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Spotify Launches a New Bid to Grow Its Podcast Business

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Spotify is trying to groom podcast creators

Spotify’s (SPOT) Soundtrap subsidiary has launched a new service plan that’s not only free but also provides unlimited free storage for songs and podcast recordings. While Soundtrap has a free plan, unlimited storage is available only to paying subscribers. Through Soundtrap, Spotify runs a cloud-based audio recording studio, allowing anyone to develop a creative idea into a song or podcast.

Soundtrap is part of Spotify’s efforts to groom music artists and podcasters. The introduction of an improved Soundtrap free plan comes at a time when Spotify is working hard to develop its podcast business. This year alone, Spotify plans to invest as much as $500 million in growing its podcast business, including through strategic acquisitions.

Early this month, Spotify signed former US President Barack Obama to an exclusive deal to supply it with podcasts for its global audience. Netflix (NFLX) also has signed Obama to supply it with shows for its video subscription service, with the deal coming as Netflix is gearing up to face off with the Walt Disney Company (DIS) in the subscription video market. Disney’s Disney Plus video service is scheduled to launch in November.

Podcasting presents a $659 million revenue opportunity

Podcasts are currently monetized through advertising. The podcast advertising market in the US is expected to grow to $659 million by 2020 from $169 million in 2016, according to estimates by the Interactive Advertising Bureau and PricewaterhouseCoopers. Pandora, the online music service that SiriusXM (SIRI) acquired for $3.5 billion early this year, is the other prominent digital music company pursuing podcast dollars alongside Spotify. Amazon (AMZN) also serves podcasts through its Prime membership program.

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