Spotify Set to Rival Apple Podcasts Subscriptions With New Service That Won't Charge Content Creators

[gregmancuso]

Spotify makes money through subscribers and ads.

If Spotify can attract more podcast creators or having exclusive content by not taking a cut of podcast subscription fee or charging podcast creators a monthly fee just so the podcast creator can offer a podcast subscription plan (pay Apple $19.99/mo for privilege of enabling subscription? Seriously? )

Podcasters will pay Apple $19.99 a month to enable subscriptions, and set their own prices for listeners. Apple will take a 30% cut of subscription revenue the first year, and a 15% take thereafter.​

then Spotify will be able to keep and even bring in new subscribers/listeners thereby making them more money.

It's $19.99 per year.

From Apple.com:

• The Apple Podcasters Program, which includes all of the tools needed to offer premium subscriptions on Apple Podcasts, is available to creators in over 170 countries and regions for $19.99 (US) per year. Creators can enroll in the Apple Podcasters Program today through Apple Podcasts Connect.

No idea what the "tools needed to offer..." entail. Not saying if that is a good or bad deal (not a podcaster).

Also, if I remember correctly from the keynote, the subscriptions are all add free. The way too many ads are one of the key reasons I don't listen to more than I do - well, that and the dreadful production quality of many podcasts.

 

[GizmoDVD]

Why do consumers care about this?

 

[0982786]

It's no different than what Apple does with their user data

Apple Plans to Expand Ad Visibility in App Store

Apple is planning to boost its advertising business through a new ad slot on the App Store search page which will allow developers to promote their...

www.macrumors.com

But that's way different - waaaay different. Apple isn't collecting information they don't need. Spotify is siphoning up every last piece of information they can get. Remember when they had to explain why people have to give up their location information to listen to music?

 

[farewelwilliams]

Apple does the same thing... they value the work of women less than men.

Here are the gender pay gaps at Apple, Facebook and Google

The latest figures show that gender pay gap remains a major problem in the technology industry

www.wired.co.uk

Apple’s figures from last year revealed that women earned a median of 76p for every £1 men earned. Women at Apple were also less likely to receive a bonus than men – 88 per cent got a bonus compared to 94 per cent of men. Those bonuses were also significantly lower, 57 per cent, on the median. This year the median pay gap has fallen to 15 per cent (85p to every £1). A gap remained between bonus pay, only 85 per cent of women received a bonus compared to 93 per cent of men. In terms of bonus pay, Apple has a 42 per cent median difference between men and women.

How men and women's salaries compare at Facebook, Google, Apple, and other top tech companies

Top tech CEOs are appearing before Congress to discuss antitrust issues, but the pay gap is another key problem plaguing the industry.

www.businessinsider.com

Women at Apple make $12,000 less than their male counterparts.

Average salary: $123,000
Average men's salary: $121,000
Average women's salary: $109,000

not related to the topic at all. this is classic whataboutism.

 

[farewelwilliams]

If you ignore free streams and bot traffic, then it should be about the same.

why ignore free streams? why are artists subsidizing Spotify’s free tier?

 

[ignatius345]

Meh to both. I'd rather just use an indy developer -- I'm a big fan of Overcast, myself.

 

[mdriftmeyer]

labels take most of the money anyway. The biggest problem are the labels, not the vendor

Apple has a list of options.

Apple Music Preferred Distributors - Apple Music Provider Support

Search for a partner to delivery your content, with the right features to thrive on Apple Music.

itunespartner.apple.com

Take CD Baby for instance:

CD Baby Pricing | No Recurring Fees - Songs Stay Up Forever

CD Baby - Independently distribute to Spotify, Apple Music, iTunes, Amazon, YouTube, TikTok, Pandora & more. Make money from your songs worldwide on 150+ trusted platforms.

cdbaby.com

You don't have to use a Label.

