Spotify’s Bet on Podcasts Is Paying Off With Exclusive Content

Spotify says podcasts are helping drive “extraordinary” conversion to paying customers

Spotify’s efforts to move beyond music and become a go-to destination for podcasts appear to be paying off.

The Stockholm-based streaming giant reported Monday morning it climbed to nearly 250 million monthly active users, including 113 million paying customers, during Q3. Combined with an unexpected third-quarter profit, those results spurred a 15% stock price surge.

Spotify was quick to point out its strong Q3 coincided with its increased focus on podcasts. The company said 14% of monthly active users now listen to podcasts, or about 35 million people. While that number may seem modest compared to podcast competitors, when you look at it in terms of growth — the key metric investors watch for at tech companies — it becomes much more impressive. Spotify, in its letter to shareholders, said it had seen “exponential growth” in the amount of time users interacted with podcasts, with a 39% quarter-over-quarter spike in hours spent listening to podcasts. (Spotify did not disclose the total number of hours spent listening to podcasts.)

This is especially noteworthy for both Spotify and its shareholders, since podcast listeners on its ad-free service are converting to paying customers at a faster clip than users not listening to podcasts — perhaps indicating users are less willing to sit through commercials during podcasts than they are willing to deal with the occasional music interruption.

“Some of the increases are extraordinary, almost too good to be true,” Spotify said in its letter to shareholders. “We’re working to clean up the data to prove causality, not just correlation. Still, our intuition is the data is more right than wrong, and that we’re onto something special. So expect us to lean into our early success with podcasting and to share more insights with you when we’ve established causality.”

Spotify has more heavily leaned into podcasts in 2019 already.

In June, Spotify launched “Your Daily Drive,” a quick-hitting mix of music and podcasts meant for users to listen to on their way to work. Spotify personalizes the mix based on each user’s listening habits, and typically includes a podcast clip that runs about 5 minutes long, followed by a handful of songs. Spotify — which now offers more than 500,000 podcasts — includes true-crime and other popular genres alongside news updates from The New York Times and NPR in its “Daily Drive” mixes.

Spotify later doubled down on blending music and podcasts by letting users add pods to their playlists in August.

Another podcasting effort that gained traction in Q3 is Spotify’s bet on exclusive shows. Spotify Studios added 22 new and original podcasts during the quarter, including new shows from Bill Simmons’s The Ringer. As Spotify continues to battle Apple Music — which had 60 million paying customers when it last updated its subscriber count in June — for paying customers, the company sees exclusive content as an integral tool.

“We need to give [listeners] a reason to think of Spotify when it comes to podcasts,” one company employee familiar with their podcasting strategy told TheWrap. “And having shows they want and can’t find anywhere else is only going to help us gain more [users].”

Moving forward, Spotify is looking to make it even easier for podcasters to quickly upload their shows. Spotify recently tested a new button that would allow podcasters to record, edit and publish their shows directly from their phones. Podcast producers are also gravitating towards Spotify; SimilarWeb analyst Ed Lavery told TheWrap Spotify has seen “rapid growth” in the number of visits to its podcast-upload site in the last 9 months. SimilarWeb shared more than 100,000 visitors went to podcasters.spotify.com in September, compared to about 78,000 for Apple’s podcast creator site.

If Spotify can continue to weave podcasts into its extensive music offering, while also making it easier for both novice and high-level podcasters to share their shows, it’ll give the company a better chance to attract more paying customers — as well as a better chance to keep its stock price moving higher.

Sean Burch

Sean Burch

Tech reporter • sean.burch@thewrap.com • @seanb44 



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