Despite Overcapitalizing on Podcast Talent Spotify Predicts Profits
The guys at Spotify have learnt the hard way about podcast profitability. They’ve ploughed a billion dollars into building a podcast platform. But they’re still showing a loss. By overcapitalizing on podcasts, they’ve had to reduce their losses in other areas, the primary area being a 2% staff cut. But although posting a loss of $527 million in the first sixth months of the year, they’re still bullish.
Where have they overcapitalized? Well, the money they spent on Prince Harry and Meghan Markle completely overestimated their appeal. It seems Americans do not have quite the sympathetic ear the rogue royals assumed they had. Kim Kardashian was also the lucky recipient of, well, what Kim Kardashian wants Kim Kardashian gets. And then there’s the Obamas. They not only negotiated the GDP of a small nation as their fee, they promptly jumped ship and went to Audible, Amazon’s podcast and audio book platform.
So, that was lesson number one. Lesson number two:
The competition
Try Apple, Amazon and Google. Giants who trade in a whole more lot than just audio. So in an entertainment sector segment, if no-one is showing any profitability – which they aren’t – you better have something else that’s making you a profit.
However, this doesn’t change the fact that Spotify is the number one podcast platform which today has a hundred million listeners. And it has a library of five million shows which include podcasts and audio books.
To turn a profit after being somewhat battle-scarred, they need to raise their advertising rates and revenues. This is something they are determined to do, to make this business profitable by next year.
I love Spotify. Particularly when it announced it was getting rid of AI generated music. But previously, It certainly changed my listening habits while driving from commercial radio to audio on demand. Which is exactly what it set out to do with the introduction of podcasts. To migrate advertising revenue away from FM.
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