In music streaming, differentiation can be a little hard to come by. While video streaming giants may rely on exclusive titles to keep their platforms vital, part of the appeal of music streaming services like Apple's (AAPL +1.18%) Apple Music and Spotify's (SPOT +1.36%) eponymous service is that their libraries are supposed to be more or less comprehensive. Exclusive music content is relatively rare.
But Spotify, among other companies, has seen an alternative path to audio exclusives. And that path is paved with podcasts. Spotify has acquired podcast companies with the apparent goal of creating exclusive podcasts for its platform. Now Apple is reportedly moving to do something similar with its Podcasts app. Bloomberg has reported that sources say Apple is looking to buy up podcasts and fund new ones with the goal of making them platform exclusives.
Image source: Getty Images.
Apple's podcast strategy
According to Bloomberg, Apple hasn't settled on particular podcasts that it will buy, but the company is reportedly looking for chances to bring exclusive original content to its podcasting platform. And that makes plenty of sense.
Apple's podcasts platform, the Podcasts app, is separate from Apple Music. So, unlike Spotify, Apple doesn't seem to be trying to differentiate its music platform from the competition. This move looks more like Apple defending its Podcasts app from the moves Spotify is making. Spotify's targeting of podcasts has essentially opened a new front in the audio streaming wars.
Apple has reason to care about the future of its Podcasts app. Originally spun off of iTunes, the Podcasts app still holds a very nice chunk of market share. Industry execs told Bloomberg that the app is responsible for somewhere between 50% and 70% of all podcast plays -- numbers that, while imprecise, still look pretty impressive.
The value of podcasts
Since the Podcasts app is separate from Apple Music, there's no direct benefit for Apple Music if Apple moves into exclusive podcasts, other than encouraging people to join the Apple ecosystem. But as Spotify's strategy has already indicated, the most important role of podcasts may be to help establish listener profiles.
Musical preferences, it seems, are not as helpful in targeting ads as music streaming service executives might have hoped. Spotify has put an emphasis on podcasts in part because they are more revealing about the people that listen to them.
Apple filed ad-targeting patents related to podcasts as early as 2015, and it has also allowed podcast creators to see some basic analytics to help them target audiences and advertisers.
It's a fact: Podcasts matter
Apple and Spotify aren't using their podcasts for the exact same things, though there is some overlap. But it's abundantly clear that both companies value their podcast business and see big potential in the space. This business is Apple's to defend, and it certainly has the cash to do so. Look for both companies to make further investments in podcasts, and keep an eye out for how they turn around and use those podcasts to lure in subscribers, court advertisers, and more.
