Spotify’s $1bn podcast bet on star names including Harry and Meghan, Kim Kardashian and the Obamas is a LOSER as the company hemorrhages $600MILLION in six months
- Spotify has invested $1 billion in building its podcast empire, with 4 mil shows
- But the podcast industry is a tiny slice of the digital ad industry – just over 2%
- Major deals like Meghan Markle’s Archetypes have also tanked in recent years
Spotify’s podcast empire is crumbling fast despite exclusive signings with some of the most famous people on the planet – though execs claim it’s all part of a master plan for long-term profitability.
Multi-million-dollar deals with the likes of Harry and Meghan, Kim Kardashian and the Obamas have coincided with a huge net loss for the subscription streaming service – including $565 million hemorrhaged over just six months this year.
To blame is Spotify’s zealous over-investment in podcasting as a tiny slice of the digital ad industry, along with the monumental failure of shows like Meghan Markle’s Archetypes, which was canned in June after just one series.
In recent years, company bosses have leapt at the opportunity to capitalize on the booming podcast business – a $2.3 billion industry which has grown by 25 percent over the past year, according to the Interactive Advertising Bureau.
The Swedish streaming giant has plowed more than $1 billion into building its podcast business, with an impressive roster north of 4 million titles.
Spotify stock prices began to plummet after major signings for podcasts like Kim K’s The System in June 2020 and Harry and Meghan’s Archetypes in December of the same year. It hit rock bottom when the first podcasts of each launched in the Summer and Fall of 2022
Spotify ‘s podcast empire is crumbling fast despite exclusive signings with some of the most famous people on the planet – including Harry and Meghan’s $20 million deal for a show which was canned this year
Multi-million-dollar deals with the likes of Harry and Meghan, Kim Kardashian and the Obamas have coincided with a huge net loss for the subscription streaming service – including $565 million hemorrhaged over just six months this year
However, the podcast business makes up little more than two percent of the $200 billion digital ad market – and the industry is rife with even bigger competitors, from the likes of Apple to Amazon.
Consequently, most of Spotify’s podcast shows aren’t profitable enough to offset its multi-million-dollar deals.
Spotify lost $565 million in the last six months up to June on $6.65 billion in revenue, according to the Wall Street Journal.
The firm is today worth around $31 billion – down from $70 billion at the peak of its powers in early 2021.
‘The size of the bet up against the size of the market just seems irrational in retrospect,’ media consultant Evan Shapiro told the WSJ.
Spotify argues it’s on track to make its podcast business profitable in 2024, based on forecasts of growth in monthly active users.
‘We always knew that 2022 would be an investment year and 2023 will be a year where we would slow down the investments and thereby operating expenditure while revenue keeps on climbing,’ Chief Financial Officer Paul Vogel said.
However, some of its biggest deals have already tanked, including a $20 million investment in Harry and Meghan’s Archetypes podcast.
Spotify signed an exclusive deal in December 2020, and their podcast premiered in August 2022 with Meghan’s friend and tennis legend Serena Williams as the debut guest.
Spotify lost $565 million in the last six months up to June, on $6.65 billion in revenue
Spotify stocks surged during the pandemic period, along with those of many tech companies as people spent more time streaming and online, but plummeted amid the launch of high-profile podcasts last year
But less than a year later, the ex-royals broke up with Spotify, releasing a statement saying they ‘mutually agreed to part ways’.
Top Spotify podcast exec Bill Simmons condemned the pair as ‘f***ing grifters’ amid the fallout.
The acrimonious axing of an expected second season came after Archetypes struggled to sustain a sizeable audience.
Spotify’s stock prices also seemed to take a hit. Stocks were at a high of 339.32 in December 2020 when the Archetypes deal was signed.
By the time the first episode aired in August 2022, stocks were down to 123.80, and by November of that year they fell further to 71.22.
The acrimonious axing of a potential second season of Harry and Meghan’s Archetypes came after the show struggled to sustain a sizeable audience
Meanwhile, the Obamas also cut ties with Spotify last year after clashing with the top brass over exclusivity and how much they were expected to appear in episodes.
The former first couple defected to iTunes, Amazon and Vudu, where their podcast Higher Ground is now streamed, after previously signing with Spotify in 2019.
Kim K’s eight-episode podcast The System launched in October 2022 – but it went quiet just a month later.
By far the biggest podcast deal Spotify has is with Joe Rogan, who was paid an estimated $200 million as part of an exclusive multi-year deal in 2020.
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