Why Spotify Could Become the Netflix of Audio
With an emphasis on podcasts, Spotify could soon dominate the audio market
The cultural impact of Netlfix cannot be understated. Its stock has shown that, going from a 7-year run as a penny stock to amassing its current valuation of $215 billion.
On the road to becoming the king of online streaming, Netflix connected customers to some of their favorite movies at the cost of a measly monthly subscription fee, offering a bundle of value to movie buffs and casual viewers alike.
In recent years, the entertainment industry has caught up to the streaming trailblazer and has taken away the monopoly-like hold Netflix had on consumers.
While the streaming of video content has become a crowded field, the streaming of audio content is still somewhat of an oligopoly with Apple and Spotify leading the pack.
It’s safe to take Apple’s side in almost any battle, no matter the industry. With audio, though, Spotify could become the Netflix to Apple’s Amazon (Prime Video), chopping the goliath down and running to the top of the mountain uncontested.
In the company’s recent earnings report, Spotify reported having 356 million monthly active users and 158 million premium subscribers — a 21% year-over-year growth.
Spotify and Apple Music aren’t easy to compare, as Apple Music doesn’t have a free option like Spotify. Also, due to it being a small piece of its services portfolio, Apple doesn’t readily give away revenue and user totals. As of June 2020, though, it was estimated that Apple Music had 72 million paying subscribers and a revenue of $4.1 billion.
Where Spotify takes the cake is podcasts, an area it began investing heavily into last year. In 2020, the company gained the exclusive rights to The Joe Rogan Experience as well as ventures with Kim Kardashian, Warners Bros. and DC Entertainment, and The Ringer’s library of pop culture podcasts.
Spotify also purchased the networks of Gimlet Media and Parcast along with Anchor — a podcast platform that now powers the majority of Spotify’s podcasts.
At the end of March this year, Spotify purchased the Locker Room’s app-maker, Betty Labs. Spotify said in its earnings report that this purchase will “give professional athletes, writers, musicians, songwriters, podcasters, and other global voices opportunities to host real-time discussions, debates, ask me anything (AMA) sessions, and more.”
Spotify now has 2.6 million podcasts on the network.
To further increase engagement with audio of any form, Spotify also released a product called “Car Thing.” Car Thing operates like a modern-day radio, mounting to the air conditioning/heating vent or dash in front of you with voice command and a knob for maneuvering the playlist.
Spotify currently requires Car Thing consumers to be premium subscribers, but they will send it to you for free (well, $6.99 for shipping and handling). They will eventually retail for $79.99.
While Spotify has already introduced cool features like the in-app video play that can be seen on The Joe Rogan Experience, it will bring something else to entice both podcasters and listeners: subscriber-only shows.
Creators will be able to find their true loyal fans through this feature and get to keep 100% of the revenue as well. In 2023, however, Spotify will begin taking a 5% cut.
From a user and creator standpoint, Spotify continues to separate itself from the audio-producing pack, namely Apple Music. Apple has brand recognition on its side, and any iPhone user will easily have access to Apple Music and its Podcasts app.
Apple Music is lacking when it comes to new music discovery, however, and its Podcasts app is miles behind Spotify’s podcast network — both in terms of content and in-app experience. Spotify is also available to both Apple and Android users, unlike Apple Music.
Spotify began as a music streaming company and is now heavily invested in becoming an audio streaming company. The paths of Netflix and Spotify are very different, but they may end up having a similar cultural impact.
While Netflix dominated video streaming in its early days, Spotify is moving towards dominating audio streaming as it gets older.
Spotify still has a long way to go before reaching Netflix’s level, though. It's valued at $43.5 billion, just one-fifth of Netflix. It is heading in the right direction, though, and is leaving its competition in the dust.