Spotify’s podcast investments in North America didn’t alter its subscriber growth, analysts say

Enders Analysis report says that podcasts are less likely to draw recurring subscribers

Spotify’s podcast investments in North America have made no difference to its subscriber growth, according to a recent report by media analysis firm Enders on the audio giant’s Q4 2022 financial report. 

Heavy podcast investments made by Spotify include its $200 million exclusivity deal with Joe Rogan’s podcast as well as a number of acquisitions in 2022 such as its purchase of Podsights and Chartable. According to Spotify’s latest quarterly report, this led the company to report €224m (£198m) in operating losses which resulted in lay-offs of 6% of its employees including Spotify’s former chief content officer Dawn Ostroff.

Although Spotify hopes that podcast investments will grow subscribers in North America, the report states that this might be less likely to happen as podcasts are “often consumed as live audio events, listened to just once, rather than on repeat” and so are less likely to lead to direct subscriber growth.

“We are not persuaded that the podcasts procured for North America made any difference to Spotify's subscriber expansion in that market, judging by the post-pandemic flattening trend line, in what is a mature market for subscription music streaming services,” the Enders Analysis report stated. 

The report also stated that due to the podcasts limited availability as mostly English-language podcasts, it affects their ability to travel globally into European, Latin, and other expanding markets, unlike music which can travel more easily. 

Despite the company’s massive operating loss, Spotify CEO Daniel Ek says that the platform will continue to make more podcast investments this year, even if it is planning to tighten the budget more - this includes its recently-announced exclusive podcast deal with Louis Thereoux.

Podcasting has also benefited Spotify by growing its ad-supported revenue in Q4 2022 which had an overall 14% increase year-on-year (€449m) with podcasting ad revenue growth being currently in the mid 30% range YoY as well.