The News
Spotify is terrifying much of the podcast industry with a tiny little widget.
Last week, the audio streaming giant tweaked its streaming interface, adding a feature that allows some users to more effectively skip through the parts of a podcast no one wants — notably ads, as well as promotions and filler content — as long as they aren’t sold directly by Spotify. Spotify cast the move as streamlining a feature that already exists, the 15-second skip button, which users in practice often use to bypass ads.
Still, the move could reshape the podcast industry, which is already reckoning with a migration to YouTube. For podcasts that rely on users listening to their direct-sold ads to make money, it was a warning shot. Podnews called it a “significant threat” to ad-funded shows.
Tommy Vietor, a co-founder of the liberal podcast network Crooked Media, put it even more bluntly. “Very cool of @Spotify to try and destroy the podcast industry. What a great partner!” he wrote.
Several major audio networks reached out to Spotify after the change was announced, expressing concern about threats to their monetization and seeking more information about the changes.
Privately, the platform has attempted to assuage some of the major networks’ anxiety, with some more- and less-convincing answers. In conversations last week with publishers and audio companies, the platform repeatedly insisted that the changes will buttress overall listenership by keeping users engaged with podcasters’ content, citing information showing that the skip button kept people listening to podcasts longer.
Spotify also gave itself some room to back off the changes, reiterating that the skip button is in an early testing phase as it continues soliciting feedback from podcast companies, publishers, users, and advertisers.
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The View From Stockholm
The new skip button underscores Spotify’s push toward premium subscriptions. It’s prioritizing steady, recurring revenue and cementing a two-tiered advertising system, in which marketing bought directly through Spotify can’t be skipped — while publishers’ own ads can be, devaluing them.
Advertising has been baked into the platform’s strategy since the beginning; Spotify’s free tier allowed it to gain a foothold in the 2010s at a moment when many people were still pirating music online. The importance of podcasting on the platform has complicated the picture; users have expressed confusion and frustration at having to listen to podcast ads when they already pay Spotify for a seamless ad-free music experience.
The platform’s leaders believe that some podcast companies also load up the podcasts with excessive ads, one person familiar with the company’s thinking told me. Worse, free Spotify listeners, which still represent the majority of the company’s 777 million monthly active users, are hit with both Spotify’s ads and the ads sold by audio companies.
Spotify clarified to Semafor that the rollout is fairly limited: The button only shows up when the Spotify app is in the foreground, and only some paid subscribers can see it.
“We regularly conduct tests at Spotify — some tests become permanent features, while others help inform future product development,” a Spotify spokesperson said in an email. “We’re exploring ways to make podcast listening and viewing more intuitive for Premium subscribers based on how people use the platform, with the goal of helping listeners spend more time enjoying podcasts. We’ll continue to evolve the experience as we learn.”
Max’s view
The potential disruption of the podcast ad economy comes at an uncertain moment for an industry in the middle of a retool from a format that largely resembled radio to one that much more closely resembles television.
The decline of linear TV has pushed audiences toward video podcasting on platforms like YouTube and now Netflix, which has replaced traditional television for many younger audiences, as I wrote about following my interview last week with SubwayTakes host Kareem Rahma. Algorithmic video feeds have accelerated this transition, as more and more podcast companies see clipping for TikTok and the like as the primary discovery method for podcasts — and, in some cases, whole brands.
The advertising industry has willingly accelerated this transition, enjoying a familiar return to the days of the 30-second advertising spot.
The podcast ad business has sought to reassure marketers that people will hear their podcast commercials. Some users skip ads, but most public and private measures suggest that the vast majority of listeners catch at least some of them.
One podcast executive with several podcasts in Spotify’s top 50 mused that if Spotify goes through with the changes, their company could attempt to shift audio listeners to Apple, the once-dominant podcast platform that has allowed competitors like Spotify and YouTube to take its market share. Another podcast exec mused that if the skip button is effective enough, podcast companies may have to figure out a way to pressure the platform together.
Few media companies have been able to meaningfully push tech platforms around, but Spotify has shown some willingness in recent months to bend. Last year, the platform announced that it was rolling out play counts for podcasts. Just days later, the platform clarified that it would only be grouping play counts into broad buckets over a certain amount, a concession that brought relief to some podcasts that didn’t want the everyday listener (or advertiser) looking under the hood at individual episode streams.
Still, it’s easy to see why Spotify is eager to introduce the feature. I was one of the users who got the new button in their iPhone app last week. It appears when the app is open and full-screen (not on the lock screen or during background listening). It’s incredibly effective, and eliminates the need to listen to even a small fragment of an ad for ZipRecruiter.