Spotify Turns to Podcasts to Expand Content, Boost Ad Sales

Spotify has inked an agreement to promote podcasts in its app and on bus ads, in exchange for the hosts of those podcasts publicizing Spotify on social media and during their shows. “Reply All,” “Pod Save America” and “The Bill Simmons Podcast,” which cover a range of topics from sports to politics, are the three podcasts that have signed on. With this agreement, Spotify is experimenting with putting resources into programming other than music. Apple currently is the leader in podcast subscriptions.

Bloomberg reports that, “by increasing the revenue it gets from other media, Spotify could reduce the huge share of sales that goes to record labels,” with 75 percent of its costs last year going to royalty payments.

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“The potential for Spotify is to introduce this caliber of storytelling to a much larger audience, who are already in a listening mindset,” said Gimlet Media co-founder/president Matt Lieber, whose company produces “Reply All.” “I see a growing effort to make podcasts more accessible on the platform. And they’re making progress.”

For Spotify, which boasts 140 million listeners, including 50 million paying subscribers, adding podcasts is perceived as a way “to increase the time customers spend with its app — and boost advertising sales,” as well as “assess awareness of its service among avid podcast listeners.”

A survey by Edison Research earlier this year revealed “about 15 percent of Americans over age 12 had listened to a podcast in the past week, and about almost a quarter listened to at least one every month, a number that’s doubled since 2013.” Bloomberg notes that, “ad revenue from podcasts is projected to grow 85 percent this year to $220 million.”

Weekly newsletter Hot Pod author Nick Quah states that Apple’s share of the market has declined from 70 percent to 55 percent, as SoundCloud, Pandora, TuneIn and iHeartMedia have begun to host podcasts. Spotify has “already commissioned original podcasts about music, and partnered with Gimlet Media on a podcast series about the late Chris Lighty, manager of rappers Busta Rhymes and 50 Cent.”

“Spotify has the potential to do a lot for podcasting,” said Quah. “They have a large user base, and all it takes is a few tweaks here and there to put podcasting in the foreground for the daily listeners.”