The podcast industry is attracting the world’s attention and not precisely because of the success they are having, but quite the opposite. One of the leading platforms in the streaming industry, Spotify is involved in a problem due to the investment of US$1 billion to boost this industry and that it has not produced the fruits that I expected.
The company made deals with the likes of Kim Kardashian, the Obamas, and Prince Harry and Meghan Markle. According to The Wall Street Journal, he paid $286 million for podcast studios and spent $250,000 per episode on exclusive shows to attract new listeners. After this, the company even had to cut staff.
In fact, the company laid off 200 employees in June, around 2% of its payroll and eliminated programs to focus on only limited, original and exclusive content. With this, they made the decision to close brands and consolidated his work at Spotify Studios. This led him to raise the price of basic subscriptions by US$1, up to US$10.99 per month.
Why didn’t the podcast industry deliver the expected results?
Spotify lost US$565 million in the six months to June, with revenue of US$6,649 million. This figure surprised its creators, as the company expected this industry to be lucrative when it began its podcast exploration in 2018.
“The size of the bet versus the size of the market just seems irrational in retrospect,” Evan Shapiro, a media consultant and producer, told The Wall Street Journal about Spotify’s podcast investment. “They have been left without a landing strip.”
What will the company do after the crisis?
Spotify currently has 100 million podcast listeners on its platform, 10 times more than in 2019. The company said it is on track to grow this business and become profitable in 2024.
Although by June they had 220 million paying subscribers to their premium service, the company has seen that the number of listeners It is growing, but the large percentage of content found on different streaming platforms makes it more difficult to compete in this market.
In the company, according to the WSJ, they concluded that exclusive podcasts do not usually attract subscribers of competing companies. This caused the streaming firm’s podcast costs to increase by $31 million in the first half of this year.
Now, among the company’s new projects, according to the media, is making alliances with prominent and practical figures in the industry, such as Trevor Noah with whom he agreed to a payment of US$4 million which allows him to raise income from the podcast to cover his investment. Afterwards, both parties share the benefits. Spotify intends to reach similar agreements, according to its executives.
2023-09-08 13:08:44
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