So if Spotify can build an audience by leveraging new original content and make podcasts an integral part of their product offering, they could most likely bolster their bottom line. Meaning it’s likely to get more expensive. In fact, as users begin demanding a more complete music catalogue, the bargaining power will rest with the record labels (Warner Music, T-Series, etc.). But what about margins? How on earth is paying $100 million going to help Spotify shore up its bottom line? Well, believe it or not, licensing music from record labels and music publishing companies is actually more expensive than licensing and producing podcasts. If more people migrate from ad-supported version to Premium subscriptions, revenue numbers will inevitably skyrocket. The revenue part is rather straightforward. So you shouldn’t be surprised if they try and double down on this strategy. In fact, the company says over 16 % of its users now listen to podcasts. “We have a growing body of evidence showing that there are significant benefits to engagement, retention, and conversion of users from Ad-Supported to Premium stemming from consumption of Podcast content” - Spotifyīottom line - Existing users will keep coming back so long as they see “value”. In fact, as we noted, they are already doing it, and guess what? It seems to be working. It’s something that Spotify could do as well. Netflix did it with Netflix Originals back in 2013 (think House of Cards) and saw their subscription rates soar. However, if they had engaging original content - like the Joe Rogan Experience, they’d have a pretty good chance of carving out a niche for themselves. So how does Spotify prevent users from dropping out/switching when they can’t carve out a unique value proposition? However, as time progresses, most of these streaming services will converge to a point where they will all have a similar offering and will include almost every song on their platform. So each streaming platform tries to expand its catalogue by partnering with record labels, music studios, and independent songwriters. Currently streaming services, by and large, try and differentiate themselves based on the size of their music catalogue. Retaining existing users and turning them into paid subscribersīefore we talk about retention rates, we have to talk about music streaming in general. So will this help Spotify gain new users? Almost certainly.Ģ. He gets close to 200 million monthly views/listens across multiple mediums and it’s inevitable that some of his users will now discover Spotify. His podcasts regularly top Apple’s charts. The man has 8 million subscribers on Youtube. I mean, just consider Joe Rogan’s own podcasts. In effect, they have been building an exclusive content library and they’ve been building it through acquisitions.Īnd since most deals have been exclusive, listeners from “The Ringer” and “Gimlet” have been forced to sign up for Spotify. Spotify now also owns shows related to horror and crime. The year prior, they bought out Gimlet Media, another podcast company that has shows related to startups, Mars, and other cool things. So let’s break this down one component at a time and see how it’s actually playing out.Ī couple of months back Spotify announced that it had acquired “The Ringer” - a company known for its massive podcast operation covering sports, popular culture, etc. “Growing podcast listening on Spotify is an important strategy for driving top-of-funnel growth, increased user engagement, lower churn, faster revenue growth, and higher margins"-Spotify And based on what they told investors last year, it doesn’t seem as if this is a one-off. And I swear, we are not being sponsored to write this story.Īnyway, the company has been spending big on podcasts, and yesterday, they signed a $100 million deal with Joe Rogan for exclusive rights to his podcast. Spotify is a music streaming service that gives you access to millions of songs online. It’s extremely popular and if you haven’t seen/heard his podcasts, we recommend this one. He calls his podcast “The Joe Rogan Experience” and he interviews a wide array of guests on his show. Joe Rogan is an American comedian, a mixed martial arts commentator, a television host, and a very entertaining guy. In fact, the word podcast is derived from a combination of two words - iPod and Broadcasts since most people were using their iPods to listen to podcasts back in the day. You talk to a microphone and broadcast it to millions of people. Before we get to the steamy bits, we need some context.
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