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Insider July 28, 2022 — Spotify riding high

Plus, how MrBallen became a podcasting smash

Lots of stuff happening today with Spotify: solid subs, M&A, and a death knell for the Car Thing. Oh, and the streamer is now home to 4.4 million podcasts, a 10 percent jump since last quarter. Still not profitable, though!

Plus, a look at how MrBallen went from run-of-the-mill YouTuber to podcast star.

Spotify adds 6 million paid subscribers, makes Wall Street (reasonably) happy

It was a good earnings day for Spotify on Wednesday (aside from, you know, reporting a $127 million loss). The streamer added 6 million paid subscribers, beating analyst expectations and tripling the number of sub additions from the prior quarter. Its monthly active users (MAUs) rose to a staggering 433 million, up 11 million from the first quarter of the year. And perhaps best of all: I did not have to wake up before 6AM thanks to my colleague Jon Porter in London — 🙏bless him.

While Wall Street is normally skeptical of the way CEO Daniel Ek does business (prioritizing big-picture growth over short-term profit), investors were happy enough. On Wednesday, the stock was as high as it’s been since April and is still trading about 10 percent higher than it was before the report came out. 

As Spotify’s subscriber numbers continue to creep up, it’s going to be harder for Apple to ignore. As LightShed partner Rich Greenfield noted yesterday, Apple Music has not disclosed its subscriber count since 2019, when it was 60 million. MIDiA Research estimated earlier this year that it likely accounts for 15 percent of the music streaming market, or just under half of Spotify’s market share. But until the company discloses a number, Spotify will continue to apparently trounce them.

M&A: Spotify drops a cool $214 million on new tech

An updated filing from Spotify shows what it spent on recent acquisitions Findaway and Sonantic. Again, unbothered by mounting M&A costs, the company spent a combined $214 million.

Findaway, which will form the bedrock of Spotify’s audiobook vertical, cost $123 million. That doesn’t include the additional $5.25 million spent on administration costs (likely related to the lengthy Justice Department review). They will also pay $13.65 million in compensation and $5.25 million in equity to Findaway employees, so long as they stay on board. And those executives will have their work cut out for them — Ek said that the audiobook functionality will launch “quite imminently.”

The deal with AI firm Sonantic, which closed earlier this month, cost $91 million. The London-based company can make AI voices that sound unsettlingly real. As James Vincent reported for The Verge earlier this year, Sonantic’s voices can emulate different moods, like cheerful, casual, and flirty. I don’t really want to flirt with Spotify, but I am sure there are plenty of freaks out there who do.

Car Thing is dead

Spotify announced that it is no longer making Car Thing, the dashboard accessory nobody needed in the first place. Chief financial officer Paul Vogel told investors Wednesday that the company could not find the right price point for the device after five months on the market. Plus, it wasn’t worth pursuing further tinkering with inflation driving up manufacturing costs. 

The upside? Fire sale! If you have been wanting to get your hands on a Car Thing, you can still buy it for the discounted price of $49.99.

As podcasting becomes more like YouTube, MrBallen finds its sweet spot

I published a piece for The Verge today about how MrBallen is perhaps the best example of how YouTubers can cross over into podcasting. With spooky tales like “What I saw in my room still haunts me” and “Real-life ‘ghost ship’ has a SECRET,” ex-Navy SEAL John Allen’s YouTube show gets 40 million views a month. That’s obviously very good, even if it’s not Baby Shark good. But the podcast spinoff he launched earlier this year is doing gangbusters — with nearly 7 million downloads a month, it regularly hangs out at the top of Apple and Spotify’s podcast charts.

Steven Cohen, a longtime audio industry sales executive, was shocked when he dug into the stats for the MrBallen podcast. The show was “putting up numbers that, honestly, having come from a reasonably big network, I had never seen,” he told The Verge. The opportunity was big enough that Cohen decided to leave his role as vice president of Audacy-owned podcast network Cadence13 to join the independent true crime show.

Allen realized that with his YouTube show, in which he talks viewers through the events of a “strange, dark, and mysterious” true crime story, there was potential for crossover. “It’s a video podcast on YouTube,” he said. “We don’t call it that, but that’s what it is.”

As YouTube becomes a major force in podcasting and podcasters are increasingly encouraged to post video versions of their recording sessions, there is a natural opening for creators like Allen. Influencers like Emma Chamberlain and Logan Paul have already joined the podcasting ranks, and they are not likely to be the last.

That’s all for today. I’ll be back tomorrow on the early side because I have to dip for a wedding in Connecticut.