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Podcast Wars: Can Apple Hold Off Spotify?

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Podcast Wars: Can Apple Hold Off Spotify?

The news that Apple Inc (NASDAQ: AAPL)  is stepping up its podcasting game to include the opportunity for creators to monetize subscriptions is creating ripples in the industry and has led to some comments from some industry leaders.

What Happened: At its April 20 Spring Loaded event, Apple announced several product upgrades and new items. The company announced Apple Podcasts Subscriptions, a global marketplace that could help the company compete against Spotfiy Technology (NYSE: SPOT) better.

“Starting in May, listeners in more than 170 countries and regions can sign up for premium subscriptions that include a variety of benefits curated by creators,” Apple said.

What if Means for Apple: Loup Ventures managing partner Gene Munster shared his thoughts on the push into monetizing podcasts for creators, comparing it to when Apple opened up its software to developers.

“Think of this as the app store for podcasts,” Munster said.

Apple is allowing podcasters the chance to set the terms of the advertising load and subscription amount, providing a unique monetization effort.

“They are opening up a marketplace for podcasts,” he said.

The revenue side of things could be hard to see within Apple if they include this in their subscription revenue figures, but Munster said the new podcasting program is meaningful for Apple.

Apple will charge its podcasters $19.99 a month to enable subscription services. Apple will take a 30% cut from subscription revenue for the first year and 15% after the first year.

Related Link: Apple Analysts Recap "Spring Loaded" 

Taking on Spotify: The move also puts Apple in a different business model by offering a la carte subscriptions versus Spotify where their premium offering allows listeners to listen to podcasts for one monthly price.

“Apple, where podcasting originated, cannot lose out on the podcasting battle,” Wedbush analyst Daniel Ives said.

The analyst called the move by Apple a defensive move toward Spotify and an offensive move to monetize its existing subscribers.

Reports say 116 million Americans over the age of 12 now listen to podcasts monthly, representing 41% of the U.S. population.

Apple’s market share in podcasts is 24% in 2021, falling from 34% in 2018. Spotify is on track to pass Apple’s market share in 2021 according to the Wall Street Journal.

Risks to Apple Podcasts: Some creators of podcasts have used services like Patreon and Discord to better engage with their audience. Patreon could be better built to support creators who want extra benefits for their fans, according to The Verge.

“Apple doesn’t yet seem interested in building the social aspect of podcasting communities, so if podcasters want to advertise their Discord or Patreon, they’ll have to shout out those perks and ask listeners to contact them for access,” The Verge reports.

Using Patreon and Discord can help podcasters collect information, such as emails and addresses, so they can engage with their listeners and fans. Apple will not provide that information to its podcast platforms.

Patreon takes a 12% cut in creators’ revenue for podcasts.

Price Action, Friday afternoon: Shares of Apple are up 1.80% to $134.32.

Spotify shares are up 7.26% to $284.11.

(Photo by Matt Seymour on Unsplash)

 

 

 

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