Spotify drops $100 million to build its own moat with podcasts

Spotify, which has 130 million paying subscribers and is the market leader in streaming music, decided to make a big bet on podcasts. On May 19th Spotify struck a deal with Joe Rogan, America’s hottest podcast host, who will release its own podcast exclusively on Spotify, including a popular podcast with nearly 8.5 million subscribers on YouTube, The Joe Regan Experience.

Spotify will pay more than $100 million for the deal, the Wall Street Journal reported. And that’s just a small step in Spotify’s podcast expansion plans.

Dig a YouTube corner

Joe Rogan is one of the most influential podcast hosts in North America today.

He has worked as a talk show, television host, narrated UFC fights, and has been in the podcast space since 2009. After a simple water test, in 2010 he launched The Joe Rogan Experience, a podcast with a strong personal touch (JRE for short). In this podcast, Rogan and the guests talk about almost everything from sports, philosophy and comedy to the latest hottest current affairs news and political events.

To date, JRE has released nearly 1,500 podcasts, still updated almost daily, for more than three hours each. The show has nearly 8.5 million subscribers on YouTube and more than 2 billion views.

Spotify drops $100 million to build its own moat with podcasts

Joe Rogan is one of the hottest podcast hosts on YouTube.

That’s spotify’s dream exclusive content.

Over the past year and a half, the music streaming company has expanded into podcasting, buying a host of well-known podcasts from YouTube, including two podcast networks, Gimlet Media and Parcast, covering everything from “contemporary Internet life” to “true crime thrillers.”

As a video platform, YouTube and podcasts, a sound-based form of content, were supposed to be “eight words out of step”, but the new form of “video podcast” unexpectedly gave many new opportunities for podcasts. YouTube is the world’s largest “content platform” with more than 2 billion users worldwide. A show that cuts a small piece of the cake, which makes up one-third of the world’s population, is an amazing amount.

Spotify drops $100 million to build its own moat with podcasts 

Elon Musk’s “Famous Scenes” while guest Joe Regan’s video podcast

In addition, the video form also broadens the expression boundaries of podcast programs. For example, the JRE podcast sparked one of the hottest discussions, in September 2018, when Tesla CEO Elon Musk smoked marijuana in front of the camera. In this episode, Rogan offers to give Musk a sip, and Musk asks Rogan, “Is it legal to smoke here?” He took a sip of cigarettes after confirming it was legal. Although the move led directly to a 10 percent plunge in Tesla’s stock price, the clip sent JRE with an explosive wave of viral spread, with Musk’s movements and demeanor being made into videos, motion pictures and shared on social media.

The reason for this effect is closely related to the content form of “video podcast”.

So YouTube has become a good soil for podcasts. Although the podcast industry’s practice is to host content on its own servers, it is spread through the generic form of RSS subscriptions. But there are still a lot of podcasts that have been hugely successful on YouTube. Now Spotify wants to buy them and turn them into their own chips.

Under Joe Rogan’s agreement with Spotify, all of Rogan’s more than 1,000 podcasts will be released on Spotify on September 1 this year. By the end of the year, his new podcast will be turned exclusive and no longer available on YouTube.

“Traffic”, “Interests” Two Hands

Spotify has “poached” a lot of podcast content from YouTube, but YouTube still has an irreplaceable role to play in the spread of the program.

After being bought exclusive by Spotify, Rogan won’t “leave” YouTube. He will continue to run his own account, cutting a few minutes from his long podcast and posting them to YouTube. This way he can continue to get attention and continue to make money through YouTube’s ad sharing.

“A large part of Joe Rogan’s podcast audience doesn’t download a dedicated podcast client, and he’s able to get so much attention today, and he’s tied to YouTube’s recommended algorithms,” the former CEO of Pocket Cast, a well-known podcast client, told The Verge. “

While most podcasts have a high level of audience loyalty, it’s still extremely difficult to build enough momentum to get users to switch platforms. There is more than one major exclusive programming, a pay-subscription-based podcasting platform that is facing a lack lull in user growth, spending big on programming, but there is still a huge risk of churn in trying to move listeners.

So not only Rogan, but other podcasts have a big chance of adopting this strategy, most of them have dozens to millions of subscriptions on YouTube, and each issue of content is given a huge share of ads, and they won’t give up the entire YouTube because they’ve been bought by Spotify.

Spotify drops $100 million to build its own moat with podcasts  Joe Rogan 专门建立了一个“小号”来发布经剪辑的播客内容片段|YouTube

This is a choice many podcasters need to make. Spotify offers an attractive price tag, but staying on YouTube means more potential and more room to grow. That’s why they’ve come up with this way of being able to flow and benefit from the two-pruning, the format of content packaging growth, published to as many platforms as possible, to get more traffic, revenue, which is also conducive to more comprehensive content branding.

