Spotify’s podcast ad revenue increases 627% in Q2 – TechCrunch

In the minutes leading up to its quarterly earnings call this morning, Spotify showed ads for its originals and exclusives, such as the true-crime show “Deathbed Confessions” and the sex and relationships podcast “Call Her Daddy,” which Spotify recently acquired on a deal worth $ 60 million. Sure, it’s kind of fun to hear a recording of host Alex Cooper’s voice saying, “Hi, Daddy!” when investors log into a call at 8 a.m., but the subtext rang clear: Spotify is serious about growing its podcast business.

Given how many podcasting companies Spotify has acquired in recent years, it would be worrying if there had not been significant growth in this area. Among Spotify users who already listen to podcasts, podcast listening increased 30% year-over-year, with total hours consumed up to 95%. Meanwhile, podcast ad revenue increased by 627%, which beat expectations. Spotify attributes this success to triple-digit annual earnings from its in-house studios (The Ringer, Parcast, Spotify Studios and Gimlet) and exclusive deals with “The Joe Rogan Experience” and Obamas’ Higher Ground studio. Spotify also referenced its November acquisition of Megaphone, a podcast hosting and advertising company.

“Continued superior performance is currently limited only by the availability of our inventory, which is something we are actively addressing,” said CEO Daniel Ek. “The days when our advertising business accounted for less than 10% of our total revenue are long gone, and going forward, I expect ads to be a substantial part of our revenue mix.”

Image credits: Spotify

In April, Spotify launched paid podcast subscriptions – via Anchor, the host of podcasts that bought in 2019, creators can choose certain content behind a paywall. Apple released a similar feature too, but it’s still too early to know how these subscription services will affect listeners and creators. However, Spotify shared a bit more information about its Audience network, an audio ad marketplace. Since its launch in April, Spotify’s “monetizable podcast inventory” has tripled. Spotify has also seen a “significant” increase in unique advertisers and a “double-digit increase” in CPMs (cost per thousand ad impressions), but did not provide specific figures.

Still, the more power a platform like Spotify has over the podcasting industry, the fewer options creators will have for monetization; Already, the ubiquity of streaming platforms has taken its toll on musicians, who are working together to demand better compensation from Spotify. The Justice on Spotify The move notes that, on average, artists make $ 0.0038 per stream of a song, which means a song must be streamed 263 times to earn a single dollar. Spotify has continued to grow during the pandemic, but since live shows are the best way for musicians to make money in the age of streaming, artists have struggled while touring is not safe.

On this morning’s earnings call, Ek noted live performances at Green room, The Clubhouse clone of Spotify, as a potential way for musicians to increase their income. In the last quarter, Spotify has tested live concerts as a source of income, partnering with artists like The Black Keys. Still, smaller artists may not trust the platform due to its refusal to make the broadcast itself a more viable way to get paid for their work.

“Live is meaningful to a lot of our creators, and we’re excited about it,” Ek said, adding that Spotify saw positive results from its live digital events thus far. “We want to provide the most opportunities for creators to create more ways to turn a listener into a fan, and turn fans into super fans, and increase monetization for those creators.”

Although Spotify did not meet its target for monthly active users (MAU) in the second quarter, other key metrics showed an upward trend, such as growth in paid subscribers and revenue. The platform attributes this roadblock to MAU growth to the persistent impact of COVID-19, as well as a problem Spotify had with its third-party email verification system.

“In full disclosure, this was a problem on our part,” CFO Paul Vogel said. “The estimate at this time was that it was 1 to 2 million MAU growth that was affected by the friction created by this email verification change. It has since been corrected and should not have an impact in the third quarter. “

Of Spotify’s 365 million MAUs, 165 million (about 42.5%) are paying subscribers, which is still well beyond its next biggest competitor, Apple Music, which already had 60 million subscribers in 2019, but has not released updated figures since.

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