Spotify’s ambitious foray into podcasting, including deals with celebrities like Kim Kardashian and the Obamas, and its subsequent lack of profit is the subject of an in-depth Wall Street Journal feature. The streaming giant spent over $1 billion on its podcast initiatives but faced a loss of €527 million in the first half of this year.
The podcast market, though expanding, remains a small slice of the digital ad industry. According to the Interactive Advertising Bureau, podcast revenue in the U.S. is expected to hit $2.3 billion this year, a mere fraction of the $200 billion digital-ad market. Despite these hurdles, Spotify, which had 220 million paid subscribers as of June, claims it is on track to make its podcast business profitable by 2024.
The company laid off 200 employees in June and consolidated its content into Spotify Studios, effectively phasing out its Gimlet and Parcast brands. It also raised its subscription price by $1 to $10.99 per month. While Spotify aims for profitability, it has started to share more of the financial risk with its podcast talent, as evidenced by its recent $4 million deal with comedian Trevor Noah.
Chief Executive Daniel Ek still maintains that Spotify’s long-term goal is to become an audio giant with an annual revenue of $100 billion by 2030. Although the company reported €11.7 billion in revenue in 2022, it continues to struggle to turn its podcast investments into a lucrative business.
