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Spotify’s bet on podcasts pays offINTL

Spotify’s bet on podcasts pays off

Spotify (SPOT) registered a doubling in podcast listening hours in the last three months of 2020. They credited this to a 24% growth in paying subscribers in that period – sure, but current subscribers’ listenership would have also increased for the numbers to add up.

Spotify bet hard on original content beyond music last year, bringing in A-list names to their podcast game such as Michelle Obama, Joe Rogan, and Prince Harry and Meghan Markle. They not only invested hundreds of millions of dollars in these shows but also invested in other companies within the podcast ecosystem, such as Megaphone (a podcast advertising and publishing podcast company).

In addition to an increase in listenership – ad revenues linked to podcasts grew more than 100% on an annual rate.

PS- advertising, in general, accounted for 13% of the company’s total revenues in Q4.

why it matters
The podcast industry has exploded in recent years, and coronavirus-related lockdown restrictions pushed users towards audio content even more as yet another way to be entertained. Though Spotify's shares recently slumped after they missed analysts' earnings estimates, solid growth in this space is good news for them.