SPOTIFY TURNS A PROFIT AND WANTS TO TAKE ON PODCASTS

It’s only April, but it’s already been a hell of a year for Spotify. The company is not only looking forward to cornering new markets in music, but the news has also hit that it will be making big moves with podcasts as well.

Turning a Profit and Turning a Corner

As Rolling Stone reports, in the fourth quarter of 2018, Spotify has “posted an operating profit for the first time, adding 9 million premium subscribers, expanding into 13 new markets and positioning itself to be something much bigger than just a music service.”

A lot of people don’t realize that even when a company is making money hand over fist that it can take a while for it to make a profit. (Geffen Records was in business for seven years before having its biggest year, which made it the number one independent label in the biz.)

In the last quarter, the company has shown good growth, with 96 million paying subscribers, and a base of 207 million overall. Right now, Spotify has a profit of $107 million. The company cut costs down, but as they explained in a statement, “the business would have been profitable regardless.” (Spotify went public last year, and apparently Wall Street is glad they’re doing so well.)

While the company has been saying it doesn’t want to be a label, they clearly have major ambitions by signing distribution deals with artists directly, and growing new artists on their playlists. (When you’re playing cards, it’s always a good idea not to reveal your entire hand, especially when you want your company to become a global giant.)

The CEO of the company said in a statement, “We want Spotify to continue to be at the center of the global audio economy. To be clear, this doesn’t make music any less important at Spotify. Our core business is performing very well. But as we expand deeper into audio, especially with original content, we will scale our entire business, creating leverage in the model through subscriptions and ads.”

Getting Into the Podcast Business

As reported in The Verge and many other media outlets, Spotify has plans to spend as much as $500 million on podcast companies, and the first company they bought is Gimlet Media. Spotify has also bought Anchor, a company that lets people create their own podcasts. As The Verge tells us, “This is huge news for the growing podcast industry, as it’s already expected to generate nearly $700 million in revenue by 2020.”

If these projections for next year are indeed correct, it could help make Spotify an even bigger company than ever. As Spotify CEO and co-founder Daniel Ek said in a statement, “The [podcasting] format is really evolving and while podcasting is still a relatively small business today, I see incredible growth potential for [it] and for Spotify in particular…

“In our industry, things change fast but the path ahead for Spotify is clear – we want to become the world’s leading audio platform, and today is an important step in that direction.”

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