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Seeking profits, Spotify turns to ai instead of original content for its podcasting future
Spotify shareholders are excited about the company reporting operating profits for the first time in a year, sending shares up nearly 10 percent on the news. The revenue increase was largely due to the streamer’s $1 price increase earlier this year, but executives also pointed to the shrinking podcast operation, which included hundreds of layoffs and the dissolution of Gimlet and Parcast , as a contributing factor. The adage that “content is king” no longer applies, and Spotify is increasingly focused on tools that will scale the business rather than content that attracts listeners.
in a call with investors, CFO Paul Vogel said that after being a real “drag” on profit margins in the past, podcasting will soon break even and turn toward profitability. CEO Daniel Ek echoed that sentiment. “We are constantly finding new ways to bring more efficiency to the business… We have seen some improvements, but you should expect that we will continue to look for more improvements in the future because that is simply our modus operandi.”
While Ek and Vogel really pressed the issue of “efficiency” (according to my transcript, they said the word more than 30 times over the course of the 50-minute call), what wasn’t said about podcasting spoke louder. In the past, they’ve excitedly touted how many millions of podcasts there are on the platform, the latest celebrity show, and the explosive growth of the area. But as investors ran out of patience for the time and money such ambitions required, the company’s leadership changed its tune.
Instead of emphasizing, say, his new revenue-sharing deal with Trevor Noah or the reliability of The Ringer, Ek pointed to Spotify’s new ai-powered translation product. He pointed to the machine translation tool as a way to seamlessly scale podcasts and increase the amount of content in non-English speaking markets. He also hopes ai will be a boon for podcast advertising.
“Creating a great audio ad is a pretty expensive thing to do and quite expensive for marketers,” he said. “What generative ai promises to do is allow creative cost to be reduced… (It also) allows that creativity to be scaled in unimaginable ways. You can translate any creative you have into many different languages; you can use the same voice actor; But instead of producing one or two ads, you can have 1,000, 10,000 or even 100,000 ads created individually for each user.”
I’d take it with a grain of salt (we know Ek loves to dream big!), but it underscores the latest version of Spotify’s podcasting business: leaner, less flashy, and more scale. This doesn’t mean that Spotify’s contributions to podcasting are insignificant; As one audio industry professional told me, translation could be a total game-changer for the medium (if not a complete failure). But we shouldn’t expect those contributions to come in the form of original content.
The main question I’m left with after these results is where Spotify’s licensing agreements fit in. I wish during the call someone had asked Ek about the plan for big-name talents like Joe Rogan, Alex Cooper and Dax Shepard as their deals approach. for renewal. For one thing, they have the scale (especially Rogan). On the other hand, they cost a good amount of cash (…especially Rogan). I’ll have more on this later this week, but it will be interesting to see how much Spotify and its investors can spend on the biggest names in podcasting.
Wondery brings its podcasts to television
That’s certainly one way to get podcasts to the masses. Wondery, which is owned by Amazon, will make many of its podcasts available on three new channels on Freevee, an ad-supported video streaming service also owned by Amazon that was formerly known as IMDb TV (yes, Amazon also owns IMDb ).
On October 31, Freevee will launch three dedicated Wondery channels: a flagship channel focused on entertainment programming such as Baby this is Keke Palmer, Business warsand American Scandal; Annex C, which will feature true crime shows like This is really happening, doctor Deathand Morbid; Marvelous; and Wondery Sports, with shows including Don’t call it a comeback and Gladiator. The visuals will be a mix of on-camera footage, animation, and performance art, but I wouldn’t count on that being the main draw.
It’s an interesting discovery strategy, although I’m not sure how replicable it is beyond Amazon. If successful, I could see a situation where other AVODs license podcast programming (it’s certainly cheaper than video), but Amazon is in the unique situation where it owns the entire channel, so it doesn’t there is a lot of risk here.
Joe Rogan Experience is the most searched podcast, followed by calls his daddy and This American life
PodBam published a list of the 40 most searched podcasts and it is not surprising that Rogan is number one. The Joe Rogan Experience averaged 135,000 monthly searches on Google, followed by calls his daddy with 106,000 and This American life with 81,000.
The numbers drop pretty quickly after that, which shows how important podcasting still is. Even heavyweights like The Bill Simmons Podcast, Fresh airand Conan O’Brien needs a friend received less than 20,000 searches. Searches don’t necessarily equal listens, but it is a way to measure how interested audiences are in particular shows.
