Should you get bored with mattress commercials throughout podcasts, you may sleep soundly


Nick Cherrier is Zuora’s subscription strategist for ANZ. Here he looks at Spotify’s new paid podcast subscription service and what that could mean for the broader subscription economy.

You hinted at it last year and now it’s a reality: Spotify has launched a paid podcast subscription service. They are currently beta testing within their Anchor podcast creation tool that will allow creators (currently US only) to post podcast content aimed at fans who love the shows enough to be willing to pay for it .

This is not a new concept and Spotify has made major changes over the years. So why is it worth talking about?

Well, Spotify isn’t an old subscription company; it is a flagship of the subscription economy along with Netflix, Salesforce and Microsoft. Today it is available in nearly 100 countries, has nearly half a billion monthly active users, and had 155 million premium subscribers at the end of 2020. It has a market capitalization of more than $ 50 billion, making it Sweden’s third largest company, ahead of Volvo and H&M.

This isn’t just an organization making a relatively minor change in the way they work – it’s one of the world’s largest subscription companies making a small, but potentially important, customization to an entire trading system.

We live in a golden age of media

At Zuora, we talk a lot about what the subscription economy is and how it changes our participation in society – we talk about user rather than ownership. And if there’s one industry that the subscription revolution has changed more than any other, it’s the media.

In many ways, we are now in a golden age of media: we have more music, films, TV and entertainment to discover and more new voices to discover than ever before.

In the old world – the era of product economy – there was (and could not) be a variety of choices because media production and distribution were almost exclusively taken over by a few large publishers and studios. It wasn’t quite the gatekeeper system of the pre-internet news world, where owners and editors dictated what information customers could or did not see, but it was very close.

These big players tolerated commercial “failure” – the hits should pay for the failures – but only to a very limited extent. If two movies in a row weren’t box office winners, or two albums in a row weren’t hits, you were ditched.

What made companies like Spotify possible was a closer connection between a fan base and an artist. What was once called a “cult classic” – which flopped in the cinemas, for example, but later found a relatively small but very committed following – is now an integral part of Netflix’s offering.

The porters are dead – or are they?

Today everyone can be their own studio. It has come to be known as the Creator Economy, and it’s hard to imagine that it could develop without the Subscription Economy as a breeding ground.

However, that does not mean that this golden age of media, with its healthy segment of individual artists and independent development teams who are successful independent of large studios, has ended the dominance of established institutions. In fact, Spotify said in its 2020 annual report that music from Universal, Warner, and Sony (alongside independent record producer Merlin Network) accounted for nearly 80 percent of its streaming music content.

This is a problem for Spotify (they still struggle to make a quarterly profit despite their monumental success). It’s also a problem for anyone like me who tries to argue that power has shifted significantly under these new subscriptionable arrangements.

But I’m not trying to convince you of some kind of massive claim that “video killed the radio star”. I’m just saying that while the gatekeeper organizations remain influential, they are no longer the be-all and end-all that they used to be. They are still guarding the bridge, but many more creators than ever before are crossing the bridge without their green light. And that’s simply because the creator economy allows it. As an artist or writer, you can now get in touch with an audience through a channel like Spotify (or Substack or Medium) and without the mediation and most importantly the consent of a publisher or studio.

Create a stronger creator economy

And what Spotify is apparently going to do is make that fan-creator relationship even smoother – more direct than ever. Their announcement means that podcasters now have the ability to offer their shows as paid services via a subscription economy powerhouse.

This is exciting news if you are tired of the weird mattress advertisements that interrupt your favorite discussion of football, politics, or ’90s basketball shoes. It also holds great promise if you follow our latest End of Ownership Survey That found that more than three in four Australian adults (78 percent) now have at least one subscription service, up from 67 percent in 2018.

Spotify changed music consumption for the better, ushering in a golden age for audiophiles and audio-loving creators. This step may seem small in the scheme of things, but it is another step towards an increasingly decentralized system where fans have a lot more power and creators enjoy the benefits.