Spotify Moves Away From Podcast Revenue Strategy

Spotify Moves Away From Podcast Revenue Strategy

News by Anja Paspalj
Published: January 30, 2023

Following a string of layoffs, Spotify is shifting away from its podcast strategy.

Despite having more than 450 million users worldwide, the music platform has been in a financial loss every year due to the large fees that must be returned to music rights holders and publishing houses. Spotify generates about $12 billion in sales annually, of which the majority goes directly to the music industry.

Its newfound strategy for success involved investing in creating original content in podcasting to minimize its financial dependency on music. While introducing podcasting advertising formats helped grow its business to $200 million annually, the strategy has been found both difficult to maintain and unable to achieve greater results.

Despite hoping to create original podcasting content, similar to Netflix’s content strategy, Spotify has missed the mark. Podcasts are neither as financially lucrative nor offer as much long-term stability as television.

Its lackluster financial luck ultimately resulted in the recent layoff of 6% of its workforce, while its chief content officer Dawn Ostroff who led the podcasting programming strategy resigned voluntarily. In an attempt to regain its footing and shift the dynamic within the company, Spotify is moving its focus to advertising revenue.

Its goal is to build advertising technology specifically for podcasting and audio content, drawing comparisons to Google’s AdWords, and to generate profit that will not need to be shared with publishing houses in the music industry. The challenge will now be to get content creators on board to use these new tools.

Considering that Spotify already distributes about five million podcasts, luck may finally be on its side.

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