Title: Spotify Missing Out on $38 Million in Annual Profits Due to Popularity of “White Noise” Podcasts
Subtitle: Spotify Contemplated Removing the Podcasts, but Ultimately Decided to Keep Them
Date: August 18, 2023 | 12:11pm
Author: Thomas Barrabi
In a surprising revelation, Spotify is reportedly losing out on $38 million in annual profits due to the immense popularity of “white noise” podcasts among its users. According to an internal document obtained by Bloomberg, these podcasts, which feature calming sounds like falling rain or crashing waves, generated a staggering three million daily consumption hours on the platform as of January.
The unexpected success of these podcasts prompted Spotify to consider removing them from its streaming service altogether and redirecting users to more financially lucrative content, such as music from well-known artists like Drake or Ed Sheeran. An internal analysis indicated that if Spotify removed “white noise” from its “talk” section, blocked future uploads, and guided users towards other audio content, the company’s annual gross profit would increase by approximately $38 million.
Despite this potential financial gain, Spotify decided against removing “white noise” podcasts from its platform. Currently, users can still enjoy them as part of the podcast section. A Spotify spokesperson stated, “The proposal in question did not come to fruition — we continue to have white noise podcasts on our platform.”
Bloomberg noted that Spotify’s own algorithmic push for “talk” content inadvertently boosted the popularity of these white noise podcasts at the expense of the company’s bottom line. The outlet had previously reported that the hosts of such podcasts could earn $18,000 per month in ad revenue.
While some Reddit users have expressed disappointment over their favorite white noise podcasts disappearing recently, it is evident that these podcasts still maintain significant popularity on Spotify. The company’s shares have surged by nearly 60% this year, despite reporting unfavorable second-quarter results that fell short of Wall Street’s expectations.
In July, Spotify further rankled users by announcing plans to increase monthly subscription prices by up to $2 for ad-free service. The company justified this move by stating that the market landscape has continued to evolve, necessitating changes in Premium prices to ensure continued innovation and value delivery to fans and artists on the platform.
As Spotify grapples with balancing user preferences and financial considerations, it remains to be seen how the company will adapt its strategy in the future. For now, white noise podcasts continue to captivate Spotify users, while the company strives to find a balance between profitability and offering diverse content options to its audience.