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Are Podcasts Set to Cannibalise Music Consumption?
The events of 2020 to date have certainly influenced our choice of audio content, with the battle for ‘share of ear’ creating multiple options for the working-from-home consumer. As shifting routines have impacted our behaviour and heightened our desire for escapist content, brands have needed to adjust their offering to best serve these changing needs.
What’s dictated the headlines since the beginning of 2019 has been Spotify’s growing investment in podcasts; re-establishing their value in ‘spoken word’ content, podcasts have become instrumental in attracting more paying subscribers to the platform, providing snackable content that educates, entertains and inspires. According to The Verge, not only has Spotify seen its number of paying subscriber rise to 124 million at the end of Q1 2020, podcast listening has also increased by 200 percent year-on-year, with the company now hosting over 700,000 podcasts.
So why the heavy investment? Podcasts are a ‘win-win’ for music streaming services. They generate additional ad revenues and contrary to music, do not require expensive licencing fees, all whilst building a competitive advantage through exclusive podcasts such as the Joe Rogan Experience recently acquired by Spotify. And with Spotify keen to become the next “YouTube” of audio, key celebrity influencers including the likes of Michelle Obama and Kim Kardashian will continue to attract high levels of consumer interest in the podcast department.
So with this in mind, should the growth of podcasts be feared across the music industry? What happens when streaming services encourage customers to listen to more stories and ironically - less music?
Podcasts as Friend or Foe?
At a first glance, it is easy to see why podcasting may appear to be a direct threat to the music industry, with streaming services heightening the importance of storytelling. However, Futuresource’s latest ‘Audio Tech Lifestyles’ consumer survey reinforces the fact that podcasts shouldn’t be seen as music’s biggest enemy. Research revealed that 40% of respondents listened to podcasts, with 70% of listeners enjoying them at least once a week. More significantly, over 80% of listeners said that they consume the same amount or more music as a direct result of listening to podcasts, reaffirming the theory that podcasts do in fact complement our music listening patterns.
So why is this? Both music and podcasts can be enticing in different ways, with podcasts requiring a greater degree of active listening in comparison to the more passive nature of music. However, the goal of musicians and podcasters is one and the same: to create stories that resonate, meaning that the two go hand in hand when providing the variety of content so heavily craved by consumers. What podcasts do provide for the music industry is a powerful platform for nurturing a loyal community of fans, wanting more context and ‘insider knowledge’ around their favourite musician. From a pure content perspective, podcasting hasn’t disrupted the music landscape – it’s been part of a natural evolution where both storytelling and music listening work in synergy with one another to enhance the user experience.
Power lies in Personalisation
How musicians directly benefit from spoken word content will depend on how platforms like Spotify provide a seamless flow between recommended podcasts and music playlists, utilising their distinct user base of music fans to convert more podcast listeners and vice versa. With a focus towards personalisation, streaming services will need to continue to enhance algorithms that promote artists and podcasters simultaneously.
Improving algorithms is also increasingly important with the ongoing rise of smart speakers, weaving more conversational user behaviour into the experience of discovering new content. Our consumer research showed that music still dominates smart speaker usage, with more than 70% of owners using their device for music services. In addition to this, more hours at home have encouraged the exploration of streaming services amongst an older demographic, who in the long-term can be expected to incorporate such devices into their daily routines.
The Future Focus for 2020
Although often viewed as a double-edged sword, our research has demonstrated that podcasts and music can cohabitate and sometimes benefit each other, with the humanising power of podcasts enabling artists to share their narrative and connect on a deeper level with fans. For many streaming services, especially for Spotify, the focus is likely to remain on developing their podcast offering throughout the course of 2020. Delivering continued support for the music industry will involve such platforms boosting crucial convergence points between the two popular formats.
For further insight into the wants, needs, behaviour and profile of the audio consumer, including key stats and trends currently shaping the audio industry, our latest ‘Audio Tech Lifestyles’ consumer survey market report is now available. Please contact Kailash Morjaria via firstname.lastname@example.org for more information.
Here at Futuresource Consulting we deliver specialist research and consulting services, providing market forecasts and intelligence reports. Since the 1980s we have supported a range of industry sectors, which has grown to include: CE, Broadcast, Entertainment Content, EdTech and many more.