Spotify Stock Downgraded by Citi, as Podcast Competition Heats Up

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Spotify shares sank 7.4% after a Citi analyst downgraded the stock, concluding podcasts have not had a positive impact on subscriber growth

, reveals Apple is intent on following Spotify’s lead in switching its focus from a music-focused platform to one with both music and spoken word. Apple already has a popular podcast app but does not own the content it distributes. Amazon, often overlooked in discussions about audio streaming, already has a podcast subscription business -- $4.99 per month or $34.99 annually -- through its acquisition of podcast producer Wondery in December 2020.

Becoming an audio platform is a sensible and unavoidable move. Podcasting has the opportunity to expand Spotify’s listening hours, make the product stickier and improve gross margin . Since labels no longer give streaming services exclusives, podcasting is the favored format for luring listeners with titles that are unavailable elsewhere. And while streaming services are uninterested -- thus far -- in becoming record labels, they have quickly built in-house podcast production.

The three streaming leaders have taken varied approaches -- buy or build -- to enter the music and audio markets. Apple is creating its own podcasts but bought Beats Music and re-built it into Apple Music. Although Spotify and Amazon Music were built from scratch, both companies have used established brands to kickstart their podcasting businesses.

 

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Good. Their “give up rights for promo” concept is disgusting.

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