Apple launches new subscription platform. Will it be the ‘Netflix of podcasts’?
Fifteen years ago, Apple Inc. played a major role in bringing podcasts to the mainstream, offering a way to distribute free audio programs to the masses.
Since then, rivals such as Spotify have been chipping away at Apple’s territory by offering podcasts exclusive to its streaming platform and generating revenue through advertising and monthly subscriptions.
On Tuesday, Apple signaled its intentions to remain a major player in the podcasting business by offering a subscription platform on its app next month.
The new effort allows Apple to start collecting a cut of podcast subscriptions on its Podcasts app. Previously, Apple did not collect subscription revenue through Apple Podcasts and publishers could charge subscription fees through RSS feeds.
“Apple is creating the Netflix of podcasts,†said Ray Wang, principal analyst at Constellation Research. “They are enabling creators [with] a distribution channel to 1.65 billion devices.â€
The move also reflects growing competition in the podcast arena, analysts said.
“This service will further enable Apple to monetize its podcasting moat and ultimately we expect more exclusive content partnerships to be announced over the coming months to compete with Spotify in this quickly morphing podcasting arms race,†Daniel Ives, an analyst at Wedbush Securities, wrote in a research note Tuesday.
Apple Podcasts subscriptions will be available in more than 170 regions and countries next month, Chief Executive Tim Cook said at an event Tuesday at Apple’s headquarters in Cupertino, Calif. The subscriptions will allow customers to unlock new content, listen ad-free or gain early access, he said.
“Now you can help your favorite podcasters build their business and fuel their creativity,†Cook said.
With Apple Podcasts subscriptions, podcast creators will set the pricing from 49 cents and up, receiving 70% of the subscription revenue each billing cycle in its first year, and 85% after that, according to a person close to the company who was not authorized to comment. Creators will receive 100% of the revenue generated by advertising, the person said.
Podcast creators pay about $20 a year to enroll in the Apple Podcasters Program, which gives them the tools and ability to distribute premium podcast subscriptions on the Podcasts app.
Dawn Ostroff, Spotify’s chief content officer, says she plans on making hundreds of original podcast series next year as part of a strategy to expand the streaming platform’s podcast offerings. The company aims to have 20% of the listening on its service be non-music.
Apple recently launched a podcast related to its Apple TV+ original series, “For All Mankind†in February. Last year, Oprah Winfrey and Apple collaborated on an Oprah’s Book Club podcast.
On Tuesday, Cook spoke about the upcoming new design of the podcasts app that will introduce channels to help consumers better find podcasts they are interested in. One of those channels is from Luminary, a subscription podcast network that will have 35 original podcasts, including “The C-Word With Lena Dunham.†Luminary said it would charge $5.99 a month for access to its channel on Apple’s app.
Other companies that will offer premium subscriptions include the Los Angeles Times, Sony Music Entertainment and Tenderfoot TV.
“Offering subscriptions provides new flexibility and options for consumers, and is an important addition to helping creators better monetize their works,†Dennis Kooker, president of global digital business and U.S. sales at Sony Music Entertainment, said in a statement. “All of this will lead to more investment and even better shows for podcast fans.â€
Apple has been growing the number of services it sells that complement Apple’s vast array of tech hardware. The services include Apple TV+, music streaming service Apple Music and fitness program Apple Fitness+.
In its first quarter, Apple said services generated $15.76 billion in revenue for the three-month period that ended Dec. 26, up 24% from a year earlier.
Apple on Tuesday unveiled bundles for the various services it sells, including Apple Music and Apple TV+. Analysts say this will help boost subscriptions.
Companies, including Apple, have been expanding their commitment to audio programs as demand for podcasts increases. Roughly 80 million Americans are weekly podcast listeners, up 17% from last year, according to Edison Research and Triton Digital. The findings were based on a survey conducted Jan. 4 to Feb. 2.
Large media companies have been scooping up podcast production firms in a race for content. In recent years, Spotify has acquired several podcast-related companies, including Gimlet Media and the Ringer. Most recently, Spotify bought Betty Labs, the L.A. creator of live audio app Locker Room, in March. Other acquisitions announced last year include SiriusXM buying Stitcher for up to $325 million and Amazon acquiring West Hollywood podcast publisher Wondery for an undisclosed price.
Hip-hop stars, executives and creatives flocked to the invite-only audio chat app Clubhouse, giving it instant cache and, ultimately, a $1-billion valuation.
Tech companies are also embracing audio-only chat rooms, with the growing popularity of apps such as Clubhouse. Facebook said Monday that in the next few months, users will be able to listen to podcasts on its social network and it will make available live audio rooms on its Messenger app this summer.
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