It looks as if the writing is on the soundproofed wall: The podcast growth is over, and this week’s information is proof. Spotify laid off 17% of the corporate – its third spherical of layoffs this 12 months – and canceled two extremely acclaimed reveals, together with a winner of the Pulitzer Prize for audio reporting. However as an entire, the podcast trade didn’t fail. It’s simply that Spotify took a billion greenback swing and whiffed, and now, podcasters themselves need to navigate the fallout.
“Spotify has sort of set the phrases of the quote-unquote ‘well being’ of the podcasting trade based mostly on their actions as a tech firm,” stated Eric Silver, co-founder and head of artistic at Multitude, an unbiased podcast collective. “However Spotify’s decisions don’t have something to do with me. It’s simply that they hold failing so publicly, and now everybody thinks podcasting is lifeless, which actually frustrates me.”
When outsiders consider podcasting, they might think about mega-viral hits like “Serial” or long-standing establishments like “This American Life.” However for the lengthy tail of podcast creators – those that make podcasts for a residing, however aren’t getting multi-million greenback offers from Amazon, Apple or Spotify – the trade isn’t as imperiled because it appears. And but, Spotify’s shadow looms so giant over the podcasting trade that it’s unattainable for its failures to not reverberate.
In 2021, a 12 months that noticed enterprise capital flowing like champagne at a Gatsby celebration, Spotify CEO Daniel Ek informed Forbes that he needed his firm to be just like the Instagram or TikTok of audio.
“Everybody underestimates audio. It ought to be a multi-hundred-billion-dollar trade,” Ek stated on the time. “Audio is ours to win.”
Within the final handful of years, we watched as Spotify acquired too many podcasting corporations to rely – Gimlet, The Ringer, Anchor, Parcast, Megaphone – after which courted huge names from Joe Rogan, to Alex Cooper, to Prince Harry with eight- and nine-figure offers. The corporate dumped over a billion {dollars} into its efforts to nook podcasting, however now has canceled over a dozen reveals from the studios it spent so many a whole lot of hundreds of thousands to accumulate, like Parcast and Gimlet, which have since been mixed into one entity and decimated.
“In hindsight, I used to be too bold in investing forward of our income development,” Ek stated after Spotify laid off 600 individuals in January.
After buying Gimlet and Parcast, Spotify made many of the networks’ reveals unique to the Spotify platform. In principle, this choice would pressure the listeners of those well-liked reveals to obtain Spotify so as to hold listening each week – and, hopefully, a few of these listeners would convert to paid subscribers. However, in line with the Gimlet and Parcast unions, this technique backfired. Some reveals misplaced greater than three quarters of their audiences after being transformed to Spotify exclusives.
“Spotify informed present groups that their podcasts have been being canceled due to low numbers,” stated a joint statement by the Gimlet and Parcast unions, posted after a spherical of layoffs in October 2022. “However selections Spotify management made immediately contributed to those low numbers.”
Throughout the entire creator economic system, which incorporates podcasting, there’s a rising disconnect between the truth of the trade and the stakeholders that spend money on it. Final 12 months, the amount of cash invested in creator economic system corporations dropped round 68% from the primary to 3rd quarter. However this statistic doesn’t really say something in regards to the viability of creators’ careers. It means, fairly actually, that fewer startups are elevating cash.
This isn’t essentially a nasty factor. Throughout the funding growth of 2021, my inbox was flooded with pitches from creator economic system startups looking for press about their newest funding rounds. A few of these corporations have been thrilling, however a lot of them confused me – as a creator myself, I couldn’t think about myself or my pals within the trade utilizing many of those merchandise. As SignalFire associate Josh Constine informed me earlier this 12 months, “Creators aren’t refined enterprise software program patrons, nor have they got software program integration groups.” In different phrases, VCs had thrown cash at corporations that didn’t really clear up any issues for creators’ companies. So, I wasn’t shocked that when market circumstances tightened, the businesses that appeared to solely need to capitalize on the creator economic system hype have been now not being funded.
“A media firm must have the aim of creating sufficient cash for it to outlive,” Silver informed TechCrunch. This might sound intuitive – absolutely, a enterprise ought to attempt to flip a revenue. However that’s not how the world of venture-funded startups works. Spotify, for instance, has solely reported quarterly income a handful of instances, as a result of its enterprise has prioritized continuous development over returns. The corporate is by no means distinctive in that approach.
“It’s essential for corporations to ‘learn the market,’ and proper now, the market values environment friendly development and doing extra with much less as an alternative of most development with simple capital,” Inventive Juice founder Sima Gandhi informed TechCrunch this summer season.
This “most development” mindset has poisoned venture-backed digital media corporations like Buzzfeed, which descended from a shining star to an IPO embarrassment. The “center class” of podcasters can’t depend on Spotify, and different media staff can’t depend on failing media conglomerates like G/O Media and Vice anymore. Over the previous couple of years, worker-owned media shops like Defector, Aftermath and 404 Media have begun cropping up, usually based and staffed by journalists who had been repeatedly laid off from mismanaged media corporations. Now, the podcasting trade is going through the identical reckoning as Spotify’s losses show that development can’t take precedence over sustainability. Already, podcast studio Most Enjoyable has adopted a worker-ownership co-op mannequin, and as podcasters proceed to lose belief in huge companies like Spotify, we’ll see this development proceed.
“Spotify isn’t all of podcasting, though they act as if they’re, and make decisions as in the event that they’re the one one within the room,” Silver stated. “Podcasting isn’t lifeless.”
