Though 37 percent of U.S. adults and teens now listen to podcasts monthly, the industry remains relatively tiny as a business — with about a million podcasters but short of a billion dollars in annual ad sales. Maybe because of this, podcasting has been also blissfully free of the deep-moated, monopoly-chasing platforms that control so much of the video and text-based Internet. Anyone can put up a podcast, any application can locate and download it. It’s a decentralized, hacked together, open system and, as podcaster and a listener, I think it works perfectly.
And so, of course, it looks like someone wants to put it behind a wall.
Spotify, best known as a music-streaming company, has spent more than $600 million lately on acquisitions including two podcast networks, Gimlet Media and the Ringer, and Anchor, a tool that helps people create and upload their own podcasts. Last week, Spotify paid (reportedly) more than $100 million to lock the “Joe Rogan Experience,” one of the most popular podcasts in the world, into an exclusive multi-year license.
My guess — and I’m hardly alone — is that Spotify wants to become to podcasts what YouTube is for video: simply, the default platform for both listeners and creators. And that should worry people in both of those groups.
Ultimately, in the world of video, creators are beholden to YouTube’s goals and policies. When YouTube began showing a preference for longer videos in recent years, that’s what creators started making. Many people who made shorter content saw their businesses simply disappear.
In the ecosystem of YouTube, which Google owns, tens of thousands of small businesses depend on the whims of one of the largest companies in the world for both audience and revenue. Like Facebook with Instagram, Google’s YouTube stands between content creators and their audiences, extracting value and exercising control in a near monopoly.
No such company exists in podcasting, and one has to wonder: If that would be worse for creators and audiences, could it ever even happen?
I think it could. People and organizations who create podcasts primarily want access to audience and ways to make money. If Spotify can leverage cheap capital to lock a large audience into its ecosystem, podcasts would need to go there. And if the company gives some kind of preference (whether revenue-sharing, promotion or both) to podcasts that are exclusive to its platform (which would be perfectly legal), then listeners would be locked into their ecosystems as well.
When money, rather than innovation or value, is your competitive advantage, that’s when things get boring and stagnant, and monopolies take root. That would be great for Spotify’s stock price (disclosure: I own stock in the company), but it would be terrible for the vibrant, weird, exciting world of podcasts — which is far more than those well-known journalism-oriented productions “Serial” and “The Daily.” Successful audio dramas like the “Bright Sessions,” the conversational mystery-solving podcast “Meddling Adults” and historical dives like “You Must Remember This” are all the product of word-of-mouth marketing and the hard work of small teams.
But Spotify’s movement into the space has been fast and furious. In 2019, Spotify’s share of podcast listenership increased from 20 percent to 34 percent in Germany, while Apple Podcast’s share dropped from 45 percent to 36 percent.
There are reasons to expect that the trend won’t continue.
First, Apple and Alphabet, the parent company of Google, both stand to be hurt if Spotify continues to make podcasts less convenient for people who bought into their ecosystems. Each of those companies are sitting on more than $100 billion in cash, enough to easily challenge (or even acquire) Spotify.
Apple, for its part, might be a reluctant challenger. The company whose iPod gave podcasting its name has long played a strong role in keeping the ecosystem open. With a lack of interest in advertising models and strong interest in looking good, Apple has kept its hands off podcasting, despite owning a patent that could, if enforced, hobble the entire industry.
The second reason Spotify might not succeed if it pursues a walled-garden strategy: Many of the people who make and listen to podcasts respect, even treasure, the industry’s open architecture. Podcasters often come from the world of public media, and while some businesses are for sale, some aren’t even businesses. Among many — though obviously not all — there is a strong ideological opposition to harming the open nature of the podcast ecosystem.
Would that opposition be enough? Here’s hoping.