Report: New Spotify App To Give Podcasts More Prominence

Spotify Technology SA is testing a new version of its app that gives podcasts more prominence, an overhaul the company hopes will make it easier for people to find and listen to the radio-style programs, according to Bloomberg.

Tabs at the top of users’ libraries display the words “music” and “podcasts” in a large font, according to people familiar with the matter, making podcasts more prominent and accessible than they are now. Spotify has already tested the changes for some users, said the people, who asked not to be identified because the plans aren’t public yet.

The new version of the app puts podcasting and music on equal footing, marking a clear signal that Spotify wants to be in all forms of audio. The company has spent about $400M this year buying three podcasting companies, and has invested in original podcasts that are available only to its users.

Despite Spotify’s recent flurry of activity, Apple Inc’s podcast app is still the dominant way most people listen, accounting for more than 60% of all listening, according to several industry executives. Spotify accounts for 10% to 20% of listeners for many top podcasts, but chief financial officer Barry McCarthy said in an interview that the Swedish company is working to make audio programs easier to find.

Spotify is the largest paid music service in the world.  But the company’s recurring losses are major source of concern for investors. Music rights holders commandeer more than 60% of Spotify’s revenue in the form of royalties. And the company has agreed not to push for another cut in licensing fees in the current round of negotiations with the music industry.

As a result, Spotify has experimented with other ways of reducing the share of revenue gobbled up by music royalties, such as enabling artistes to bypass record labels and upload their work directly.

Podcasting is still a nascent business, with $314M in US revenue in 2017, according to the Interactive Advertising Bureau. The number of people in the US over the age of 12 who listen to a podcast every week surpassed 60 million in 2019, according to Edison Research.

Ek hopes podcasting will lure advertisers from radio, which still generates billions of dollars a year in sales. Advertising accounted for less than 10% of Spotify’s revenue in the most recent quarter, and podcasting could raise that proportion in time, helping to turn Spotify into a profitable technology giant like Apple and Facebook Inc.