Apple ‘creating the Netflix of podcasts’ as it takes on Spotify, launching new subscription platform on its Podcasts app
- Apple has revealed plans to collect a cut of podcast subscriptions on its Podcasts app
- Subscribers will be able to unlock new content and listen to ad-free podcasts
Fifteen years ago, Apple played a major role in bringing podcasts to the mainstream, offering a way to distribute free audio programmes 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.
Recently, Apple signalled its intentions to remain a major player in the podcasting business by offering a subscription platform on its app in May 2021.
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.”
The move also reflects growing competition in the podcast arena, analysts said. “This service will further enable Apple to monetise its podcasting 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.
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Apple Podcasts subscriptions will be available in more than 170 regions and countries next month, CEO Tim Cook said at a recent event at Apple’s headquarters in Cupertino, California. The subscriptions will allow customers to unlock new content, listen ad-free or gain early access, he said.
“Now you can help your favourite 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 per cent of the subscription revenue each billing cycle in its first year, and 85 per cent after that, according to a person close to the company who was not authorised to comment. Creators will receive 100 per cent of the revenue generated by advertising, the person said.
Podcast creators pay about US$20 a year to enrol in the Apple Podcasters Program, which gives them the tools and ability to distribute premium podcast subscriptions on the Podcasts app.
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.
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 US$5.99 a month for access to its channel on Apple’s app.
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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 monetise their works,” Dennis Kooker, president of global digital business and US sales at Sony Music Entertainment, said in a statement. “All of this will lead to more investment and even better shows for podcast fans.”
Apple has been growing the number of services it sells that complement its 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 US$15.76 billion in revenue for the three-month period that ended December 26, up 24 per cent from a year earlier.
Companies including Apple have been expanding their commitment to audio programmes as demand for podcasts increases. Roughly 80 million Americans are weekly podcast listeners, 17 per cent more than last year, according to Edison Research and Triton Digital, based on a survey conducted between January 4 and February 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 LA creator of live audio app Locker Room, in March. Other acquisitions announced last year include SiriusXM buying Stitcher for up to US$325 million and Amazon acquiring West Hollywood podcast publisher Wondery for an undisclosed price.
Tech companies are also embracing audio-only chat rooms, with the growing popularity of apps such as Clubhouse. Facebook said on 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.
