Spotify is facing an interesting challenge related to white-noise and ambient podcasts, as they have gained popularity on the platform and accounted for a significant portion of daily consumption hours. White noise podcasts, which often serve as sleep aids and relaxation tools, have amassed millions of listening hours. However, this trend has created an unexpected issue for Spotify’s business model due to how ad payouts to podcasters are structured.
According to an internal document seen by Bloomberg, white noise and ambient podcasts accounted for around 3 million daily consumption hours on Spotify as of January. This substantial listening time means that Spotify has to allocate ad payouts to these podcasts, even though they consist of repetitive and non-talk content. As a result, the ad revenue generated from these podcasts might not be proportionate to the listening time they attract.
In response, Spotify reportedly considered taking actions such as removing white noise podcasts from recommended feeds, prohibiting future uploads of such content, and directing listeners towards more economically viable shows. This potential course of action could result in increased profits for Spotify by saving on ad payouts while steering listeners towards podcasts with higher ad revenue potential.
This situation underscores the complex economics and challenges that arise in the evolving landscape of podcasting and streaming platforms. While Spotify’s acquisition of podcast creation app Anchor aimed to encourage diverse podcast content creation, the popularity of certain types of content can lead to unexpected financial considerations. The tension between content popularity, ad revenue, and platform sustainability is an ongoing issue that streaming platforms like Spotify must navigate.
