B2B Growth: Your Daily B2B Marketing Podcast
B2B Growth: Your Daily B2B Marketing Podcast

Episode 2063 · 11 months ago

Why Apple is Handing Podcasting to Spotify (& Why It Matters For Marketers)

ABOUT THIS EPISODE

In this episode, James Carbary and Dan Sanchez riff on th e current race of the podcasting tech giants Apple and Spotify. A recent article made it clear why Spotify is taking the lead and Apple doesn't care.

Yeah, welcome back to be, to be growth. I'm dan Sanchez with sweet fish media and if there's one thing you have to know about me, it's that while I like coffee, I like your Beaumont even more. If you don't know what it is, it's worth a google, but I promise it's legal, it definitely doesn't sound legal, I'll just let you google it for curious. We had to jump onto this, this is like an impromptu recording here at Sweet Fish Media because I just sent James an article about why why Spotify and why essentially Apple is pretty much giving up podcasting the Spotify and it was an interesting enough topic that James and I decided to push record and just kind of banter back and forth about what the heck is going on in the podcasting industry and why you as an audience should care. Yeah, so, so Apple just seemingly has been crapping the bed when it comes to innovation with their podcast product. I've been seeing more...

...and more people. I've done two surveys on linkedin, asking people where they consume their podcast content and I did one about nine months ago and was surprised to see that it was like 55% Apple 38% Spotify, something like that. Nine months later it was like 58% Spotify, 40 something percent Apple. I mean, Spotify had had straight up taken the lead and this isn't a huge data set, but I had about, I think 15 or 1600 people reply to those polls. I've seen other polls on Lincoln that say the same thing, which just makes you wonder what the hell is Apple doing? Like they had, they literally, I think they named the category podcasts like pod and they're losing and seemingly they just don't care that they're losing. They added this subscription product recently. Uh, that Spotify basically just said, you know, hold my beer,...

...we're gonna go and do what you just said you were going to charge creators for and we're going to do it for free. So anyway, this article that you just sent me uh kind of shed some light into that. Do you want to elaborate on what that article talked about, sitting here with you, wondering what the heck's Apple's game plan on this? It's kind of like they sit on so much money, like why aren't they innovating around podcasting? Like why aren't they doing anything? They already own the category. Like they could continue easily, easily, continue to own the category. If they take some of that huge pile of cash they're sitting on and just do something about it. And then we were all sitting because we knew there gonna be doing something around podcasting. This last release. They didn't remember sitting there watching it live and being like, they gave like two minutes of their hour long thing to podcasting and then just went into their other products that they're releasing, you're just like what? That's it dang. And then Spotify quickly stole any, any kind of thing they had by just totally dominating their new offering. But this morning, Robin Hood serves me up articles that of stock side investment...

...naturally, I've been seeing the trends with Spotify. So you know, I buy a few shares, not a lot, but a few, I'm trying to read the tea leaves here, looking at Spotify growing and podcasting and like we'll invest in things, you know, and you know, I get this article kind of breaking down like what's going on between these two companies just from a financial perspective and it brought so much clarity as into why Apple doesn't care and why Spotify cares so much and it really has to do with what was kind of documented in the book. The innovator's dilemma, right? Big companies and it's kind of like the, just, just on that book is that big companies go after where they have the most margins, big companies go after where they know they can grow their financial pie in the most substantial way. And for Apple, they make a ton of money in so many different ways, mainly from their hardware, product sales and the computers and the iphones and probably don't know. The app stores brings in as much. It probably still brings in a lot of money. Maybe not as much as it used to, I don't know. Um, but they make...

...money in so many different ways. They're probably looking at this podcast service and can like, like for them, they weren't even making money off of it. It was kind of like an add on. It was a way for them to their like just it was a way for them to keep their users engaged. I mean, that's what the article laid out, like. It's it's yeah, it just keeps apple users more engaged with the Apple ecosystem. That's how they're looking at podcasting. It's like, oh, this is this cute little thing on the side over here that just keeps our users a little bit more engaged. Whereas Spotify, there are billions of dollars on the line for Spotify because they've gone all in and they only care about podcasting and that's kind of the other end of the innovator's dilemma, right? Is that smaller companies? And I mean, no one thinks to Spotify as a small company, but compared to Apple, it's a small company, right? They come in and find the parts and to them while while it might be a small gain for Apple, it's a big game for Spotify, right? It doesn't...

...take a it doesn't take a lot for a smaller company to see and seize the opportunity for it to become a huge deal for a small company. Which classically is why big companies fall hard and small companies end up innovating underneath them. In this case we're talking about cos apples well diversified company with lots of different irons in the fire. So it's not like this would disrupt Apple by any means. But for Spotify, this could be huge because they're in the audio game and podcasting lies squarely within that James. You want to share the other part about why Spot, why this is so attractive. Dis Spotify. Yeah. I mean to me it just seeing what Spotify has done with acquisitions like Joe Rogan, the Ringer. I just saw the other day on Spotify that they are, that they acquire Dax shepherd's show, armchair expert. And what they're essentially trying to do, like their, their operating margin, according to that article. They're operating margin on music is very, very small because you have to pay licensing to the artists...

...for music. But with podcasting, especially when you're going and buying shows like Joe Rogan, his entire back catalog or Dax Shepard Show or the Ringer, you're bringing on shows that you don't have to pay licensing to. You've paid for the show. You, you've essentially purchased the asset that you can then create ad revenue off of and create, create additional, like you significantly increase your margin by owning the asset as opposed to having to pay a licensing fee every time a song gets streamed. So Spotify is seeing that they can make a whole lot more money with podcasts than they can with music and hence hence them going and doing all of these acquisitions and spending. So one thing I hope they do, I hope they spin off a separate app. I actually tried moving over to Spotify when I saw in linked in that so many people were moving over and I couldn't do it. The, the, the user experience to...

