Spotify’s podcast empire is taking a serious hit despite the streaming service’s multi-million-dollar deals with some of the world’s most famous people. Despite signing exclusive deals with the likes of Harry and Meghan, Kim Kardashian, and the Obamas, Spotify made a net loss of $565 million over just 6 months this year.
The streaming service had invested heavily in podcasting, banking on the growing $2.3 billion industry as a key area of growth over the last few years. But a tiny share of the digital ad market, estimated at just 2%, coupled with the failure of some of their high-profile exclusive shows (including Meghan Markle’s Archetypes, which was canceled after just one series), has spelled disaster for the company’s bottom line.
Spotify has plowed more than $1 billion into its podcast business, with over 4 million titles now available, yet most shows remain unprofitable for the streaming giant. Media consultant Evan Shapiro noted the discrepancy between the size of the bet and the size of the market, and said ‘it just seems irrational in retrospect.’
Spotify CFO Paul Vogel claims the company remains committed to achieving profitability in 2024. But Spotify’s financial picture is becoming more dire by the day. When the Archetypes deal was signed in December 2020, its stock price was a high of 33. But since then, it has dropped to an all-time low of 71.22 in November 2022.
The exodus of high-profile talent from the Spotify camp hasn’t helped matters. Harry and Meghan cut ties with the streaming service soon after its debut episode, and the Obamas left for other distribution channels last year over clashes on exclusivity and guest appearances. Kim Kardashian’s eight-episode podcast The System also went quiet after just one month in October last year.
The Swedish streaming company’s fate has been largely tied to their biggest podcast deal of all, with Joe Rogan. Shortly after signing a multi-million dollar contract in 2020, Rogan became the darling of the podcasting world and quickly became a linchpin for Spotify’s successful transition into the audio content world. Despite the bankruptcy figures, it appears that the controversial host has emerged unscathed from the debacle.
Spotify’s stock may have gone down, but the company doesn’t appear to be done with podcasting yet. With their biggest star safely tucked away, the streaming giant looks set to ride out this troubled period as they continue to invest in new content in a bid to turn their fortunes around. Whether they’ll be successful or not remains to be seen.
