SOUND THE TAKE ALARM. Big news drop this evening. Let’s jump in:
There had been rumors, and there had been increasing reason to believe them. Spotify’s buzzy start to the year, in which the Swedish platform spent hundreds of millions of dollars acquiring its way into the podcast industry, had begun to inspire questions about the future of Apple’s position as the dominant podcast distributor. Those questions got even louder as it became apparent Spotify was quickly becoming a strong second podcast distributor. Surely such an ascendance would prompt Apple to mount some sort of response. Indeed, maybe the rising competition would be so alarming that Cupertino might even begin reconsidering their longtime position as the impartial steward (and enforcer) of the open podcast ecosystem.
Well, from the sounds of a report that dropped this afternoon, the company might indeed be doing just that.
Earlier today, Bloomberg’s Lucas Shaw and Mark Gurman broke the news that Apple is planning to “fund original podcasts that would be exclusive to its audio service.” Citing “people familiar with the matter,” Shaw and Gurman noted the increased podcast investment is meant to stave off competition from Spotify… and Stitcher?
The report went to state:
Executives at the company have reached out to media companies and their representatives to discuss buying exclusive rights to podcasts, according to the people, who asked not to be identified because the conversations are preliminary. Apple has yet to outline a clear strategy, but has said it plans to pursue the kind of deals it didn’t make before.
Apple declined to provide comment when I reached out for comment. Elsewhere, Spotify’s stock price took a bit of a dip after the article went out.
This is definitely an eye-catching scoop, but I’d counsel a soft interpretation of the report. The possibility of Apple funding original podcast content that would be exclusive to its platform is certainly a break from the company’s previous stance on the ecosystem… and a fact that will understandably send shudders down the spines of open podcasting advocates. But it’s worth noting that the report contains little to no detail in terms of what the actual plan is supposed to be.
The Bloomberg report notes that Apple has yet to settle on a clear strategy, and it doesn’t mention the specific kinds of companies that’s been contacted. A deal with, say, an indie production studio like Pineapple Street and Neon Hum has very different ramifications compared to a deal with NPR, Radiotopia, iHeartMedia, Rooster Teeth, or Wondery. Is Apple pursuing exclusive distribution rights for big hit shows, or is the company exploring the possibility of commissioning brand new projects? (The report doesn’t seem to delineate between the two frameworks.) Also, whatever conversations that have happened are said to be preliminary — which is to say, it’s possible that what we’re actually seeing is Apple in the process of poking its feelers around and taking stock of its options.
Whatever the eventual specifics may be, one thing’s for sure: virtually none of the podcast execs I contacted this evening to discuss the report seem particularly surprised about Apple exploring original or exclusive content. For them, the prospect was a near inevitability, with the real question being about timing (will this happen sooner or later?) and shape (“Netflix for Podcasts,” or something else?).
Me, I’m stuck on the money. What are these original Apple podcasts, exclusive or otherwise, supposed to do for the company? Which brings me to another question: what’s motivating Apple to consider investing more dollars and resources into podcasting, a category that it may have created… but has never previously extracted direct value from? I mean, even if more iPhone-using podcast listeners were flocking to Spotify, they’d still be listening on iPhones, no?
Let’s assume there’s ambition within Apple to start digging for money in these podcast hills. Are we talking about Apple pursuing a “Netflix for Podcasts” model? I highly doubt it. Exclusive paywalled podcasts… well, they haven’t really proven that they can drive a paid subscription business at scale yet. And when I say “scale,” I mean “scale at the level that would make it worth it for Apple to abandon its noble, beloved position as impartial steward of the podcast ecosystem.” Sure, Spotify has exclusives, but I don’t think those exclusives are the primary reason that the Swedish platform has become the second major podcast distributor. (Not yet.) If anything, it’s the simple fact of access, and maybe all this increased attention.
In any case, Apple isn’t a content business — it’s shifting towards becoming a service business. And it is here that things get a little stickier. Some observers have evoked the Apple TV+ connection, stating that there is a possible lane here to build out some sort of similarly-shaped Apple Podcast+ business. But that doesn’t really make sense either? As the dude Peter Kafka reported in March, with Apple TV+, “Apple’s main focus — at least for now — will be helping other people sell streaming video subscriptions and taking a cut of the transaction.” Again, Apple (still) isn’t in the content business. It’s (still) committed to being a services business. All the original television shows that Apple is funding seems to be top-of-the-funnel stuff; buzzy content that gets people using Apple TV+, who then gets properly monetized by these partner services with Apple taking a cut. Meanwhile, a future with wildly buzzy Original Apple Podcasts might get more people using the Apple Podcast platform… but to what end? Where would the direct value be there?
Which makes me think: should we be expecting a shoe of another kind to drop?
Anyway, like I said: soft interpretation. There remains a lot we don’t know, and I have strong feeling we’re witnessing a little shard of a much larger, complicated soul-searching process. In the meantime, original content is cool and all, but I do hope they’re siphoning some of that money to improving the actual Apple Podcast app.