Spotify (NYSE:SPOT) continued its ambitious expansion into podcasts this week by announcing support for video podcasts. The move is entirely expected in the broader context of the Swedish company's massive push into podcasts, which has included numerous acquisitions over the past year and a half and a slew of exclusive content deals, most recently a new series hosted by former First Lady Michelle Obama.
Lights, camera, action
Spotify will initially focus on about half a dozen "select podcasts" to be the first video podcasts, allowing users to listen to or watch their favorite shows. Content creators can upload video content that syncs with audio feeds, and all shows will be available for both free users and premium subscribers. The company argues that adding complementary video content can boost user engagement and grow audiences. Video podcasts will be available on desktops and mobile apps.
The news comes just a couple months after the music-streaming leader inked an exclusivity deal with Joe Rogan worth an estimated $100 million. The Joe Rogan Experience (JRE) is the most widely followed video podcast on YouTube, with over 9 million subscribers. Episodes often garner millions of views, depending on the guest and topic; an interview with Elon Mask in late 2018 has been viewed over 36 million times. That's the type of traffic -- and related share of ad revenue -- that YouTube will lose once Rogan completes the jump to Spotify in September.
The Ringer, which Spotify acquired in February, also has a popular YouTube channel with sports-related shows and other pop culture content. The outlet has a whole video production operation that was included in the acquisition.
One minor distinction between Spotify and YouTube is that Spotify will allow all listeners to stream the audio in the background when multitasking, while YouTube only offers that feature to YouTube Premium subscribers. Smaller content creators that aren't bound by exclusivity agreements will likely upload video podcasts to both platforms, particularly if they've already developed meaningful fan bases on YouTube.
Opportunities in video ads
There are also significant implications for Spotify's advertising business, which is one of the primary ways that the company plans to monetize podcasts. The streaming tech company introduced Streaming Ad Insertion for audio ads earlier this year, allowing advertisers to dynamically target users in a way that has been lacking thus far in the $1 billion podcast advertising industry.
Expanding into video opens up entirely new possibilities with video ads, which fetch higher prices because video tends to be a more effective advertising format.