Apple Inc. (AAPL) is reportedly developing a paid podcast subscription service, or at least seriously considering launching one. While Apple has a popular Podcasts app and offers a podcast distribution service on its Mac and iOS platforms, it hasn’t tried to monetize these features so far. Moreover, since Apple’s iPod and the iTunes Store have played such a big role in popularizing podcasts, it makes sense, some observers say, that Apple would consider creating a premium service.
These reports indicate that Apple is looking to offer exclusive content to its subscribers, in part by enticing podcast creators to switch from other platforms, such as those offered by Spotify Technology AG (PLACE), SiriusXM Holdings, Inc. (SIRI) and Amazon.com, Inc. (AMZN). For its part, Spotify has already spent around $800 million acquiring various podcasting companies.
- Apple would develop a paid subscription service for podcasts.
- Monetize Apple’s existing podcasting infrastructure and ecosystem is one of the reasons.
- Spotify has moved away from music streaming to become an increasingly big player in podcasting, and Apple may be feeling a competitive urge to catch up.
What Apple can predict
If Apple launches a podcast subscription service, it may be offered in combination with services such as Apple MusicAppleTV+, apple arcadeand Apple News+ which are included in the AppleOne price set. Additionally, reports suggest that in addition to purchasing original content, Apple may consider creating audio spinoffs of shows and movies that appear on Apple TV+. Adding to the speculation, in the fall Apple hired Jake Shapiro, an experienced radio industry executive, to lead a team that works with podcast creators.
The skeptical point of view
Nicholas Quah, a writer who follows the podcasting industry, warns that “no one has really found a Netflix-like paid subscription service for podcasting yet.” He claims that a successful paid service must deliver “the promise that it can consistently and perpetually beat the entire universe of free alternatives.”
To those who argue that people pay for audiobooks, Quah replies, “Audible isn’t really in the media business, it’s in the digital retail business, ultimately dependent on the publishing industry. books…there hasn’t been much public evidence that Audible has been able to pull off original content development yet, nor has Apple, for that matter.
He specifies: “Apple TV+ could be a good component[arison]but the state of this service is quite ambiguous … researchers suspected the majority of these submarines[criptions] were unpaid but bundled together as part of a larger distribution deal. The fact that Apple simply extended Apple TV+ free trials to July 2021 doesn’t inspire much confidence on the user acquisition front.”
Quah goes on to note that Apple Arcade, a high-end mobile gaming service, failed to “keep users coming back” in the months following its launch, leading Apple to cancel developer contracts with developers. game studios. Meanwhile: “Apple Music’s lineup is primarily organized around one superstar talent, Zane Lowe, and there just aren’t many planetary talents like this in podcasting. Some of them are already with Spotify.”
Importance for investors
The upshot of all of this is that while it may be strategic for Apple to attempt to monetize the podcasting infrastructure and ecosystem it has created, it is highly uncertain whether it has the potential to become a revenue generator. significant benefits for the company. Moreover, as noted in the skeptical viewpoint summarized above, Apple’s success to date as an original content provider is irrelevant.