Spotify wants to beat YouTube in audio
This story originally appeared in Hot Pod, The Verge’s preeminent audio industry newsletter. You can subscribe here for more scoops, analysis and reports.
Spotify announced yesterday its acquisition of Podsights and Chartable, two companies known for tracking pixels that allow marketers, advertisers and podcasters to measure the success of their shows. It’s a big deal, to state the obvious, if for no other reason than if podcasters have avoided Spotify’s podcast world until now, well, they’re probably going to have to start engaging. Both of these platforms are essential to the space to show advertisers that their marketing is heard and acted upon and that podcast ads are effective and budget-worthy.
As for its plans, Spotify says it will bring Podsights’ technology to its “audio ads in music, video ads and display ads.” At a time publication on its website and a meeting along with Podsights CEO Sean Creely, the team stresses that nothing is changing in the immediate future, and Spotify will only improve its technology. Chartable’s fate seems less clear. Its technology will be integrated into Megaphone, especially its marketing technology like SmartPromos and SmartLinks. Of the society blog post does not mention what will happen to the whole team.
I want to note a few things. One is that this purchase puts Spotify in a powerful position to know exactly how shows perform, even those not hosted on its own platform or consumed on its app, and that’s likely going to present a dilemma for major networks. . Do they build their own trackers? Do they trust Spotify to protect their data from Spotify’s own publishing teams, because Podsights says it will? Then there’s the open question of how much Spotify will lock down this technology on its own platform. For what it’s worth – and a sore point I’ve heard from various people in the industry – Anchor, Spotify’s other hosting and authoring platform, never allowed pixel tracking. I imagine that could change.
Now, in the worst case scenario, Spotify could force podcasters to host on its platforms in order to attribute ads, which isn’t ideal for someone like Amazon, who has a hosting platform . Spotify spokesperson Erin Styles tells me Chartable’s tools will only be available to people who have a Megaphone account, but they don’t need to be paying customers, so we may already be seeing some a slight hint. On the other hand, there’s also the possibility that Spotify sees an opportunity — and money — in reaching out broadly to advertisers, no matter where the streams come from or where the shows are hosted. I don’t know how it happens!
But I also read this news in a different way: these purchases allow Spotify to better compete with YouTube, especially YouTube analytics. I’ve been thinking about YouTube a lot lately, as we’ll have a panel on it at the Hot Pod Summit, and one thing that video editors appreciate about YouTube – and wish would only apply to audio on the platform – is AdSense, as well as the comprehensive analytics provided by the platform. (There is a whole 5 minute video dedicated to browsing its analytics dashboard!) These analytics mean that someone who uploads a video gets broader data about who watched it, including their age and gender, as well as granular insights as the exact moments that most captured the audience’s attention.
YouTube, I believe, is Spotify’s main competitor. We can see it in Spotify’s product priorities – it’s integrated video podcasts into its platform, courted YouTube podcasters (i.e. Rogan and others) and launched Anchor in a bid to bring creators to its application. CEO Daniel Ek said the company’s mission was to have 50 million creators on Spotify. To achieve this goal, they not only need a way to make money (reliable, quality programmatic ads), but also robust analytics, which Podsights and Chartable can help provide.
Yesterday I logged into Spotify and saw this on my homepage:
Pure video content which when I click on it shows me a description where Rowena literally says she makes videos about “personal development and productivity on Youtube.” (Emphasis mine.) The move to single-app audio and video syncing is already happening, and it’s on Spotify, not YouTube.
Now, I wondered in this newsletter what YouTube could do in the podcast space. YouTube already has programmatic ads for anyone who wants them (something Spotify is trying to achieve); YouTube is already, without even trying, a popular place to consume podcasts (a space Spotify is trying to dominate); and YouTube already offers strong analytics on who watches and how (again, an area Spotify wants to own). Above all, YouTube also has a lot of user behavior data because Google is basically synonymous with everything we do online like sending emails and browsing. He doesn’t have to worry about Apple not allowing cross-app tracking like Facebook or Spotify might.
YouTube hired Kai Chuk last year to oversee podcasts on the platform – the first person to take on the role – and has also made background listening free for Canadian YouTube Music users. Both of these could arguably be seen as indicators of Google’s growing interest in space, although I must caution and say that this does not guarantee that significant changes will result, in which case, good for Spotify.
So yes, this purchase, as always, is about giving Spotify a bigger slice of the podcasting world. It wants to be the biggest and best place to buy and distribute audio ads, and this acquisition helps it achieve that. The question is whether it can become that place before YouTube allows people to upload audio only to its platform and, due to its size, obscures Spotify’s ambitions.