Podcasts exploded in 2020. People created nearly 900,000 new podcasts last year, according to Chartable, and hungry listeners couldn’t get enough. Audience in the United States grew 90%, and it grew even faster in other countries tracked by the podcast measurement company.
One thing that stands out from Chartable’s data is the predominance Spotify (NYSE: SPOT) has become, thanks to its strategy podcast acquisitions. And despite the consolidation taking place in the industry, he may have built an insurmountable lead in most areas of podcasting on the creative, advertising and listening side of the equation.
Spotify is the easy choice for all podcast makers big and small
Spotify has two valuable podcast hosting companies: Anchor, acquired in early 2019, and Megaphone, acquired at the end of last year. Together, the two host around 35% of all podcasts that have entered the Apple top 200 last year. Spotify’s platforms host 3.5 times more podcasts than its next closest competitor, Scripps– Owned Triton.
Anchor provides an easy platform for creators to get started. In fact, the company said that podcasts created by Anchor accounted for 80% of new podcasts on its platform in 2020. The total number of podcasts on Spotify increased by 1.5 million last year, suggesting that 1, 2 million new podcasts started on Anchor during this time. That’s well above Chartable’s count for total new podcasts for the year.
Anchor may still have room to grow in countries outside of the United States where podcast creation is growing much faster. It currently only offers its monetization tools in the United States.
Meanwhile, Megaphone offers more robust hosting and monetization capabilities for professional creators and media companies. It is by far the most popular hosting service for podcasts reaching Apple’s top 200. Megaphone could gain market share as Spotify integrates its streaming ad insertion technology into the platform, making it even more appealing to podcasts looking to monetize a large and diverse audience with more precision. advertising targeting.
For a company to catch up with Spotify in hosting, it would have to make multiple acquisitions and grow those platforms faster than Spotify can develop Anchor and Megaphone.
Spotify takes part in listening to podcasts
When it comes to listening to podcasts, there are two apps that stand out above the rest: Spotify and Apple podcasts. But the first is gaining market share, while the second is losing some.
Last year, 25.5% of podcast listeners used Spotify and 37.8% used Apple. But Apple’s share fell by 42.7% in 2019, while Spotify increased its market share by 19.9%. In fact, Spotify was one of only two podcast apps to increase its market share, according to Chartable. the iHeartRadio the application went from 2% to almost 4%.
Two factors are expected to help propel Spotify’s position even higher in 2021. The first is the faster growth in podcast creation and listening outside of the United States. Apple’s podcast app is only available on Apple devices, which have a much larger market share in the United States than outside the country.
Second, Spotify has a growing list of exclusive podcasts, which may make more listeners at least try Spotify as a podcast player. The streaming company still has a long way to go for more of its music listeners to listen to podcasts in the app as well. Only 25% of its listeners tried podcasts on Spotify in the fourth quarter, up from 16% at the end of 2019.
The future of podcasting on Spotify
Spotify no longer plans any major acquisitions in this space. “The bulk of our strategy going forward, although we are not ruling out any further acquisitions, is to increase the capacity of our own production capabilities that we now have across all of the studios we have acquired,” said CEO Daniel Ek on Spotify’s fourth quarter earnings call. He also said that there are many more exclusive productions in the works, which the company hopes to continue to develop on its audiences.
The opportunity for Spotify is huge. Podcast advertising in the United States is expected to climb well above $ 1.1 billion this year. Spotify has the ability to participate in these ad spending through its own productions and through monetization tools in Anchor and Megaphone. The biggest opportunity is a change from radio advertising, which still accounts for around $ 12 billion in the United States. Spotify’s ad-supported business generated less than $ 1 billion in 2020.
While Spotify will invest money in developing new content for its platform, it has the opportunity to grow its advertising business and take advantage of fixed content costs. In addition, it will continue to gain market share in a growing industry.
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