Spotify. It’s Not Just for Music Anymore.

Podcasts also offer a financial advantage, helping Spotify improve profit margin and reduce its dependence on the major record companies, whose licensing deals are by far its largest expense.

While podcasts are hardly a new invention — they became part of Apple’s iTunes in 2005 — their popularity has surged in recent years. By some estimates, more than 600,000 podcasts are available through Apple, a number that does not include shows that are exclusive to other providers, like Spotify.

But while it may seem as if every other person on earth is either a podcast listener or a podcast host, the money thrown off by the boomlet has been relatively modest. According to a study by the Interactive Advertising Bureau and PwC, the podcast industry as a whole generated $314 million in 2017, though that survey also predicts that by 2020 the number will more than double, to $659 million.

Spotify, which went public in April, announced on Wednesday that it ended 2018 with 207 million active users around the world, 96 million of whom paid for monthly subscriptions. Its revenue for the year was 5.3 billion euros, about $6 billion, an increase of 29 percent from 2017.

And while in 2018 the company lost €78 million, about $89 million, it had a net income of €442 million, or about $502 million, in its fourth quarter. Spotify’s gross profit margin also grew in that quarter, to 26.7 percent, from 25.3 percent in the previous three months.

Despite Spotify’s dominance among music listeners (its chief rival, Apple Music, has 50 million paying subscribers), Mr. Ek, the company’s chief executive, predicted that “over time,” about 20 percent of all Spotify listening would involve something other than music.

“Ultimately, if we are successful, we will begin competing more broadly for time against all forms of entertainment and informational services, and not just music streaming services,” Mr. Ek wrote in his blog post.

Article source: https://www.nytimes.com/2019/02/06/business/dealbook/spotify-gimlet-anchor-podcasts.html?partner=rss&emc=rss