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The Mystery of Anchor

Something to mull over.

Last week, The Verge’s Ashley Carman published a report raising questions over a key pillar of the value proportion extended by Anchor, the plug-and-play podcast publishing platform that Spotify acquired for over $100 million in 2019. Specifically, Carman’s story takes aim at Anchor’s Sponsorships tool, which positions itself as a way for podcast creators hosted on Anchor to easily make money off their shows and listens.

When Anchor originally rolled out its Sponsorships program in late 2018, the company pitched it as “the first and only podcast advertising platform open to all podcasters and sponsors of all sizes, regardless of how many plays a show gets, or the size of a marketing budget.” In other words, it’s supposed to be a monetization tool that theoretically gets Anchor closer to realizing its vision of a consolidated YouTube-style ecosystem for audio.

However, drawing from interviews with nine podcast creators using the tool, Carman finds some doubt that Anchor Sponsorships is delivering what it’s supposed to deliver; that is, a marketplace that actually drives a reliable source of potential advertising dollars. She also unearths a slightly more curious finding: that Anchor and Spotify themselves appear to be the primary advertisers on the Anchor Sponsorships marketplace.

Here’s the key chunk from Carman’s piece:

Nine podcasters tell The Verge the same story: Anchor’s sponsorship feature seems to be seriously lacking in sponsors, and they’ve received few, if any, opportunities beyond Anchor or Spotify itself. Three people say they’ve earned thousands from Anchor and Spotify alone. Three also say they have now left or are looking to leave Anchor’s platform because they’re not receiving new sponsors.

Okay, so, I think it’s prudent to pull back a little. One of the challenges with assessing a platform like Anchor from the outside is its black box nature, which makes its full scope fundamentally (and intentionally) unknowable beyond a certain point. We know that hundreds of thousands of podcasts are actively hosted on the platform, some meaningful portion of which is presumably plugged into the Anchor Sponsorships system. As such, when you have a report like The Verge’s that draws upon nine qualitative examples, you’re naturally vulnerable to a structural counterargument that would suggest you to be looking at the anomaly, not the norm. Fewer than ten people report that they’re not seeing much opportunity routed through Anchor Sponsorships? Well, there are hundreds of thousands of rocks still left unturned. This is the natural narrative advantage held by Spotify and Anchor in a nutshell.

With that in mind, it’s a little strange, then, that Spotify declined to comment on the record when The Verge reached out (and similarly declined to comment on the record in my own correspondence). Instead, they pointed Carman to a lone counter-example, the unexpectedly popular bro-cast How Long Gone, which itself seems to corroborate of the report’s major suggestions: that, in what seems to be many cases, Anchor-using podcast creators are getting most of their Anchor Sponsorships revenue from Anchor itself. (Like other sources cited in the piece, How Long Gone‘s hosts also say that the majority of their ads market Spotify and Anchor products.) You would think that, by way of disputing the claim, they’d extend a counter-example that gets more of its Anchor Sponsorships revenue from actual advertisers on the platform. That, at least, would strike at the heart of the report’s other major suggestion: that it feels like there’s not actually a reliable supply of advertisers on the platform.

I am, frankly, a little less bothered by the notion of Anchor dogfooding its own Sponsorship tool by itself. Yeah, it’s gaudy, but I’m familiar enough with the tech world to understand it as a tried-and-true growth tactic. However, the fundamental question raised in Carman’s piece is one that places the notion in the broader context: Is Anchor’s Sponsorship platform primarily dominated by in-house ads? Which is to say, is this a situation where the bulk of Anchor-hosted podcasts are primarily rendered to be a mass army of tiny little Spotify marketing vessels? Is Anchor’s mission statement of making it easier for people to publish podcasts actually half the picture, and the full picture of Anchor’s utility to Spotify is a platform that drives up the latter’s “number of shows distributed on Spotify” metric as well as its marketing reach?

Again, let’s back up a little. This is all speculative, to be sure, but the larger point is: It’s hard to tell what exactly is up with Anchor at this juncture, and Spotify doesn’t really seem to be putting forward many tangible data points that better answers the question for people. (Even some gesture towards a “total number of dollars paid + how many podcasts are getting payouts” metric set would be nice.)

Anchor’s utility in the Spotify podcast ecosystem was also recently made even more unclear in the wake of Spotify’s acquisition of Megaphone, a hosting platform that’s generally oriented towards higher-volume publishers and that also contains an internal advertising marketplace of its own. At first glance, there seems to be some duplication of value here, though one could suggest a distinction that Megaphone is for “higher-volume publishers” (see also: industrial-grade clients, whales, etc.) while Anchor is for “everyone else.” However, if one were to take that framing, then we’re basically talking about a situation in which Spotify, as a platform, would be operating from a position of gatekeeping between what’s an “industrial publisher” and what’s in the bush leagues. And if you were to reject that framing, then, well, we’re back at the original inquiry: What’s supposed to be the differentiated value proposition between Anchor and Megaphone? What is the point of Anchor, and how does it fit into the Spotify value chain?

Here’s what I’m not saying: that Anchor is a dud, that Anchor Sponsorships is a scam, and that something rotten is Sweden. These are all very smart and well-compensated people working to make the numbers work for themselves, for their signed talent, and for the greater galaxy of podcast producers, presumably in that order. What I’m saying is that there seems to be an increasingly noticeable tension between Spotify’s persistent dream-weaving of the past few years and what seems to be the actual lived experience on the platform. Spotify is due to report quarterly earnings in a few weeks, and I’m sure the company has wall-to-wall announcements lined up — new features, new deals, new visions that could very well render many of the questions raised throughout the column irrelevant. Right now, though, I can’t help relating to the Citi analysts who stood out for being alone in downgrading their assessments of Spotify recently. All that dream-weaving is nice, but I can’t help starting to wonder.