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4:51 PM PST 01/18/2021
by
Natalie Jarvey
The iPhone giant explored adding a paid audio product, a risky move given the proliferation of free, ad-supported programs.
Over the past decade and a half, Apple has gained significant influence in the podcasting industry by allowing creators to reach its large audience of device owners without charging them a dime. But the company’s recent conversations with creative partners about introducing a subscription product to its podcasting business indicate that its reign as a benevolent distributor may be coming to an end.
The talks, first reported by Information, have been underway since at least last fall, sources say The Hollywood Reporter, and could end up taking many different forms. Either way, it’s clear that Apple led by Tim Cook – after spending the last two years watching streaming music rival Spotify investing hundreds of millions of dollars to align with some of the most successful producers. prolific and popular podcasting personalities – is no longer content to be sitting on the sidelines. “There is a huge opportunity under their nose with 1.4 million iOS devices around the world,” says Daniel Ives, analyst at Wedbush Securities, “and they don’t want to lose.” Apple declined to comment on its podcasting plans.
Much of the growth in the podcasting industry over the past decade can be attributed to Apple and its former CEO Steve Jobs, who in 2005 said it was “integrating podcasting” by adding media support. to iTunes. A few years later, the company launched a separate Podcast app that quickly became the primary distribution platform for the media. But Apple, which grossed $ 275 billion in sales in fiscal 2020, has refrained from transforming podcasting – still a relatively small industry that the Interactive Advertising Bureau estimates to bring in nearly $ 1 billion. dollars in advertising revenue in the United States last year – into a lucrative business.
Now, however, Apple’s position as the top platform for podcast listening is under threat as the company faces stiff competition from tech and media giants including Spotify, Amazon. and SiriusXM. In the years since taking over podcasting, Apple has also focused on its growing service business, through which it already offers subscription products for music, TV, video games. and fitness videos.
But Apple will need to proceed with caution as it explores the introduction of podcasting subscriptions, a business that has long been funded largely by ad sales. Many longtime podcasters are strong supporters of keeping media free and widely available, and listeners have yet to show a strong appetite for paid podcast services like two-year-old startup Luminary. Even Spotify, which has a strong music subscription business with 144 million members, has refrained from placing any of its podcasts behind a paywall. And Citi analysts recently wondered if Spotify’s investment in the podcast could pay off, noting on January 15 that the company’s pace of adding premium subscribers and downloading data “shows no benefit. equipment”.
Ives says Apple might have an easier time selling a podcast subscription if it has a curated selection of exclusive and original shows from in-demand talent, just like it does for video programming with Apple TV +, launched. in 2019 with a drama series. The morning show with Jennifer Aniston and Reese Witherspoon. Apple has released a handful of in-house podcasts and has discussed creating podcasts that will serve as companions to its original TV shows, sources say, but it has yet to seek out high profile projects or talent like Spotify. Last fall, Spotify paid generously to bring The Joe Rogan Experience, regularly the No. 1 show in the Apple Podcasts ranking, exclusively on its platform.
Apple is currently boosting Apple TV + signups by offering a free subscription to people who buy new devices. It also encourages people to pay for multiple Apple subscriptions by offering discounted Apple One plans. LightShed media analysts recently wrote that they “believe Apple can be successful” with a subscription podcast product if it leverages its new packages with its “leadership position in podcasting.”
The Patreon membership platform has shown that podcast subscriptions can work on an individual level, with fans paying for exclusive or ad-free content from their favorite personalities. Apple could use a similar feature, in which it allows people to pay à la carte to listen to programs without advertising. But to attract podcast partners, Apple’s deals would have to cover any lost advertising revenue.
“It’s not like it’s a hoax,” says Ives, “but given Spotify’s aggression especially against this market, they have to do something about it.”
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