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

Episode 2063 · 6 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'mdan Sanchez with sweet fish media and if there's one thing you have to knowabout me, it's that while I like coffee, I like your Beaumont even more. If youdon't know what it is, it's worth a google, but I promise it's legal, itdefinitely doesn't sound legal, I'll just let you google it for curious. Wehad to jump onto this, this is like an impromptu recording here at Sweet FishMedia because I just sent James an article about why why Spotify and whyessentially Apple is pretty much giving up podcasting the Spotify and it was aninteresting enough topic that James and I decided to push record and just kindof banter back and forth about what the heck is going on in the podcastingindustry and why you as an audience should care. Yeah, so, so Apple justseemingly has been crapping the bed when it comes to innovation with theirpodcast product. I've been seeing more...

...and more people. I've done two surveyson linkedin, asking people where they consume their podcast content and I didone 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 takenthe lead and this isn't a huge data set, but I had about, I think 15 or 1600people reply to those polls. I've seen other polls on Lincoln that say thesame thing, which just makes you wonder what the hell is Apple doing? Like theyhad, they literally, I think they named the category podcasts like pod andthey're losing and seemingly they just don't care that they're losing. Theyadded this subscription product recently. Uh, that Spotify basicallyjust said, you know, hold my beer,...

...we're gonna go and do what you justsaid 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 intothat. Do you want to elaborate on what that article talked about, sitting herewith you, wondering what the heck's Apple's game plan on this? It's kind oflike they sit on so much money, like why aren't they innovating aroundpodcasting? Like why aren't they doing anything? They already own the category.Like they could continue easily, easily, continue to own the category. If theytake some of that huge pile of cash they're sitting on and just dosomething about it. And then we were all sitting because we knew there gonnabe doing something around podcasting. This last release. They didn't remembersitting there watching it live and being like, they gave like two minutesof their hour long thing to podcasting and then just went into their otherproducts that they're releasing, you're just like what? That's it dang. Andthen Spotify quickly stole any, any kind of thing they had by just totallydominating their new offering. But this morning, Robin Hood serves me uparticles that of stock side investment...

...naturally, I've been seeing the trendswith Spotify. So you know, I buy a few shares, not a lot, but a few, I'mtrying to read the tea leaves here, looking at Spotify growing andpodcasting and like we'll invest in things, you know, and you know, I getthis article kind of breaking down like what's going on between these twocompanies just from a financial perspective and it brought so muchclarity as into why Apple doesn't care and why Spotify cares so much and itreally has to do with what was kind of documented in the book. The innovator'sdilemma, right? Big companies and it's kind of like the, just, just on thatbook is that big companies go after where they have the most margins, bigcompanies go after where they know they can grow their financial pie in themost substantial way. And for Apple, they make a ton of money in so manydifferent ways, mainly from their hardware, product sales and thecomputers and the iphones and probably don't know. The app stores brings in asmuch. It probably still brings in a lot of money. Maybe not as much as it usedto, 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 forthem, they weren't even making money off of it. It was kind of like an addon. It was a way for them to their like just it was a way for them to keeptheir users engaged. I mean, that's what the article laid out, like. It'sit'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 thiscute little thing on the side over here that just keeps our users a little bitmore engaged. Whereas Spotify, there are billions of dollars on the line forSpotify because they've gone all in and they only care about podcasting andthat's kind of the other end of the innovator's dilemma, right? Is thatsmaller 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 findthe parts and to them while while it might be a small gain for Apple, it's abig game for Spotify, right? It doesn't...

...take a it doesn't take a lot for asmaller company to see and seize the opportunity for it to become a hugedeal for a small company. Which classically is why big companies fallhard and small companies end up innovating underneath them. In thiscase we're talking about cos apples well diversified company with lots ofdifferent irons in the fire. So it's not like this would disrupt Apple byany means. But for Spotify, this could be huge because they're in the audiogame and podcasting lies squarely within that James. You want to sharethe other part about why Spot, why this is so attractive. Dis Spotify. Yeah. Imean to me it just seeing what Spotify has done with acquisitions like JoeRogan, the Ringer. I just saw the other day on Spotify that they are, that theyacquire Dax shepherd's show, armchair expert. And what they're essentiallytrying to do, like their, their operating margin, according to thatarticle. They're operating margin on music is very, very small because youhave to pay licensing to the artists...

...for music. But with podcasting,especially when you're going and buying shows like Joe Rogan, his entire backcatalog or Dax Shepard Show or the Ringer, you're bringing on shows thatyou don't have to pay licensing to. You've paid for the show. You, you'veessentially purchased the asset that you can then create ad revenue off ofand create, create additional, like you significantly increase your margin byowning the asset as opposed to having to pay a licensing fee every time asong gets streamed. So Spotify is seeing that they can make a whole lotmore money with podcasts than they can with music and hence hence them goingand 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 Spotifywhen I saw in linked in that so many people were moving over and I couldn'tdo it. The, the, the user experience to...

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

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

...definitely paying attention to whatSpotify is doing, the technology they're putting out there all theacquisitions they're making, anybody who's taking podcasting seriously hasto be watching Spotify because they are, they are going to be the ones once theyovertake Apple, which is going to be this year. While, I mean even the pollswere doing shows they've overtaken it already, but I know nationally, I'velooked at some data that suggests they're going to essentially, by theend of the year, Spotify will be the new leader in podcasting, which meansonce they're the leader they get to send the trends, they get to set whatpodcasting becomes in the future. The future of audio and podcasting is goingto be determined by Spotify and everybody will have to play by theirrules, which I'm actually kind of excited about because I think they'regoing 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 thingsfor 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 howto make up the money elsewhere in ads are paid subscriptions. Yeah. I meanwhen you're going for the whole ecosystem, yeah. When you've got acategory leader, whose only thing is that category, of course you're goingto see more innovation in it. It's all they, it's all they think about dreamabout playing all day every day where podcast. This is clearly, you know whatthe article called, A little, a little hobby on the side for that trilliondollar 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 upin the rising tide of podcasting. If you think about YouTube and they have30 million channels on YouTube. One of the reasons why YouTube has hadcontinued success and I believe will continue to like grow substantiallyover the next 10 years is that YouTube has actually figured out how to givecreators the most amount of money, who else gives creators money, twitch alittle bit. Nobody else. Everybody else charges money, Facebook and instagramdefinitely charge money. Tiktok doesn't...

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

...makes from his three hour long episodesor was making, I guess before he moved over to Spotify, that you can makethese creators are creating these clips from there, our to our three hour longepisodes. And each one of those clips are now making the money as wellbecause these, a lot of these clips from these big creators are gettinghundreds of thousands of use. So they're, they're monetizing each clipon top of monetizing the entire episode. And so this is such an exciting spaceto be in and I'm pumped. We jump behind here and got this little impromptuepisode on the board. Fantastic. So if you're not in podcasting now as a heckof a time to start all the presses on it right now, but it's gonna grow moreso 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 onsounder anchor. It's not hard to get started. So at least get started dabblein the water, play with it on the side,...

...whatever you gotta do to getcomfortable with this medium because it's not going away any time soon startbuilding the skill set now because it's gonna matter. All right lady, y'all one of the things we've learned aboutpodcast audience growth is that word of mouth works. It works really, reallywell actually. So if you love this show, it would be awesome if you texted afriend to tell them about it. And if you send me a text with a screenshot ofthe 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 wantto know. My cell phone number is 40749033 to 8. Happy texting.

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