Spotify is introducing more listeners to audiobooks

For the first time since Spotify announced its audiobook vertical in 2022, the company appears to be making a dent in the market.

Referring to data from Bookstat that was published in The New York Times, CEO Daniel Ek said during an earnings call on Tuesday that Spotify is now the second biggest player in audiobooks behind Audible. And according to the NYT report, it does appear that Spotify is helping to grow the overall market rather than stealing existing customers from traditional a la carte or credits-based platforms.

According to Ek, the users who are engaging with audiobooks are not necessarily going for the bestsellers that dominate on the other platforms. Because 15 hours of audiobook listening is included in Spotify’s premium subscription, users are more likely to check out newer or lesser-known authors. He said that the credit system used by Audible and others drives listeners toward “safer bets.”

However, even if Spotify is seeing traction with its new audiobook model, that doesn’t yet translate into meaningful revenue. Last month, Gustav Gyllenhammar, Spotify’s vice president of markets and subscriber growth, told Hot Pod that Spotify’s a la carte audiobook model hasn’t taken off yet because there is no path to payment from the app on iOS. And the premium model is based on the idea that heavy users will buy top-ups, which are also hamstrung by Apple’s App Store rules.

How and if that Apple issue — and Spotify’s monetization problem — resolves remains to be seen. But in the meantime, Spotify does seem to be luring its subscribers to audiobooks, possibly for the first time.

The layoffs keep coming. Warner Music Group CEO Robert Kyncl said the company plans to lay off 10 percent of staff and “wind down” its podcast arm, Interval Presents. The studio produced shows including Drink Champs and Rap Radar.

By cutting Interval Presents and social media publisher IMGN, WMG is focusing its resources on its core music business. It’s another version of what we have seen at media companies, which branched out into podcasting just to reel their efforts back in when they were forced to prioritize.

Even if WMG’s efforts in podcasting were not nearly as big as Sony Music’s, it could claim one hit with Drink Champs. Amrita Khalid interviewed WMG digital strategy chief Allan Coye in August, who saw potential in the business at the time.

“Podcasting stood out [in 2022] as one of those places where we didn’t have a lot of capabilities. We had done some experimenting across some of the labels and affiliates in the space, but it really just made sense to do something that is driven by a central strategy,” Coye said in August. “We wanted to leverage our capabilities as IP owners but also as an entity that is close to artists and understands how to find listeners.”

That doesn’t exactly sound like a full-throated endorsement of podcasting as a medium, so it is not entirely shocking that WMG has gone the other way. As the industry recovers, I imagine that people may be skeptical about signing on with new entrants that show up to “leverage our capabilities as IP owners,” etc.

It is hard to imagine an outlet with greater brand safety than The New York Times, but Podnews reports that the paper of record is facing that very issue. “Our digital performance, including podcasts, was impacted by marketers avoiding some hard news topics like the Middle East conflict,” CEO Meredith Kopit Levien said on a call with investors yesterday.

NYT podcasts like The Daily and The Ezra Klein Show have featured extensive and valuable coverage of the October 7th Hamas terrorist attack in Israel, the war in Gaza, and adjacent conflicts around the region. Klein’s show in particular has been getting recognition for its discussions of the ongoing conflict.

We tend to think of brand safety as relating to content that is inappropriate or unreliable, but controversial news topics (even when well reported) can fall into this category as well. It is notoriously difficult to get advertisers on board (or paying full price) for political shows. Tellingly, the list of Magellan AI’s top 15 advertisers are dominated by brands that spend the most on sports podcasts, and a bit in other non-news genres like comedy.

Kopit Levien said she is not worried about it as a long-term problem, which makes sense in that the Israel-Palestine conflict is a singularly polarizing issue and these news podcasts will eventually move on. And the NYT is in a unique position in that its podcasts don’t have to be ad revenue monsters so much as they have to draw audiences to the paper as paying subscribers. In this moment, getting reach may be more important than bringing in ad dollars.

Where does that leave other podcasts that dig into thorny issues, Israel-Palestine or otherwise? As I have said before, and maintain now, podcasts can offer insightful, nuanced coverage in a way that social and digital media has often failed to. But most shows do not have the financial buffer that NYT’s podcasts do. If brands are going to be scared off, then we need new business models that will support these kinds of shows. I don’t actually know what that could look like, but perhaps you do, so feel free to hit me up.

That’s all for now! See you tomorrow.