Spotify from a music company to audio company

In 2017, Spotify CEO Daniel Ek decided to transform Spotify from a music company to audio company.

In 2017, Daniel noticed something strange: an audiobook out of Germany was in the top song charts! That’s when he realized Spotify had the potential to expand beyond music.

Another reason was profits.

Spotify had to give 70% of its music revenue to record labels who owned the songs. That’s why it was still incurring massive losses. These 2 reasons convinced Daniel to move Spotify beyond music.

The first target: podcasts.

Podcasts was a small market. Apple dominated the market. But Daniel saw a lot of potential in this market. So, he announced that Spotify would invest $1 billion into podcasting!!

First, they hired Dawn Ostroff, a media pro who had run several successful media businesses including UPN and CW and Conde Nast. Then, Spotify started acquiring other podcasts.

Gimlet Media for $194 million.

Parcast for $55 million.

The Ringer for $190 million.

Joe Rogan experience for the $100 million.

Call Her Daddy podcast for $60 million.

Spotify also signed celebs like Barack and Michelle Obama, Prince Harry and Meghan Markle, Kim Kardashian and Ava DuVernay to make Spotify Originals podcasts. The company also spent a lot of money on podcasting tools. It acquired Anchor, a podcasting software, for $154 million.

It paid $236 million for Megaphone, a podcast ad network. The company has also launched several monetization opportunities for creators: paid podcasts, early access, ticketed events, merchandise, etc. These massive acquisitions have a solid strategy behind them.

All the exclusive podcasts by celebs will attract more users to Spotify. More users, more subscriptions, more money for Spotify. The monetization options will attract more creators to Spotify, who will create more podcasts on Spotify, which will attract more users to Spotify, and the cycle goes on.

Smart strategy, isn’t it?