Why Spotify’s Push for Podcast Subscription Revenue Won’t Be Easy

Why Spotify’s Push Podcast Subscription Revenue Won’t Be Easy
Variety Intelligence Platform; Adobe Stock

Spotify earlier this week announced that all U.S. podcast creators are now able to charge subscriptions to their podcasts on Spotify. That greatly expanded the ability of podcasters to generate recurring revenue on Spotify, which first started testing podcast subscriptions with certain creators in April. 

The Swedish music streaming service, with its global monthly user base of 365 million, is likely to help grow the paid podcast sub base simply by exposing a big number of consumers to paywalled digital audio shows for the first time. 

This is encouraging for podcast subscription market bulls. That’s because if you asked your friends if they had paid for a podcast before, chances are most would say no. 

At least that’s what’s suggested by a March survey conducted on behalf of Variety Intelligence Platform by YouGov, which found that 75% of U.S. podcast user-respondents said they had never paid in any way to listen to a podcast. 

Discouragingly for podcast subscription market bulls, that figure was virtually flat from the percentage who said the same when asked that question by YouGov in June 2020.  

Still, willingness to pay for podcasts will likely grow over the next year, thanks to a growing number of platforms that are moving to familiarize more consumers with paywalled podcasts like Apple and, more recently, Spotify. 

Many podcast diehards prior to Spotify’s paid podcast push accessed paywalled digital audio shows via Patreon or directly through a paid podcast’s website, YouGov data from March shows.  

Patreon currently counts over 6 million patrons (or users who pay for Patreon creator content), suggesting Spotify currently reaches a substantial number of users who aren’t paying for podcasts on Patreon. 

But while Spotify's podcast push will increase the paid podcast subscriber base to some degree, it likely still won’t be responsible for making it commonplace for most U.S. consumers to pay for podcasts (anytime soon). 

Spotify users still can’t sign up for paid podcasts directly within the app — users must do so on an external website.  

That’s likely a significant product downside for Spotify podcast creators seeking subscription revenue because it means it’s much harder for them to generate revenue from impulsive in-app podcast subscriptions. Some users are likely to lose interest in paying for a podcast if it involves them entering their credit card information into a new platform.  

VIP+ speculated in June, when Apple’s exact paid podcast sign-up process was unclear, that paying for podcasts on Apple Podcasts would be as simple as downloading an app from the App Store (i.e., clicking some buttons and scanning your face to use the payment information that you already have saved with Apple). 

We also argued that this payment process, which turned out to be how Apple’s podcast subscription sign-ups work, would be likely to spur podcast subscriptions that wouldn’t have otherwise occurred from those who don’t want to have more than one podcast listening app. 

Despite the lack of in-app subscriptions to paid content, Spotify’s paid podcast push isn’t D.O.A. because the streamer is taking no cut of podcast creators’ subscription revenue until 2023. Apple is taking a 30% cut of podcast subscription revenue from creators during their first year on the platform.  

This could convince certain top podcast creators to distribute paid podcasts on Spotify, despite the platform’s lack of an in-app subscribe button for paid podcasts, and help creators monetize certain consumers who signaled in March that they were interested in subscribing to paid podcasts within 12 months.