Spotify is Breaking Podcasts

Podcasts continue to operate outside the platform-dominated internet. Spotify’s ambitions are changing that, for better or worse.
Spotify is Breaking Podcasts
Spotify / WIRED

When Spotify agreed to pay Joe Rogan more than $100 million to make his show exclusive, it sent a clear message: the Swedish firm wants to be the main podcast game in town. That purchase had been preceded by the acquisition of The Ringer, in 2020. The latest move has taken popular podcast Heavyweight exclusive, two years after Spotify bought the show’s owner Gimlet. Such moves have left some industry-watchers worrying that Spotify is turning the podcast world upside down. To understand why, you need to look at the history of the web.

In a series of articles criticising Spotify, Matt Stoller, director of research at the American Economic Liberties Project, compares the current podcast ecosystem to the web between 2000 and 2006. The web, he claims, was broadly an open market, and it was good: if you built a website, you could finance it yourself through advertising. Giant platforms didn’t control distribution, production and advertising. Between 2004 and 2014, Google and Facebook put paid to that, he explains, and “the flow of ad money” was redirected from publishers to the tech giants.

Podcasting is still somewhat like the old web. It uses an open standard called RSS, creativity and diversity flourish, and there’s little targeted advertising. The chief virtue of this open format, explains Richard Tee, an associate professor at Surrey Business School, is that it’s inherently more democratic. “In the centralised model or proprietary model it's one single party that decides whatever those barriers are, that’s just inherently less democratic,” he says. And as a ‘platform’ for podcast distribution, RSS is also unique. “Most platforms, like YouTube or Facebook, are proprietary. There is essentially a single firm governing the platform. It’s quite different in podcasting,” he says.

Then along came Spotify. Stollar argues the company is trying to pull off the same power grab as Google and Facebook: take control of the advertising and distribution process and control and monetise the entire ecosystem through targeted advertising – a process known as streaming ad insertion. This grab would destroy the current, open system because the only viable way to get listeners – and money – would be through Spotify.

YouTube is a good comparison here. “If you want to put a video out into the world and you don’t put it on YouTube, you are not going to get much audience,” says Kerri Hoffman, chief executive of PRX, a non-profit media company specialising in audio journalism and storytelling. “That doesn’t mean it’s the only place to go, but it does mean it’s the dominant place to go. We don’t have that in podcasting, partly because of Apple’s, let’s just call it, ‘passive innovation’ over so many years. And, in that gap, it allowed others to form.”

So how worried should the podcast industry be? One thing to bear in mind is that many of these acquisitions weren’t from the independent community, says Hoffman. Acquisitions generally favour the already successful (and don’t typically favour women and people of colour, she explains); that’s not representative of the podcast industry at all, which is actually growing. “The content acquisitions are fairly big companies like Gimlet and Wondery,” says Hoffman. “It’s not putting a damper on the independent community, because that's not representative of the independent community.”

Focusing on acquisitions can tend to be a bit of a red herring as well, explains Tee. Due to the size of the podcasting ecosystem, a company can only acquire a certain number of shows – and that number only represents a small subset of the whole industry. A better way of putting the question, Tee says, is to find out to what extent Spotify can coexist with the RSS-based ecosystem. “I think it’s an open question to what extent these proprietary solutions will fully replace the open ecosystem,” he says. “Historically the web hasn’t been replaced by Facebook, but clearly there is a trend where non-web elements have grown significantly.”

What is undoubtedly worrying, however, is Spotify’s exclusivity deals. These create a “closed-loop”, says Hoffman, which is dangerous for the health of the industry. “What makes podcasting a healthy ecosystem, and different from where consolidation has happened in other industries, is the fact that there are lots of access points, people can listen on a multitude of devices and platforms,” she says. “It is more like the public internet than like any other kind of media, and in that way, it’s a real entrepreneurial game.”

Closed loops, mixed with a situation where the primary stakeholder is an advertiser, creates a race to the bottom, which is terrible for the consumer and for creativity more generally. “When the advertiser is the stakeholder, how do you extract value from the big money you’re spending? Well, you go toward tried and true content, which is mostly but not entirely true crime and celebrity content,” she says. “And so you reduce creativity.” Spotify declined to comment.

If Spotify intends to dominate the industry, then the industry is in trouble. “If Spotify can turn music listeners into spoken word listeners, and Spotify doesn’t own all content, they only own some content, that’s a good thing,” says Hoffman. “But if they start to create a closed-loop, where you can only access the shows that are hosted on the platform, and you get cut out of that revenue if you don’t agree to being exclusive, that actually is a problem.”


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This article was originally published by WIRED UK