In the Spotify latest Q2 earnings release, the company has been buoyed by its ad-supported revenue stream of which its podcast sales channel witnessed a triple-digit gain compared to last year.
The company reportedly had 2.9 million podcasts on the platform by the end of Q2, up 11.5% from 2.3 million in Q1. Spotify said in its earnings report, of that 2.9 million MAUs that listened to podcasts, consumption trends were up 95% year on year on an aggregate basis, with 30% on a per-user basis.
This in turn translated into stronger retention rates and the podcast consumption hours between its users both reaching all-time highs – a clear indicator of the company’s investment in the medium paying off.
Podcasts are a long-term plan as Spotify invests big in platform
Earlier this year, the company introduced its Spotify Audience Network advertising marketplace into the UK as well as the US, which aims to help advertisers reach the most appropriate audiences using Spotify’s technology. One quarter of the UK’s population is said to listen to podcasts, so Spotify’s potential with monetising its podcasts is vast.
Spotify’s acquisition of podcast advertising company Megaphone for $235m was indicative of the company’s intention to make Spotify the place to be for podcasts.
In May 2020, Spotify bought the exclusive rights to one of the most listened to podcasts worldwide, the Joe Rogan Experience, making it the only platform to listen to the show ensuring it disappeared from all other podcast platforms.
The Joe Rogan deal was worth $100m for a show that in 2019 was said to be downloaded 190 million times a month and was thought to be the deal that paved the way for other exclusivity deals. What followed was undisclosed deals with Barack and Michelle Obama to produce a Spotify-exclusive podcast, and Kim Kardashian West to have her own podcast on criminal reform, both of which will undoubtedly be multimillion-dollar deals.
Spotify’s plan is clear to see – its investments will attract both large audiences which it hopes will turn into paying customers and carve out a chunk of revenue through its advertising services.
The company also made further acquisitions to help its podcast push with creator platform. Anchor was bought for a reported $110m, as well as podcast network and media company Gimlet for $230m, amongst other sizeable investments.