It looks like the writing is on the soundproofed wall: The podcast increase is over, and this week’s information is proof. Spotify laid off 17% of the company — its third spherical of layoffs this yr — 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-dollar swing and whiffed, and now podcasters need to navigate the fallout.
“Spotify has kind of set the terms of the quote-unquote ‘health’ of the podcasting industry based on their actions as a tech company,” mentioned Eric Silver, co-founder and head of artistic at Multitude, an unbiased podcast collective. “But Spotify’s choices don’t have anything to do with me. It’s just that they keep failing so publicly, and now everyone thinks podcasting is dead, which really 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-dollar offers from Amazon, Apple or Spotify — the trade isn’t as imperiled because it appears. And but, Spotify’s shadow looms so massive over the podcasting trade that it’s not possible for its failures to not reverberate.
In 2021, a yr that noticed enterprise capital flowing like champagne at a Gatsby social gathering, Spotify CEO Daniel Ek told Forbes that he wished his firm to be just like the Instagram or TikTok of audio.
“Everyone underestimates audio. It should be a multi-hundred-billion-dollar industry,” Ek mentioned 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 massive 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 shows from the studios it spent so many a whole lot of tens of millions to accumulate, like Parcast and Gimlet, which have since been combined into one entity and decimated.
“In hindsight, I was too ambitious in investing ahead of our revenue growth,” Ek mentioned after Spotify laid off 600 people in January.
After buying Gimlet and Parcast, Spotify made many of the networks’ reveals unique to the Spotify platform. In concept, this choice would pressure the listeners of those fashionable reveals to obtain Spotify to be able to hold listening each week — and, hopefully, a few of these listeners would convert to paid subscribers. However, in response to 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 told show teams that their podcasts were being canceled because of low numbers,” mentioned a joint statement by the Gimlet and Parcast unions, posted after a spherical of layoffs in October 2022. “But decisions Spotify leadership made directly contributed to these low numbers.”
This isn’t essentially a foul factor. Through the funding increase of 2021, my inbox was flooded with pitches from creator economic system startups searching for press about their newest funding rounds. A few of these corporations have been thrilling, however lots of them confused me — as a creator myself, I couldn’t think about myself or my buddies within the trade utilizing many of those merchandise. As SignalFire accomplice Josh Constine told me earlier this yr, “Creators aren’t sophisticated enterprise software buyers, nor do they have software integration teams.” In different phrases, VCs had thrown cash at corporations that didn’t truly resolve 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 not being funded.
“A media company needs to have the goal of making enough money for it to survive,” Silver informed TechCrunch. This may appear intuitive — certainly, 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 method.
“It’s critical for companies to ‘read the market,’ and right now, the market values efficient growth and doing more with less instead of maximum growth with easy capital,” Artistic Juice founder Sima Gandhi told TechCrunch this summer time.
This “maximum growth” mindset has poisoned venture-backed digital media corporations like Buzzfeed, which descended from a shining star to an IPO embarrassment. The “middle 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 retailers 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 dealing with the identical reckoning as Spotify’s losses show that development can’t take precedence over sustainability. Already, podcast studio Maximum Fun has adopted a worker-ownership co-op mannequin, and as podcasters proceed to lose belief in massive companies like Spotify, we’ll see this development proceed.
“Spotify is not all of podcasting, although they act as if they are, and make choices as if they’re the only one in the room,” Silver mentioned. “Podcasting is not dead.”
