How are podcasters paid

Spotify Podcast: This is how the platform wants to earn money with your data

Spotify bought the company Megaphone in order to analyze user data more closely and to serve personalized advertising. Will Spotify Podcast soon become the dominant podcast platform? We'll take a closer look at that.

Spotify has shown a keen interest in the podcast business over and over again over the past few years. In 2019, the Swedish streaming giant bought the podcast companies Gimlet Media and Anchor. With this, Spotify created a new way for advertisers to operate targeted podcast targeting.

Now the company is going one step further - and announces that it will take over the next company with Megaphone. This is reported, among other things, by the US technology portal The Verge.

Megaphone is one of the largest advertising and publication platforms for podcasts, which, among other things, serves the international daily newspaper Wall Street Journal and the American television station ESPN use.

Spotify Podcast: Streaming Service Pays $ 235 million

Spotify CEO Daniel Ek already spoke of "Audio First" at the beginning of 2019 - and that is exactly how his words were meant. The streaming service has long since ceased to focus solely on music, but also on other listening formats - and the company is spending a lot of money on this comprehensive development.

The Megaphone acquisition cost Ek approximately $ 235 million. Advertisers should soon be able to use the Megaphone Targeted Marketplace to scale the reach of their advertisements in Spotify's Originals and Exclusive Podcasts.

Spotify itself writes in a blog post: "Together, Spotify and Megaphone will offer podcast publishers innovative tools with which they can earn more from their work."

This also includes the option to monetize their content and thus combine loyal listeners with even greater demand from advertisers.

The two companies want to achieve this by "providing streaming ad insertion for the first time to third-party podcast publishers," it said.

Spotify wants to drive podcast marketing

The Swedish streaming service wants to analyze more user data in order to promote podcast marketing.

So far, radio spots have often been integrated into podcasts. Megaphones, on the other hand, should enable publishers to switch personalized advertising, similar to YouTube.

Podcast advertising is already personalized and dynamic. That means: The commercials that you hear during your favorite shows are not always the same, but are dynamically exchanged depending on the time of day and the current situation.

Nevertheless, the personalization factor remains relatively limited, as podcast hosts have little user data in order to better individualize the advertising.

Spotify has exactly this data. This is not as detailed as with Google or Facebook. Nevertheless, Spotify knows which device you are using, how old you are, what gender you are, which shows you particularly enjoy listening to and much more.

Spotify is already using this knowledge with its Streaming Ad Insertions (SAI), which the streaming service launched in January. Commercials are played in real time.

This means that SAI decides within seconds which spot suits the respective user best at that moment. Of course, deals from Spotify with advertising partners also play a role. But basically, Spotify uses your data to bring you customized advertising.

So far, this only worked with Spotify Podcasts for podcasts that Spotify developed itself. With the megaphone deal, Spotify can now expand this to external podcasts as well.

Spotify, with its 320 million monthly users, would be very exciting as a hosting platform for podcasts. To get access to these listeners and the personalized advertising service, the podcast operators would have to pay Spotify.

This would make Spotify important for advertisers if they want to generate or buy more coverage in podcasts.

Spotify Podcast important source of money

And podcasts are, in turn, an important source of income for Spotify, as the latest quarterly figures from 2020 show.

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The advertising income in this area, together with the Ad Studio Channels, have increased in the double-digit range and, according to Spotify, are making a sustainable contribution to the quarterly plus. From this advertising income alone, Spotify generated 185 million euros in the third quarter of 2020.

The numbers also show that 22 percent of all monthly active Spotify users listen to podcasts. In total, over 1.9 million titles are already available on the platform. Spotify is already the most popular platform for podcasts - and the service should continue to build on that.

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