Audio giant Spotify has been surveying listeners to find out if they would be willing to pay for a standalone podcast service. But if it decides to go ahead, it faces an uphill battle, despite having the advantage of a massive existing user base and masses of free content.
The takeaways:
- At least four possible subscription plans are being considered, ranging from $3 per month for access to exclusive interviews and episodes, to $8 a month for early access to episodes and no platform-inserted ads.
- Crucially, none of these plans would include access to Spotify’s premium music subscription. This implies that it would be a very separate product from their current tiered offerings.
- However, at this stage, the survey is just exploratory, and a spokesperson for Spotify told The Verge that it should not be taken as a concrete product plan.
Why this matters:
Spotify has been moving aggressively into podcasting since 2018. They are working on solving a number of industry-wide hurdles around discoverability and recommendations, and should they crack that, they could well propel podcast listening further into the mainstream.
- Podcasting is also potentially incredibly lucrative for the audio giant. Unlike music, Spotify doesn’t have to pay any licensing fees or royalties to podcasters, because the podcasting ecosystem is based on open RSS feeds.
- However, it can still make money from inserting its own adverts into podcasts, or by developing shows exclusive to the platform, encouraging subscriptions.
The fact that Spotify is even at the stage of surveying users suggests that a standalone podcast subscription is on its product plan for 2021, even if it doesn’t look quite as expected.
Reality check
If Spotify starts up any form of subscription service for podcasts, there is likely to be a lot of pushback. Podcasters may demand a share of that revenue for providing Spotify with the content.
- Any shows exclusive to Spotify will have their own funding arrangement. This is particularly for episodes or content exclusive to the platform. But there are tens of thousands more podcasts available on the platform for free. These have essentially provided the company with a huge base of content at no cost to them.
Spotify will argue that they provide a discovery vehicle for many podcasters and that podcasts are available for free elsewhere. Both sides have valid points. How this affects the future of the open podcast ecosystem is likely to be a key debate in 2021.
- It is also worth noting that Spotify isn’t the first to try paid podcast subscriptions. Luminary is the most high-profile company to attempt to wall off podcasts in return for hard cash. However, it has struggled to attract paid subscribers.
- Podcasts – unlike music – are available on multiple platforms for free. Spotify will have to work hard to create enough value to convince people to pay.
Related: Spotify also announced this week that it was acquiring podcast advertising and publishing firm Megaphone in a $235 million deal that will help it ramp up its ad business.
