Spotify's Bet Big on Podcasts Hitting Jackpot

They say talk is cheap, but ... man! ... does it ever make money!

On Wednesday, Spotify reported that its advertising revenue was up 75% from a year ago. Driving the surge is two years of investments in podcasting, once the province of basement-dwelling radio nerds that is now among the hottest commodities in the content world.

No Fear Factor

Its core business remains a huge library of streamable music that includes such superstars as the freewheelin' Bob Dylan and certified lover boy Drake, but Spotify has also spared no expense building a stable of guitar-less talking heads. The Swedish company binged on true-crime studio Parcast for $56 million and narrative podcast network Gimlet for $200 million in 2019. Last year, it coughed up $196 million for former ESPN columnist Bill Simmons' The Ringer network.

Spotify also inked giant talent deals, first paying former Fear Factor host and Elon Musk toke buddy Joe Rogan $100 million for exclusive rights to his Joe Rogan Experience. Next, it poached the comedy podcast Call Her Daddy from Barstool Sports for $60 million. And all the chatter is paying off:

• Advertising, which previously was about 10% of revenue and is linked to Spotify's podcast business (What? You haven't joined the Dollar Shave Club?) now makes up about 13% of revenue at €323 million.
• The company's revenue grew 27 percent this year to €2.5 billion thanks to its 172 million paid subscribers and 381 million monthly active users — up 19% from a year ago.

All Ears: Insider Intelligence predicts the number of monthly US podcast listeners will grow 10% this year to 118 million — more than 60% of 18- to 34-year-olds already listen monthly.

Taking it to 11: Rivals Amazon Music and Apple Music don't release user numbers, but the research firm Music Ally estimates they each have about 55- and 60-million paid subscribers — a far cry from Spotify's
more than 177 million premium listeners.