Spotify looking to make profit from podcasts

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Sharecast News | 05 Feb, 2020

Spotify is looking to gain more profit from podcasts as it is currently paying out most of its earnings to record labels in royalties.

According to a report from The Financial Times, the streaming company is currently in talks to renegotiate onerous music royalty deals that limit the profit potential of its half-billion-dollar push into podcasts.

The music streaming group has been buying up podcast start-ups in the hope that producing and owning more of its content will allow it to boos its margins in the long-term.

Currently, Spotify has to pay record labels a minimum proportion of the revenues it gets from subscriptions regardless of how much and what music users consume.

Spotify has been trying to grow its share of the market for podcasts for almost a year.

The music companies are concerned the streaming service will try to reduce the revenues it destines to royalties if music consumption on the platform declines vs podcast consumption.

“They are constantly trying to chip away at that share of music on the platform,” said one music executive familiar with the negotiations. “Of course there is friction there. We are playing a defensive play right now and they are playing offensive.”

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