 

[acgmph]

Nothing stopping creators from using both platforms to reach customers. The fact that Spotify chose not to charge creators is their business decision. They didn’t offer podcasts on their app before, so they probably want to attract creators that used the public formats before. They’ll start to charge once their costs outweigh the benefits.

 

[Abazigal]

The "free" tier is still a paid tier! Advertisers pay for streaming; the artist receives exactly the same; as for "developing" countries:

• 345 million Spotify users in Q4 2020, 155 million subscribers
• Spotify users by region Q4 2020: Europe, 121 million; North America, 83 million; Latin America, 76 million; rest of world, 66 million (Spotify)
• Spotify subscribers by region Q4 2020: Europe, 62 million; North America, 45 million; Latin America, 33 million; rest of world, 17 million (Spotify)
• Spotify market share estimated at 32-34% (Midia/Counterpoint)

My point is that the free tier is causing Spotify to lose more money than they are bringing in. It’s just not as profitable as the paid tier, and even that is having a hard time breaking even due to the reasons I mentioned above.

It’s not about how many people subscribe to your service. It’s about how many subscriptions earn you more money than what you pay out. That’s what I feel goes largely under-recognised as I noticed people just like to directly compare raw subscriber numbers between Apple Music and Spotify numbers which I find to be the least meaningful statistic.

 

[Abazigal]

I don’t see any downside for the Podcaster. They get to target a much larger audience with Spotify than Apple and get to keep all the subscription revenue.

It’s not about market share but usage share.

It’s the same reasoning behind how the iOS App Store brings in more revenue than the google play store despite the latter having more users. You don’t want to target a larger audience; you want to target a larger audience who is willing to pay.

So we may see a scenario where podcasters find they are able to earn more money via the iOS podcast app (even after Apple takes their 30% cut) compared to 100% from Spotify.

Obviously, one can argue that podcasters could just make their content available both in Spotify and on iOS (and maybe even Patreon), but that’s extra work supporting multiple platforms. There may come a point where people decide to just focus on one platform, and Spotify is likely concerned about creators abandoning their platform (which may in turn lead to them terminating their Spotify account (might using the podcast app lead to them switching to Apple Music?).

 

[iOS Geek]

My god. Don’t worry about what Spotify does. Especially if you dont use it. Then insecurity of some Apple fans is incredible

There is a heaping helping of irony here...

 

[ani4ani]

My point is that the free tier is causing Spotify to lose more money than they are bringing in. It’s just not as profitable as the paid tier, and even that is having a hard time breaking even due to the reasons I mentioned above.

It’s not about how many people subscribe to your service. It’s about how many subscriptions earn you more money than what you pay out. That’s what I feel goes largely under-recognised as I noticed people just like to directly compare raw subscriber numbers between Apple Music and Spotify numbers which I find to be the least meaningful statistic.

??....there are more paying Spotify subscribers in the first world (Europe & US) than Apple, all paying the same price, so how do Apple subscribers “earn more money” for Apple?

 

[Abazigal]

??....there are more paying Spotify subscribers in the first world (Europe & US) than Apple, all paying the same price, so how do Apple subscribers “earn more money” for Apple?

Because Spotify has largely devalued the concept of "paying subscriber".

Spotify - Spotify Technology S.A. Announces Financial Results for Fourth Quarter 2020

investors.spotify.com

Using the link you provided, what I am seeing is that while Spotify's revenue is growing, their ARPU (average revenue per user) is declining. So they are earning less per customer, while paying out more. I don't know why exactly (I suspect it's due to promotions like $1 for 3 months which make them technically count as paying customers), but it's not doing any wonders for their bottom line.

 

[DeepIn2U]

Hmm I like Spotify but I don’t think it’s too smart not to collect any revenue off of hosting creative podcasts especially given the bigger platform. They would eventually need to collect something and better off asking lower amount IMO.

edit: just saw the other article about Spotify claiming they have to charge more for iOS users bc of apples cut, yet they’re willing to give away free hosting for content creators. yikes.

honestly THIS is the response I like to see from Spotify not whining and going to play tattle tell. This is growing up and how competition should work.

