Spotify Sees Podcast Losses Peaking in 2022, Says It Monetizes Only 14% of Listening Time Currently
08.06.2022 - 20:39
/ variety.com
Todd Spangler NY Digital EditorSpotify disclosed some key financial metrics of its podcast business for the first time — and while the $1 billion-plus the streamer has invested into podcasting so far has been a drag on overall profits, the company expects podcasts to eventually have a better margin profile than its core music biz.The company outlined its long-term strategy and financial prospects at its 2022 Investor Day event Tuesday.In 2021, Spotify’s podcast business generated nearly €200 million in revenue, according to CFO Paul Vogel — up 300% year over year. About 30% of Spotify’s user base, or more than 125 million monthly users, listened to podcasts in the first quarter of 2022, representing 7% of total listening hours on the platform in the period.
However, the podcast business had a negative gross margin of -57%, according to Vogel — and the losses will be even higher this year. That said, Spotify monetized only 14% of podcast listening on the platform in Q1, Vogel said, suggesting that the company has room to expand the podcast advertising business.
In 2021, Spotify’s music business had a 28.3% gross margin.Long term, Spotify believes podcasts can achieve potential gross margins of 40%-50% — even higher than its 30%-35% gross margin target for music, CEO Daniel Ek told investors.“The podcast space is a small but it’s a fast-growing space,” Ek said. Spotify also has big expectations for the audiobook market, which it entered with the acquisition of Findaway in November 2021.On the podcast content front, Spotify’s owned-and-exclusive strategy is geared around using “tentpole” shows — like top 10 podcasts “The Joe Rogan Experience,” Alex Cooper’s “Call Her Daddy” and Dax Shepard’s “Armchair Expert” — to attract
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