The business performance that impresses me from the past decade is Disney+.
Over the course of 2016–2018, with the cable and movie business under threat and Netflix and HBO are looming, Bob Iger surveys the landscape and decides that Disney needs to get in the game. He goes out and buys a bunch of different media franchises (Star Wars, Fox), a technology layer (BAMTech) and then wraps it together into a complete consumer offering that feels complete at launch in 2020.
This basically never works! It’s difficult for a start-up to do something like this, but it happens, because the start-ups that don’t do it die. But for a big company to do it takes real discipline. Few companies have the strategic clarity to see the landscape and stick to a plan for that long. Even fewer have the ability to execute and pull it off so that the end result feels coherent and obvious.
I feel like I’m watching Spotify do the same thing in podcasts.
This is definitely not my unique insight. I’m probably only aware of it because of Ben Thompson. But watching Spotify methodically pursue it is really something.
The opportunity looks something like this. It’s likely that podcasts are under monetized compared to other digital media and there’s an opportunity to role that up into an audio business that’s comparable to what YouTube has done for video.
To win in this space, a company must:
* Be the podcast app of choice for a critical mass of listeners
* Become the podcast platform of choice for Creators (thus drawing in more listeners)
* Leverage this to build a programmatic audio ads business that makes them the platform of choice for advertisers
And Spotify is pursuing each of these pillars over time. They’re actually doing it.
Their investments in exclusive content and the podcast listener experience are bringing their music listeners to podcasts.
Their investment in Anchor is making it easier and easier for Creators to get started podcasting with Spotify.
And now they’ve acquired Megaphone to help supplement their programmatic audio advertising business.
There are definitely other large tech companies in the space. Amazon is investing in Audible. Apple is the sleeping giant of the (podcast) industry. But Spotify seems to have the strategic clarity and is executing to win.