Also this could be a legal “out” if content offensive to the public or with hurtful rhetoric content, Spotify can say they received no payment as acceptance in agreement to said content.

 

[MacAddict1978]

Hmm I like Spotify but I don’t think it’s too smart not to collect any revenue off of hosting creative podcasts especially given the bigger platform. They would eventually need to collect something and better off asking lower amount IMO.

edit: just saw the other article about Spotify claiming they have to charge more for iOS users bc of apples cut, yet they’re willing to give away free hosting for content creators. yikes.

It's very smart. Below see some stats. They have 190 million free users. This helps convert them to paid users.
For the whinners out there that "Spotify pays so much less than Apple" that is because of ad supported users. Ads pay fractions of a penny more than Spotify would pay the artist for the stream. Converting those free users to paid users and putting their podcast service behind their premium tier (which they are) is brilliant.

yet, they have one of the lowest royalty rates paid out to musicians for music streaming. how about fix that problem.

If you cared about what artists make, you wouldn't use subscriptions at all and buy the music directly.
You also make a comment out of obvious ignorance for the entire model.

Spotify 1000 plays = $3.39 from Spotify, the largest service in users. HAS A FREE AD SUPPORTED TIER WHICH IS WHY THEIR PAYMENT PER PLAY IS LOWER. You may have heard of this thing call radio? There is one in your car. How much do you think ad supported radio stations are paying? Spotify is a hybrid model so it's not Apple's to Apples quite literally in this situation.

Appl 1000 plays = $5.63. No free, ad supported tier, 100% subscription funded plus takes cut of competitors services
Difference: $2.24

Spotify has 335 million more users than Apple (190m of those are free ad supported accounts which is a lot of payout with little revenue to offset), creating more opportunity for an artist to be streamed.
If your song gets play 9,000 times a week on Spotify and only 900 time on Apple, you don't care about the $0.0024 cents less per stream Spotify paid you because you made.... $30.51 vs $5.06 from Apple.

 

[farewelwilliams]

If you cared about what artists make, you wouldn't use subscriptions at all and buy the music directly.

Yeah because it's all or nothing right? Either I'm a cheapskate who uses streaming or I'm a hero who still buys music. There's no in between for making an artist just a little more money so might as well choose the platform with the lowest royalties being paid out, right?

No. ?‍♂️

You also make a comment out of obvious ignorance for the entire model.

Spotify 1000 plays = $3.39 from Spotify, the largest service in users. HAS A FREE AD SUPPORTED TIER WHICH IS WHY THEIR PAYMENT PER PLAY IS LOWER.

Of course they pay less for free tier. But the fact that there's a free tier is a huge problem. Read below.

You may have heard of this thing call radio? There is one in your car. How much do you think ad supported radio stations are paying?

Talk about "ignorance", ever wondered why artists LOVED radio? It's not the giant $5 check that arrives in the mail, no. They loved it because it exposes their music so that people would go out and buy their CDs.

But now, with Spotify free tier, you can listen to the song whenever you want. There's no longer an incentive to buy a CD after discovering a song on the radio. People just ask Google/Siri "hey what's that song" and add it to their free tier Spotify library making artists the least amount in the long run.

Spotify free tier drives people away from premium services *and* drives people away from buying the music outright, completely devaluing the artist's work.

 

[lah]

Nothing stopping creators from using both platforms to reach customers. The fact that Spotify chose not to charge creators is their business decision. They didn’t offer podcasts on their app before, so they probably want to attract creators that used the public formats before. They’ll start to charge once their costs outweigh the benefits.

Exactly. Creators should take advantage of ALL platforms and get their product out there. smart Podcasters will have their listeners interest in mind and make it easy for them to subscribe. So being on every platform possible is the best way to go. Apple’s 30% cut for the first year and 15% thereafter is just the cost of doing business, same with their 19.95 yearly fee (which is very low IMO).

