Amazon is building an impressive roster of audio exclusives at Audible, but its end goal is more clearly a Netflix-style model. Its desultory launch of paid-for podcasts in late 2021 was notable more for temporarily breaking its own podcast store than it is for the small number of shows that have taken it up on the offer. Apple, whose built-in Podcasts app is still the market leader, has all but abandoned the medium it effectively created. The goal isn’t, as the New York Times puts it, to build Spotify into the Netflix of podcasts – it’s to build Spotify into the YouTube of podcasts.Īnd bizarrely, the company is building towards that goal almost unopposed. By buying exclusives upfront, Spotify breaks the chicken-and-egg problem that hampers its efforts to turn podcast advertising from a profitable niche into a core tranche of the industry. That trade-off is small-fry, though, compared to the long-term point of deals like Rogan’s, which is to turn the platform into the home of podcasts. And yes, every time you listen to Joe Rogan on Spotify, you make the company money: the podcast still has adverts in it, earning payments based on audience size, but Spotify’s deal with the former MMA commentator is reportedly a flat-fee deal. Yes, every time you listen to a song on Spotify, you cost the company money: it pays royalties per stream, and the perfect Spotify music fan is someone who pays every month and never opens the app. Which is why Spotify is willing to torch its relationships with some of the biggest names in music over Joe Rogan.Ī lot of musicians accurately described the conflict as one of money, not morals, but missed where the money really lies. Audiences won’t switch to listening to podcasts on Spotify without a hefty push, and podcasters won’t switch if the audiences aren’t there. Spotify can sell ads on behalf of podcasters, target those ads in a far more granular way than most podcasting apps, and easily roll out technical features – “tap here to buy”, for instance – as advertisers see fit.īut the company faces a chicken-and-egg problem. When you listen to a podcast on Spotify, you’re not just downloading an MP3 from a server and playing it on a generic app of your choice – you’re streaming straight from Spotify’s servers, with your listening linked directly to your account and all the commensurate profiling that brings with it. What the company is bringing to the table for advertisers is obvious enough. Buying adverts is hard, because of the fragmented nature of podcast production targeting audiences is hard, because of the lack of meaningful analytics available through the decentralised ecosystem and tracking purchases is hard, because of the difficulty of linking a particular call to action to any individual response.Įnter Spotify. That means the “customer acquisition cost” of podcast advertising is extraordinarily high, and so it has typically only paid off for those industries where it’s worth paying a lot of money for each new customer: ones with recurring revenue or big-ticket items.įrom an advertiser’s point of view, there are inefficiencies throughout the system. Instead, it’s because buying and running adverts on podcasts has historically been an expensive, analogue affair, that involves one-to-one relationships with a plethora of small publishers and creators, all to publish adverts with little-to-no ability to track anything beyond the absolute broadest metrics possible. That’s not (just) because those companies are huge fans of supporting independent media, though. Podcast adverts are something of a cliche at this point: meal delivery kits, direct-to-consumer mattresses, and web hosting services abound. In other words, both companies make tools that turn podcast advertising into something a bit more like web advertising. “These tools will make it easier for publishers to turn audience insights into action and expand their listenership while ultimately growing their businesses,” Spotify writes. Spotify says it plans to use Podsights’ technology outside podcasting and will bring it to the “full scope of the Spotify platform, including audio ads within music, video ads, and display ads.” The Chartable acquisition appears to be more directed toward podcasters themselves rather than advertisers, particularly because of its technology like SmartLinks. Both Podsights and Chartable allow podcasters and networks to include tags in their shows that are used to track who listened, if they heard an ad, and whether they took action upon hearing it.
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