One of the major takeaways from Spotify’s investor day was that the music business in a better spot financially than most people thought. The problem is that means that podcasts were in a worse spot… Let’s dive into the problem.
Simply put, Spotify went from not being in podcasts to being the dominant leader in 5 years… it’s not a crazy big problem. They just spent unnecessary money in route to domination. It really would be a podcastrophe if they blew all this money and didn’t dominate the industry. But as Spotify pushes to profitability, inefficient spending in podcasts is one of the easiest cuts.
I think Ek put it best when he said “In hindsight, I probably got a little carried away.” The push into podcasting has been successful so far, but their investments into content haven’t been as successful, driving much of the narrative right now.
The Podfather Solution
To help drive podcasting towards profitability, Spotify has put Alex Norstrom in charge of all of podcasting, with Dawn Ostroff leaving the company. Dawn was a former TV executive who drove a lot of the content strategy Spotify had within Originals & Exclusives. Alex Norstrom has been with Spotify for 12 years, in increasing roles. To me this does signal a move away from Originals & Exclusives, but it does leave a void in content leadership at Spotify.
Oddly enough, it looks like Bill Simmons might be stepping into that void. Spotify seems to be getting closer to what the true essence of their podcasting push will be. It’s way easier to replicate a Bill Simmons style podcast than a Serial style podcast. Bill has a great understanding of podcasts, he’s been dominating the industry for over a decade, but he’s not exactly what you’d expect as a corporate executive. He’s had his share of controversies… I could see Bill becoming a Joe Rogan-esque controversy in the future.
I do worry about the intersection of content and monetization. There is a huge difference between creating content and building the tools to help monetization. While The Ringer was profitable, they primarily seemed to be driven by brand advertising. For Spotify to fully monetize, they will need to get into programmatic advertising and continue to scale their ad network. The podcast problem Spotify is trying to solve is three fold: content, discovery and monetization. I think Bill Simmons can help solve the content problem, but Spotify has a lot of work to do on discovery and monetization still. Spotify has been taking steps in all of those categories, but they still have a ton of work to do here. Content isn’t the only problem here.