The Wall Street Journal reports that the podcast industry is expected to generate $1 billion in ad revenue, and Apple and Spotify are competing to capitalize on the growth market.
The audio entertainment industry was already on a rise before the COVID-19 pandemic, but stay-at-home health restriction boosted its growth in the U.S. Now, Edison Research and Triton Digital estimates that 116 million Americans, or 41% of the country’s population over the age of 12, are monthly podcast listeners which is an 11% increase over 2020. Spotify already offers exclusive content for its paid tier and Apple is now catching up to its rival podcast streaming service.
Recently, the Cupertino tech company introduced Apple Podcasts Subscription at the Spring Loaded event. Starting from May, listeners in more than 170 regions and countries will be able to sign up for premium podcasts subscriptions that offer exclusive content like early and exclusive access to new series or movies, access to additional content, or ad-free listening.
After 15 years, Apple is finally offering paid content on its podcast app and that has started a platform war
Describing the newly launched Apple Podcasts subscription as the ” awakening of a sleeping giant”, the report explains that the company is finally ready to earn profit from the millions of shows it offers on its podcasts app. Daniel Ives, an analyst for Wedbush Securities said that “Apple, where podcasting originated, cannot lose out on the podcasting battle. It’s now or never. It’s both a defensive move toward Spotify but also offensive in terms of monetizing.”
Apple will charge podcasters a $19.99 annual fee to enable subscriptions and will be allowed to set their own prices for listeners. The company will charge a 30% commission rate for subscriptions in the first year and for the following years, will reduce it to 15%. The pricing structure is designed for a sustainable and healthy industry.
On the other hand, Spotify, the leading app to offer exclusive podcast-related content, is expected to announce a new and more attractive offering for podcasters in which they will not pay an annual fee and subscription share cut but will allow them to set their own price for listeners. People familiar with the matter said,
“Users of Spotify’s iOS app who subscribe will be routed to a website for the transaction, meaning that Apple won’t take a cut of that revenue.”
The report indicates an intense battle between rival music streaming giants to gain a bigger market share. Other competitors like Wondery by Amazon, Stitcher, Pocket Casts are also working on expanding subscription-based podcasts content but Apple and Spotify are reported to “make paying for podcast content more mainstream.”