...me is too clunky um, to go between music and podcasts and video in those podcast, it just, it's not a good experience for if it wasn't for me. So I actually went back to Apple for all of the problems that it has. Apple podcast is a standalone app that is just focused on podcasts. So that's the next move. I hope we see Spotify making is to split off podcasts into its own app, just so it can be a better experience. But and I use Spotify for music, so it's crazy that I wouldn't just want to use it for, you know, my podcast as well. But for whatever reason, the the experience was just not very delightful. So anyway, that's that I think is the underlying reason why their margins a whole lot, you know, a whole lot bigger. um they can make an article said that their margin is currently 25%, which isn't bad for a lot of companies, but compared to its Kind of big brother in the streaming...

...games Netflix, who's getting between 35 and 40% margins, Spotify has got to be more competitive, right? Because that's the that's the closest kind of company to model after and they know they can get it up to about, you know, into the same range if they could become the leader in podcasting because the margins are so much better there. You see how closely licensing for the podcasters. Yeah, you see how closely they're following Netflix's model to, I mean with House of cards, I think that was netflix's first foray into original content. You're seeing Spotify get into it by acquiring Gimlet, who's got, I think they had 25 or 30 original shows whenever Spotify acquired them. Um, and now they're, they're getting into acquiring much, much larger shows. And uh, and so they're really following Netflix's Playbook, just an audio. And it seems to be working because more and more and more people are consuming podcast content via Spotify now. Yeah, as professional podcasters, we are...

...definitely paying attention to what Spotify is doing, the technology they're putting out there all the acquisitions they're making, anybody who's taking podcasting seriously has to be watching Spotify because they are, they are going to be the ones once they overtake Apple, which is going to be this year. While, I mean even the polls were doing shows they've overtaken it already, but I know nationally, I've looked at some data that suggests they're going to essentially, by the end of the year, Spotify will be the new leader in podcasting, which means once they're the leader they get to send the trends, they get to set what podcasting becomes in the future. The future of audio and podcasting is going to be determined by Spotify and everybody will have to play by their rules, which I'm actually kind of excited about because I think they're going to be putting a lot more. I think they're going to in order to do that. They're giving a lot, a lot more tools and advertising and all kinds of things for creators to do what they do apples like, oh, we're going to charge 30% Spotify is like, well we're not...

...charging anything because they know how to make up the money elsewhere in ads are paid subscriptions. Yeah. I mean when you're going for the whole ecosystem, yeah. When you've got a category leader, whose only thing is that category, of course you're going to see more innovation in it. It's all they, it's all they think about dream about playing all day every day where podcast. This is clearly, you know what the article called, A little, a little hobby on the side for that trillion dollar organization over There and this might not apply to be, to be brands, but it's gonna, it's gonna affect you and that you're going to be caught up in the rising tide of podcasting. If you think about YouTube and they have 30 million channels on YouTube. One of the reasons why YouTube has had continued success and I believe will continue to like grow substantially over the next 10 years is that YouTube has actually figured out how to give creators the most amount of money, who else gives creators money, twitch a little bit. Nobody else. Everybody else charges money, Facebook and instagram definitely charge money. Tiktok doesn't...

...give creators money. So everybody goes to Youtube to figure out how to make things that is B two C starts to figure out like, oh, we can actually make a pretty good amount of money through a podcast and it's easier to make podcasts and it is Youtube content that's gonna attract a lot of creativity to the space. It's going to blow up the BBC world as they, as people can figure out how to monetize audio content more. And Spotify makes that easier for them to do. The whole tide will rise and you'll start to see podcasting go from what I think we have two million shows to 10 million to 50 million shows. That's why they're investing. That's why so many companies, even netflix is investing in audio content now because it's at two million now. But if you knew was going from two million to 50 million shows over the next 10 years, wouldn't you want to get in on that? Absolutely. It's one of the things, one of the reasons we're building a tool that we're building called showcase that auto clips, video podcasts, into micro clips that you can use on Youtube or social. I mean, you think about the revenue that joe Rogan...

...makes from his three hour long episodes or was making, I guess before he moved over to Spotify, that you can make these creators are creating these clips from there, our to our three hour long episodes. And each one of those clips are now making the money as well because these, a lot of these clips from these big creators are getting hundreds of thousands of use. So they're, they're monetizing each clip on top of monetizing the entire episode. And so this is such an exciting space to be in and I'm pumped. We jump behind here and got this little impromptu episode on the board. Fantastic. So if you're not in podcasting now as a heck of a time to start all the presses on it right now, but it's gonna grow more so get in it. Yeah, I mean, sweet Fish Media can help you if you need help, but you can get, you can get in with that is you can start a free podcast on sounder anchor. It's not hard to get started. So at least get started dabble in the water, play with it on the side,...

...whatever you gotta do to get comfortable with this medium because it's not going away any time soon start building the skill set now because it's gonna matter. All right lady, y'all one of the things we've learned about podcast audience growth is that word of mouth works. It works really, really well actually. So if you love this show, it would be awesome if you texted a friend to tell them about it. And if you send me a text with a screenshot of the text you sent to your friend meta. I know I'll send you a copy of my book, content based networking, how to instantly connect with anyone you want to know. My cell phone number is 40749033 to 8. Happy texting.

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