Its not a single thing, there are multiple positive impacts to Spotify business.
- Podcasts replace music listening. A quick win because time spent listening to podcast means less fees to music companies. Music licensing is the single largest cost Spotify has.
- Better negotiation power with music companies. Spotify has no negotiation power with big music. A podcast roster can diversify revenue and reduce dependency
- Some podcast operators want an ad network where someone else sells the ad spots. Spotify could build a ‘Google Ads’ for podcasts business.
- Smart people remember that Google Ads was a key part of killing professional blogging when Google realised they had full control of the relationship and increased their share until the small players were squeezed out.
- Having exclusive podcasts might drive people to sign up. This increases revenue straight to the bottom line
- Today Apple Podcasts remains the dominant podcatcher and directory service but Spotify could make play to take control of the market. Lets face it, Apple hasn’t shown any interest in participating in podcasting.
- Spotify gets to test the market for video – could it compete with Youtube ? It wouldn’t cost much and would be trying for a few years.