Last week, MBW told you that record labels are becoming increasingly antsy that Spotify might reduce the percentage of money paid out to music copyright holders by pushing more audience listening towards non-music content.
This week, that narrative has kicked on a couple more blocks.
Spotify has in the past few hours announced a new deal to exclusively lock down The Joe Budden Podcast (pictured) – a very popular cast for hip-hop enthusiasts which was previously available over iTunes.
The news comes less than 24 hours after Spotify debuted its first ever brand-partnered, first-party podcast series – the five-episode ‘Ebb & Flow’ hosted by Jasmine Solano and sponsored by New Amsterdam Vodka.
The Joe Budden Podcast, which arrives on Spotify on September 12, has issued 175 weekly episodes, topping podcast charts. The show sees rapper Budden team up with his co-hosts Rory and Mal to discuss hip-hop music and news, while interviewing artists and public figures.
On Spotify, the Joe Budden ‘cast will double its frequency, with a new episode released each Wednesday and Saturday.
“I’d like to thank Spotify for this tremendous opportunity to take The Joe Budden Podcast and podcasting in general to heights never before seen,” said Budden. “Our partnership is extremely humbling for me and adds yet another chapter to a career full of plot twists.
“While companies are spending endless amounts of dollars and research to find out what consumers want… all you have to do is listen to the people. Again, thank you Spotify for listening.”
“This highlights a new way of thinking and a corporate ‘head nod’ to the shift taking place before our very eyes.”
He added: “While companies are spending endless amounts of dollars and research to find out what consumers want, how they want it and who they want it from, we’re in a space where all you have to do is listen to the people. Again, thank you Spotify for listening.”
Courtney Holt, Head of Spotify Studios, said: “As we continue to expand and diversify our content slate, teaming up with The Joe Budden Podcast is an exciting move for Spotify.
“We can’t wait to bring Joe’s loyal fans more of what they already love, and offer the opportunity for new hip-hop fans to discover him and listen.”
So that’s one existing podcast locked down on an exclusive deal, plus a brand new branded series launched – adding to other Spotify hip-hop-themed podcasts such as Dissect, Microphone Check, and Good As Hell.
Those major labels starting to worry about Spotify’s increasing love for non-music content aren’t vexed without cause.
In a positive note about Spotify’s potential future value, media analyst Rich Greenfield of BTIG wrote last month that he’d noticed Spotify getting “far more serious about podcasts”.
“As podcasting consumption grows on the Spotify platform, overall time spent on the platform will increase and [profit] margins will improve as listening mix shifts away from music.”
“While it remains early days, with Spotify’s podcast catalog far smaller than Apple and others and a podcast experience that clearly needs to improve and make non-music content more visible, we believe Spotify’s users very much want access to a robust array of non-music content,” wrote Greenfield.
He added: “As podcasting consumption grows on the Spotify platform, overall time spent on the platform will increase and margins will improve as listening mix shifts away from music.”
ie. Profits will improve as Spotify is able to pay music artists and labels a lower percentage of its turnover, thanks to more listening time being drawn to podcasts.
Spotify’s intentions in the world of podcasting are clearly sizeable: in June, the firm announced a deal to exclusively bring comedian Amy Schumer’s ‘cast, 3 Girls, 1 Keith, to its platform.
Bear in mind that Netflix reportedly paid somewhere between $11m and $20m to get a Schumer to commit to a stand-up comedy exclusive on its platform, and it hints at the level of Spotify’s intent.
As we’ve previously noted, Spotify is all-too-aware of the financial benefits podcasts may bring to its platform.
Speaking to MBW on a call ahead of Spotify’s Q2 earnings last month, the firm’s CFO Barry McCarthy noted that podcast content offers the unique monetary benefit of having audio sponsors (like New Amsterdam Vodka on Ebb & Flow).
“Podcast content everywhere [therefore] includes ads – on our platform as well – both for free users and paid users,” said McCarthy. “There is an opportunity to expand margins.”
He added: “The opportunity and the challenge is to take all the insights we have into listener taste to unlock the world of podcasting; if we do that I think there’s an opportunity for it to become significant part of the overall audio mix.
“The bigger the percentage of [our] mix, the bigger the margin opportunity to be had.”
Spotify’s operating losses in the first half of 2018 stood at €131m, off total half-year revenues of €2.4bn.Music Business Worldwide