advertising tools for podcasts which will hand information such as listening statistics, age, gender, and device to podcast hosts and advertisers paying for promotions in episodes. Its hope is that making this information available could drive up the rate charged for podcast ads.

Withrow has described a “virtuous cycle” in which the new tools “pull more revenue into the industry” and therefore makes it more attractive to new podcasters.

Spotify said on Wednesday that its podcast advertising saw “double digit growth” during lockdown, while its more traditional advertising products declined. “Overall, podcast advertising outperformed in the quarter with momentum continuing into July,” the company said.

And so the plan emerges – fiendish in the eyes of some podcast fans, but fairly simple. 

After a period of initial spending to get stars on board, its listenership will grow large enough, and its advertising system lucrative enough, to the point where other podcasters cannot afford not to use it. That would give it as much power over podcasts as Facebook has over news publishers.

But the path ahead is not without obstacles. The coronavirus pandemic caused listener numbers of some podcasts to drop as much as 30pc. 

Podtrac, a podcasts analytics business, warned in April that it had seen total unique listeners drop 20pc since the beginning of March as many listeners worked from home and stopped listening to podcasts during their commutes.

And many industry experts have expressed their discomfort at Spotify ending the previously open world of podcasts available on hundreds of different apps.

“Most likely, this deal will come to symbolise the moment when the open, RSS-based podcast ecosystem began to collapse,” wrote Product Hunt co-founder Nathan Baschez following the announcement of Spotify’s deal with Rogan.

“If there are any big holdouts among popular podcasters, who maybe don’t like Spotify’s closed ecosystem, or who sign exclusive deals with other players, then Spotify can’t present itself as a one-stop-shop, and podcast listening could become fragmented across a number of apps,” says Evans. “Some people even refuse to call what Spotify is offering ‘podcasts’.”

And if Spotify does succeed, it may struggle to govern its new conquests. In the past, it has largely been able to avoid the censorship debates and toxic speech scandals that have dogged the likes of YouTube, Facebook, Twitter and TikTok since their beginnings. 

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