Can Apple Podcasts Keep Up with Industry Trends?

Music isn’t the only arena where Apple (AAPL) is contending with Spotify (SPOT). A new phase of their competition has made podcasts an epicenter. On November 13, a report by Voxnest indicated that, in October, Spotify had outpaced Apple in the podcast space in many regions. During the month, Spotify emerged as the most preferred platform for podcast listening. It was particularly strong in Sweden and Equatorial Guinea.

Apple had been a leader in podcasting. However, listeners are more interested in original content, a trend that Spotify has identified and bet big on. It has made massive investments in original content and improved its interface for listeners.

Spotify’s aggressive investments in podcasts

Back in February, Spotify announced its acquisition of private podcast companies Gimlet Media and Anchor, reported CNBC. At that point, Spotify reported plans to invest $400 million–$500 million in such acquisitions this year.

According to Tubefilter, in March, Spotify acquired storytelling-driven studio Parcast. And in November, Spotify launched a new personalized feature, Your Daily Podcasts, reported TechCrunch. With the feature, algorithms analyze users’ listening behavior and suggest the next episode. Based on these algorithms, users can also create a new podcast playlist. Spotify is also looking at signing deals with YouTubers Ryland Adams and Lele Pons to make top-notch podcasts in 2020, revealed Tubefilter.

The company is also looking at expanding in India to promote original content with a local flavor. According to Rolling Stone India, Spotify India announced three original podcasts on November 19. All three shows are set to commence on December 3. As of Friday, Spotify stock had surged 25.5% year-to-date, to $142.55.

Apple’s plans to create original podcasts

The Voxnest report shows that Apple Podcasts still dominate in most of the parts of the world. But it lacks original content. For years, Apple has only been a player instead of a creator. Its podcast business, launched in 2005, hasn’t seen significant upgrades for many years.

However, with the consistent success of Spotify, Apple has woken up to reality. It may soon make its presence felt in the original content space. On November 21, AppleInsider reported that the company had brought onboard National Geographic deputy podcast director Emily Ochsenschlager.

Another report by Bloomberg back in July suggested that the iPhone maker would be venturing into original podcasts that would be available only on Apple’s Podcasts app. Apple is relying heavily on original content for its Apple TV+ as well. According to Voxnet, the company had been focused on its streaming platform’s November launch over the past few months, setting podcasts on the backburner.

Podcast industry set for a significant growth

The podcast industry is booming. In June, the Interactive Advertising Bureau and PricewaterhouseCoopers estimated the industry would generate over $1 billion by 2021. Up until 2018, the podcasting industry had grown by 65% compounded annually. Another survey by Edison Research and Triton Digital has estimated that weekly podcast listeners would climb from 8% of the US population in 2014 to nearly 22% in 2019.

Apple’s podcast advertising could be lucrative

Spotify is keeping up with Apple. Rolling Stone India has revealed that Spotify now has 500,000 podcast titles, compared with 10,000 in 2018. The exponential rise of podcasting is a major reason Apple must become more active than ever in this arena.

Apple doesn’t make money from podcasts. However, investing in originals will help it attract more iOS users into Apple’s ecosystem. The users may also subscribe to Apple TV+ and Apple Music.

One of the main reasons for the surge in the podcast industry is ad revenue. In the abovementioned Bloomberg article, Lucas Shaw and Mark Gurman suggested that if Apple’s podcast userbase expands, it could earn more from ads in its App Store.

In November, JPMorgan Chase raised Apple stock’s price target, reported AppleInsider. Analyst Samik Chatterjee indicated that more ads on the App Store and Apple TV+ could result in increased ad revenue, and predicted ad revenue could soar from the present $2 billion to $11 billion in 2025. Chatterjee’s Apple stock price target is $290, implying an approximate 9% rise from the stock’s current price.