 

[genovelle]

It says in the article the podcaster gets to keep all of the subscription revenue from their podcast on Spotify instead of giving up 30% commission to Apple.

They are referring to the super low rates the pay music artist. I would ask Spotify to put in writing that they will never charge content creators. I also wonder if they would allow musicians and labels to do the same. Offer subscriptions to their fans that gives a access to their music without paying Spotify? If not, this may be time for a class action lawsuit against them.
This is discriminatory against music content creators.

 

[genovelle]

Exactly. Creators should take advantage of ALL platforms and get their product out there. smart Podcasters will have their listeners interest in mind and make it easy for them to subscribe. So being on every platform possible is the best way to go. Apple’s 30% cut for the first year and 15% thereafter is just the cost of doing business, same with their 19.95 yearly fee (which is very low IMO).

Apple can also pour a ton of money into marketing and promoting this platform.

 

[0924487]

why ignore free streams? why are artists subsidizing Spotify’s free tier?

Spotify free tier is like marketing spending. It’s a part of the cost of doing business. No one is making money off free users. You have to spend money to make money. It’s a part of incubating demand and providing presence and relevance for the product.

 

[Zwhaler]

Spotify free tier is like marketing spending. It’s a part of the cost of doing business. No one is making money off free users. You have to spend money to make money. It’s a part of incubating demand and providing presence and relevance for the product.

Spotify generates ad revenue from the free tier. Using your logic, Google isn't making any money either because search is free. ?‍♂️

 

[farewelwilliams]

Spotify free tier is like marketing spending. It’s a part of the cost of doing business. No one is making money off free users. You have to spend money to make money. It’s a part of incubating demand and providing presence and relevance for the product.

If they didn't like Apple forcing artists to subsidize the 3 month trial of Apple Music then I'm sure they're not happy with subsidizing Spotify's free tier listens. Apple walked back and fronted the bill for the 3 month trial. If Apple deserved that criticism, then you should factor in Spotify's smaller royalties for free tier listens. You can't make that exception.

Unless you're saying it's ok for Apple to let artists pay for Apple Music's 3 month trial for all users?

 

[0924487]

Spotify generates ad revenue from the free tier. Using your logic, Google isn't making any money either because search is free. 🤦‍♂️

Haven’t you noticed that most of the free Spotify ads are ads for Spotify premium? They don’t net much profit on free users after server bills and running costs are paid for.

 

[0924487]

If they didn't like Apple forcing artists to subsidize the 3 month trial of Apple Music then I'm sure they're not happy with subsidizing Spotify's free tier listens. Apple walked back and fronted the bill for the 3 month trial. If Apple deserved that criticism, then you should factor in Spotify's smaller royalties for free tier listens. You can't make that exception.

Unless you're saying it's ok for Apple to let artists pay for Apple Music's 3 month trial for all users?

That was a symbolic act by TS, more for personal marketing and influence than anything else.

Apple doesn’t pay parity for free users, it’s significantly less, like less than 10% or so if I remember correctly. It’s a nominal fee as a symbolic act. The record companies are okay with it, that’s why Apple had a deal in the first place.

 

[farewelwilliams]

That was a symbolic act by TS, more for personal marketing and influence than anything else.

I can point you to many artists who complained about it. In fact, 20,000 indie labels weren't happy with the 3 month trial, but are now on board after Apple backtracked.

Apple doesn’t pay parity for free users, it’s significantly less, like less than 10% or so if I remember correctly. It’s a nominal fee as a symbolic act. The record companies are okay with it, that’s why Apple had a deal in the first place.

There is no free plan for Apple. Unless you mean that 3 month plan, in that case: look at royalties gained over a 5 year span from a free Spotify user and a 3-month-no-pay-but-then-converted-to Apple Music paying customer. Which will pay more?

Also, this isn't counting the fact that Spotify free users no longer feel the need to buy the albums outright, reducing CD/digital sales completely.