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Following last week's announcement of a major deal, Spotify reported fourth-quarter earnings. Although the company is still operating at a loss, podcasting profit margins actually appear to be improving. We'll go into more detail below, as well as what it cost the company to get there. Oh, and still he doesn't have HiFi.
Additionally, there are several announcements regarding the Hot Pod Summit program.
After job cuts and the end of exclusivity, Spotify may finally have a lucrative podcast business in its hands.
On today's conference call, Daniel Ek told investors something he had wanted to hear about podcasting for a long time. “I'm pleased to say that we were very close to breakeven in this business in the fourth quarter. This gives us great confidence that we can meet our full-year podcasting revenue goals for 2024. .”
Spotify executives have long argued that the podcasting division has a path to profitability. The difference now seems to be that investors believe what they say. The company's stock is trading above $230 for the first time in more than two years after completely transforming its podcast business with improved margins and cuts that shocked the industry.
This year has been a year of dramatic changes, with Spotify's podcast business going largely unnoticed. Nearly all the executives who pioneered the space have left, including head of podcasting Dawn Ostroff. CFO Paul Vogel is retiring. Gimlet and Purcast, two pillars of its content strategy, have collapsed. Through three rounds of layoffs, the company has reduced staff brought in during M&A, not only in content but also in advertising and product. It killed Clubhouse's competitor Spotify Live. And just last week, it gave up exclusive rights to top podcast stars Alex Cooper and Joe Rogan.
Ek said the exclusivity model had served its purpose. “What we've learned over the last few years is that while some of these exclusive deals worked, they generally weren't in line with what the creators wanted. ” he said. “Exclusivity makes sense if you are a small player looking to scale up. If you are a larger player, the added value of exclusivity is much smaller than the value of partnering. Masu.”
He also downplayed the magnitude of Spotify's previous exclusivity strategy, noting that not all podcasts were exclusive to the platform. That's also the case with The Ringer. However, according to reports from semaphores, in 2021, Ostrov sought to limit these shows to the platform as well. It's a very good thing she didn't do that considering what happened with Gimlet and Purcast.
The Ringer has proven to be the most resilient studio within Spotify, and that strategy appears to be being applied more broadly. The idea is to be present in as many places as possible and capture as much advertising dollars as possible. This isn't revolutionary, it's the default for podcasting. But that new cash flow (along with reduced minimum guarantees, as in the case of the $250 million deal with Logan), according to a note from Wells Fargo analyst Stephen Cahall, He says it should bring big upside for streamers.
It's not there yet. Spotify is still operating at a loss (though it was less in the red than investors expected). The audiobook industry has yet to find its footing and may never take hold unless Spotify gains an advantage over Apple and its App Store policies. Additionally, Ek said the company is still pursuing “efficiency,” so you know what that means.
However, the company provided stronger than expected guidance for the first quarter of 2024, and investors are excited. The podcasting industry is another story.
Co-op and AI at Hot Pod Summit
In a difficult year for podcasting and the media industry as a whole, there is growing interest in the possibilities that new business models offer. These include worker-owned cooperatives, where employees own stock in the company and have some control over company decisions. Supporters hope such cooperatives will play a key role in the future of podcasting and give the medium a viable path to sustainability.
That's why we're excited to announce the next guests coming to Hot Pod Summit to explore the future of the podcast workforce. jasper oneVice President of Revenue and Operations at Defector Media. Eric Silver, Creative Lead at Multitude Productions.and Yolie Rosoldo, Director of Network Operations at Radiotopia.sponsored by The VergeAlong with Amrita Khalid, the panel will discuss what it takes to break away from traditional business models and the challenges to expect along the way.
And today we have one more thing to announce. At the Hot Pod Summit, we'll be looking at how transformative and potentially deceptive AI can be in the podcast space. This is going to be fun. Let's take a look at the AI's podcast recordings and see if they're good enough to fool a room of experts. I hope that until the end we can all still work safely.
ALSO UPDATE: Unfortunately, due to programming conflicts, we will not be able to proceed with our planned panel feature. through line and israel story. I was excited to bring a thoughtful conversation to the Hot Pod Summit attendees about how podcasts can provide a space for critical storytelling around conflict. With so much misinformation out there, especially on social media, I truly believe in shows like this: israel story and through line Demonstrate the value of podcasting to a wide range of media environments. I look forward to publishing an article on that topic soon. In the meantime, we will be making announcements regarding additional programs in the coming weeks.
The Hot Pod Summit, an invitation-only event for podcast industry leaders, will be held on Wednesday, February 28th. This summit kicks off On Air Fest Brooklyn 2024, hosted in collaboration with our friends at work. Including Malcolm Gladwell, Stephen Dubner, Norah Jones, Laurie Anderson, Seth Meyers, Nick Quar, Avery Trufelman, and talent from Audible, Netflix, iHeart, WBUR, Vox Media Podcast Network, and more. Check out our On Air Fest lineup. . Buy your tickets here.
Thank you to AdsWizz and Simplecast for being the official lead sponsors of Hot Pod Summit 2024. AdsWizz operates a self-service advertising platform for creating and running audio ads. Simplecast provides podcast hosting, distribution, and analytics.
That's all for now. We'll be back again Thursday for Insider. For the rest of you, I'll see you next week.
