Spotify: The Roadmap
Spotify is in a place of dominance, with 271 million monthly users, 124 million paid consumers and a vast amount of space to grow. Spotify is not slowing down. With the most recent acquisition of Ben Simmons The Ringer podcast network for $200 million, Spotify are on the path to expanding their territory. With all the above mentioned the question is, where are Spotify now and where do intend on going?
Spotify has been influential behind how music has been consumed over the past 10 years through playlists. Rap Caviar, a playlist with a following of nearly 13 million and 7 billion streams, Rap Caviar holds an immense amount of influence on the success of a record that makes the playlist. The most listened to record from the playlist is Meek Mill — “Going Bad” featuring Drake which has amassed 44 million streams. Because of this ‘shift’ in music consumption, a plethora of playlists by Spotify and many other outlets. The general aim by artists seems to be to make it on a playlist with a large following.
Podcasts have been the centre of attention regarding Spotify’s strategy to scale over the past 18 months. With the acquisition of Gimlet, Anchor and The Ringer, Spotify have spent around $700 million on podcasts to aggressively control the market. Spotify has also gone into the business of exclusivity. Like a few others, The Joe Budden podcast is an exclusive of Spotify but they do something different that differentiates them from others, they play music. Whilst a small difference, it separates them from the rest and creates a unique selling point. With very to no evidence, do Spotify cover any additional licensing costs to record labels that would permit them to continue doing this? Should be the case, this might be a pathway towards creating other podcasts with that feature.
Staying on podcasts, it has been reported that Spotify have been testing video attached to podcasts. The Verge reports Spotify used Youtubers, Zane Hijazi and Heath Hussar to test the feature. Video would appear for 50% of their episodes before returning to an audio only podcast. Two years ago Derek Thompson, senior editor of The Atlantic sat down with Scott Galloway, professor at NYU stern to speak about Spotify. In the video below he speaks on video being the next product that Spotify would roll out to scale their business. Whilst he was ahead be slightly ahead of time, the roll out of video in line with podcasts is an indication of him being correct whilst also being in line with trends that podcasters have created. I believe that we will see a separate introduction of video on Spotify which will mainly be original content and The Joe Budden podcast could be a great place to start.
Spotify is in the process of creating an ecosystem. Like their rivals, Apple and Amazon, they laid their foundation and were able to use that as a means to distribute other products through their pipelines. Apple is able to offer bundle deals (music, arcade and Apple TV+) because their distribution is the iPhone. Amazon can offer music and video because their distribution is Prime. Spotify is attempting to do the same thing with podcasts, an industry that made $344 million in the U.S. alone. A lot of money indeed but that equates for just one country and Spotify is global and will need to amass those figures by themselves. Podcasting may have been around for a while, but it is still very much untested and could go either way. Whatever way it goes will define Spotify as a company for decades to come.