YouTube probably doesn’t mind “users going to Spotify to listen to the full podcast.”

A full-length podcast may drive users to pay to subscribe to YouTube Premium (the backstage audio feature is supported after a payment, otherwise the phone’s lock screen will stop playing), but podcasting is just a tiny piece of the YouTube video map. And the edited “short shows” can still generate advertising revenue for YouTube and don’t hurt YouTube’s core business.

Spotify’s real ambition

Podcasts are just the tip of the iceberg of the sea of YouTube content, but for Spotify, podcasts have an extraordinary meaning.

Since its inception in 2006, Spotify has become the world’s largest music streaming platform. But its path to development has been bumpy. In 2011, Spotify, which is seeking expansion, was almost as hostile as the entire recording industry, as the charging of streaming “monthly subscriptions” hurt the traditional “pay for every song, every album” music sales model. Spotify’s rapid growth in users from 2011 to 2015 was also the world’s darkest record-making period.

Before 2015, many artists, such as Taylor Swift, even refused to put their music on Spotify. It wasn’t until 2015 that the entire recording industry emerged from the dark and grew back to growth as streaming subscribers expanded. After bringing real money to the record industry, Spotify has finally received a double recognition from both users and artists.

But Spotify has also seen a much stronger rival, Apple.

Apple Music went live in 2015. Apple, which has worked in the music industry for many years, has grown rapidly in terms of user volume since it became a streaming company. For Apple, music is not just a business, it’s a higher-dimensional hardware and software ecosystem. Apple Music doesn’t need to make much money for Apple, but it’s all about helping Apple become more competitive in its hardware, boosting each other and achieving stable sales. In 2019, Apple Music’s paying subscribers in the North American market will be the “big brother” against Spotify.

After more than a decade of development, the experience of music software homogenization is serious, and the way music content is produced and distributed, and it is difficult for Spotify to break out of “exclusive content.” The same $10 price, as well as a library of music that covers almost all pop music, Spotify has a hard time closing the gap with Apple Music in terms of experience. The only difference is that Apple has an iPhone, AirPods on its hardware… CarPlay and Siri are all better supported for Apple Music. Spotify doesn’t have its own product ecology, and even membership fees collected through the App Store’s in-store purchase channels are taken away by Apple by at least 15%.

Despite the expansion of the streaming music market over the past five years, Spotify’s growth has not been stifled by Apple, but has accelerated, gradually opening the gap with Apple in terms of user size through internationalization and better cross-platform experiences. But Spotify has been under intense pressure. It is facing a not bad money, and the business dimension is much higher than their own opponents, after all, to find a way to break through.

Spotify drops $100 million to build its own moat with podcasts

Many Spotify users use Apple’s hardware, which is Spotify’s biggest “soft spot” and Unsplash

In February 2019, after 13 years of losses, Spotify finally made a profit for the first time. After reaping more than 100 million paid subscribers, Spotify is finally starting to dig its own moat, and the first step in its ambition is podcasting.

Podcast content produces more than dozens of times more efficiently than music, and the audience’s attention is more focused. Most artists may be two or three years old to produce an album that lasts about an hour, but podcasters can easily produce dozens or even hundreds of hours a year, with steady update frequency. Most ordinary people may listen to hundreds of songs each year from dozens of different artists, correspondingly, and most podcast listeners subscribe and listen to no more than 10 podcasts. This provides the soil for “exclusive”.

Podcasting is a form of content that has a more steady creative rhythm and a higher audience loyalty. Each episode posted by Joe Rogan on YouTube has a steady multimillion-dollar cast, far more than any other video blogger with the same number of subscriptions and is updated less frequently.

The exclusive podcast content that delivers stable, loyal listeners is the moat That Spotify is digging. To get this out, users follow podcasts to Spotify, naturally considering whether to switch to Spotify for their own need to listen to music. This gives Spotify its first “front-up” to Apple.

Spotify’s ambition in podcasting is not just about buying exclusive content. Last year, it also acquired Anchor, a podcast editing software, in an attempt to control the entire podcast process from production to release. What’s more, Spotify also holds the preferred data of its 130 million users, which will be a bigger wild-looking way for Spotify to use it to sell ads for podcasts or continue to tap into more paid services.

Apple has been in the podcast space for years, but it has been very conservative, treating podcasts only as a software product rather than a “business.” Spotify’s accelerated growth in this area may allow Apple to start thinking more about podcasts.

Spotify is growing into a huge “voice content platform.” Its task is no longer just to do large user scale, but also how to expand the business, establish product barriers, provide a richer and better experience, mining greater user value.

Spotify shares continued to rise after news of its partnership with Joe Rogan, rising 17 percent in a week and nearing all-time highs.

This is Spotify’s new starting point, and it’s just taking its first steps in the podcast ingress world.