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How Spotify Hopes to Win the Podcasting Wars

The Spotify app on an iPhone.

Fabian Sommer | Image Alliance | Getty Images

A big phenomenon during the 2020 pandemic was the surge in digital audio as millions of listeners of all ages turn to online music and podcasts to guide them through their darkest times. Spotify was one company that benefited from this paradigm shift.

Heading the indictment is Dawn Ostroff, Spotify's Chief Content and Advertising Business Officer, who was involved in building the company's podcast library and advertising streams worldwide. In addition to streaming music, Spotify now has a library of over 2 million podcasts on its platform in multiple languages, covering interests from comics to politics to sports.

"Our goal is to be number 1 in podcasts," Ostroff said Thursday at CNBC Evolve's Transforming Media livestream event. "We want to bring the best talents together under our roof."

It's no wonder she has been credited with starting a race in the podcast content space after capturing such high-profile celebrities as former President Barack Obama, former First Lady Michelle Obama, the Kardashians, and Joe Rogan. Rogan's show The Joe Rogan Experience, which started more than a decade ago, has built a massive and loyal following. It's one of the most popular podcasts and it tops the charts on major Apple and Google podcasting services.

The talent hunt

Barack Obama and Michelle Obama have signed a multi-year contract to produce podcasts exclusively for Spotify through their media company Higher Ground Productions.

Spotify's partnership deals have also moved the needle, including those developed with DC Comics that will allow it to create narrative shows and sell ads for DC Comics characters like Batman and Harley Quinn.

Less celebrated, but no less important, is Spotify's promotion of influencers for podcasts and the use of Spotify's tools and distribution.

"It was easier than you think to convince talent to join this new horizon that we are building," said Ostroff. "They are realizing that podcast is the next big thing in the media. People young and old are all migrating to this space."

This was good news for Spotify, as podcasts were key to moving users to paid subscription, Ostroff said.

A buying frenzy

According to Ostroff, the company strengthened its business through acquisitions over the past year. "We built the business in a very strategic way," she said.

In November, the company acquired ad tech company Megaphone for $ 235 million. Megaphone provides technology for podcast publishers and advertisers looking for targeted slots for podcasts. It provides podcast hosting, distribution, and ad insertion tools for podcast publishers like ESPN and The Wall Street Journal. Advertisers can use the company's technology to find audiences for podcast content from these publishers.

That follows a series of deals. In February, Spotify acquired sports and entertainment news company The Ringer. Last year, Gimlet Media and Anchor were acquired for a total of approximately $ 340 million. It also bought Parcast for about $ 55 million.

Following the announcement of the Ringer deal, Spotify CEO Daniel Ek told investors the company would continue to invest in the podcast space and sees the format as a growth path for the company, which has to repay most of its sales to the music labels licensed music from.

"In order for us to continue our growth and development, we wanted to expand what it really means to be an audio network," said Ostroff.

According to Ostroff, advertising is one way to achieve this, while also noting the sharp decline in television and the rise in digital television. "If advertisers are looking for younger audiences, this is the perfect place. Also, advertisers can have a closer relationship with the user, and they appreciate and respect that."

Ostroff sees a great opportunity in advertising to build sales by taking note of advertisers like the data analytics for users that Spotify can provide. "There are so many ways the podcast business can keep changing and growing. There are so many developers in the room now. The key is staying in lock step or a few steps in front of your customers so that you can constantly spin and stay relevant to deliver that. " Content they want. "

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