Spotify wants to be the industry’s No. 1 distributor of podcasts and it’s willing to forgo some revenue in order to counter Apple’s push into podcast subscriptions.
Spotify will not take a cut from podcasters who choose to sell in-app subscriptions and also will allow them to set their own pricing. Listeners on its iOS app will be routed through a website to purchase the subscriptions, thereby allowing Spotify (and podcasters) to skirt around Apple’s fees.
The news comes right after Apple Podcasts debuted its own in-app subscriptions. The company will allow podcasters to sell access to ad-free, bonus, or early-access content at whatever price they choose to set. Unlike this reported Spotify plan, however, Apple requires podcasters to pay $19.99 per year to even list their subscriptions, as well as a 30 percent cut for each subscriber’s first year. That drops to 15 percent for every following year.
It’s increasingly likely podcasters will have to manage their subscriptions across multiple platforms’ backends. Apple doesn’t allow podcasters to use RSS to distribute their exclusive content it has to be uploaded manually through Apple’s system. Spotify has never accepted RSS, and presumably, podcasters will have to do something similar to get their subscription content on the service.
Spotify’s bet is that the move will keep its podcast flywheel spinning by attracting more total listeners. Also unlike Apple, Spotify is spending big bucks for exclusive podcast programming, ranging from Joe Rogan to Prince Harry and Meghan Markle. Spotify can sweeten the pot for those partners by letting them keep all the money from any premium subscriptions they offer on the platform.
According to Spotify, as of the fourth quarter of 2020, it had 2.2 million podcasts on the platform (up from 1.9 million podcasts the prior quarter and up more than threefold year over year). Despite some skepticism on Wall Street that the podcast investment is paying off, Spotify said it’s . “We now feel reasonably confident that we can prove out that causality of having podcast and the benefit it is having on user growth and retention, and then having podcast is a positive contributor to [long-term value] per subscriber,” CFO Paul Vogel said.
Spotify kicked off its podcast-growth initiative in early 2019, buying podcast studios Gimlet Media and Parcast along with podcast self-publishing platform Anchor paying nearly $400 million for them, with additional potential payouts over four years. Last year Spotify bought Bill Simmons’ The Ringer podcast and media startup in a deal worth up to nearly $200 million and spent $235 million in cash to buy podcast publishing and ad company Megaphone.
