Spotify’s Podcast Aggregation Play

Consider Spotify’s two primary business models:

This importance of centralization to an advertising business model is best seen by the fact that Spotify drove €542 million ($616 million) in advertising revenue last year, far outpacing all of podcasting, even though half of the company’s users didn’t hear any ads at all. Three years ago Midroll also acquired a podcast player called Stitcher; as I explained at the time there was a lot of value to be gained from controlling both the listening experience and ad sales, particularly in terms of data: with better data Midroll could more easily sell podcast advertising inventory to companies with business models that did not rely on generating outsized lifetime values. Meanwhile, for Spotify podcasts are fixed costs: that means that driving more listening flows directly to the company’s bottom line in a way that increased music listening does not.

Source: stratechery.com