Spotify and Amazon’s Podcast War

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Spotify and Amazon’s Podcast War

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Spotify is uplifting its podcast game. The music streaming service is aiming to become a one-stop high-quality podcast source. At least or those who are not on Apple Podcast. Most of these are not Apple users. As of now, Apple dominates the podcast service streaming by a large margin. Primarily because the majority of podcast listeners in the U.S. owns Apple device one way or the other. But the Swedish is a leading podcast distributor in many international territories.

Source: BusinessQuant

Spotify has noticed the opportunity and hence is getting serious on its podcast distribution business. Last week, the company scooped the exclusive rights of Joe Rogan’s podcast. It is a multi-year deal and is estimated to cost around $100 million to Spotify. Wall Street responded positively to Spotify last week. In the past three months, Spotify shares have gained 35%. But this week’s Tuesday, Spotify shares fell by 0.4% and currently dipped by around 2.64%.

The reason was the report that Amazon.com Inc. is also focusing on podcasts. More specifically local news and live sports. The report said that local news and live sports will be prioritized with a mix of other original content. Amazon is planning to deliver scores and news in the form of short audio content to users who as relevant questions to its Alexa voice assistant.

Audible Originals

It is reported that Audible, the audiobook service owned by Amazon.com Inc., has met with multiple talent agencies and producers regarding potential podcast projects. The project is rumored to be called “Audible Originals”. Audible will be offering some hundred thousand to a few million dollars per show. The Spotify-Joe Rogan deal may have acted as a catalyst to secure a talent for its Audible Originals. The market for podcast producers has skyrocketed and there’s potentially more million-dollar deals coming to this sector of the entertainment industry. Although except Spotify Technology SA, only Amazon.com Inc. and Apple Inc. have the potential to go ahead with a million-dollar deal on podcasts. Microsoft Corp. & Google does have the financial capability and infrastructure to get into the podcast games, but both have not shown any interest in podcasts yet.

Audible has already signed shows from comedians Tiffany Haddish & Kevin Hart along with a documentary producer John Battsek. The acquisitions of Audible, a dominant audiobook service, are part of multimillion-dollar podcast producer shopping spree. Audible, indirectly Amazon.com Inc., aims to establish an enticing podcast destination for podcast fans. This is to tackle Spotify’s move to reposition itself as a podcast distribution leader.

Business Model

Currently, Audible platform is used as an audiobook station. Audible is leading as in the audiobook market and has an advantage due to its Kindle and Amazon associations. For the past few years, Audible has started funding the original series. The company initially focused on well-known authors. Well known authors indeed have attracted avid readers and listeners of books. But now the company is focusing on prioritizing celebrity hosts and shows such that the new content broadens its audience.

Source: BusinessQuant

Reports of Audible changing its business model is also rising, given the current business model may not be effective while having podcasts and celebrity shows running. Currently, per month subscription fees on Audible is $14.95. the subscription provides a credit for one audiobook along with two original shows. But the company is considering selling the original shows individually, taking subscriptions for originals out of the picture. Audible is also considering lowering its price plans to offer only originals and not audiobooks.

Amazon Music

Audible’s move to go full throttle on the audio genre seems promising at first glance. But it has confused many analysts along with producers. Similar to Audible, Amazon Music is also investing in podcast expansion. It is reported that there will be a podcast in Amazon Music app in the coming months. Much like Audible, Amazon.com Inc. is also in talks with many producers and networks about hosting their shows in Amazon Music app. There are no official reports that any deals have been finalized for Amazon Music. After Spotify, Apple Music & YouTube Music, Amazon Music is the fourth largest paid music streaming service. The streaming service is most popular among people owning smart speakers and prefers Amazon’s voice assistant Alexa.

Source: BusinessQuant

In a Nutshell

Spotify wants to rebrand its popular music app as a home for all types of audio content. Spotify has started investing millions of dollars to acquire or sign multi-year deals with podcast studios. With Amazon.com Inc. focusing on podcasts as well, analysts predict a podcast war to start among the tech giants. It is a no brainer that soon Apple Inc, Microsoft Corp. and Alphabet Inc. will start rolling into the podcast war. As of now, it is still early to predict how the audio industry will shape and which among them will come on top of the others.

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