Spotify boss reveals: With this strategy, Spotify wants to prevail against Apple

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In 2006 Daniel Ek founded the Swedish start-up Spotify in Stockholm. At that time, the music industry was on the ground: it had to fight illegal piracy and digital exchanges. The music streaming put an end to the spook. Thirteen years later, Spotify is listed on the US stock exchange and for many it is an integral part of everyday life, with locations all over the world. Spotify is no longer a pure music provider, it’s about everything you can hear. The platform’s podcast area is one of the fastest growing.

You can read more about this and the background here:

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Among the five most streamed Spotify formats worldwide, there are three German-language formats alone with “Mixed Hack”, “Fest & Fluschig” and “Herrengedeck”. The podcast business seems to be going pretty well, especially in Germany. But why?

Spotify can answer that best for us. Michael Krause has been the Managing Director for Central Europe at Spotify since 2017. In addition to the Central European markets, he controls the German-speaking business – and therefore knows all the details.

Most streamed podcasts in Germany 2019

Most streamed podcasts in Germany 2019

Source: Spotify

WORLD: Why are podcasts so popular with listeners?

Michael Krause: We were lucky enough to win Jan Böhmermann and Olli Schulz with “Fest & Fleuschig”. It actually started three years ago that we were also relatively well ahead in the podcast market in Germany. In addition, there was a lot of interest this year. Both on the customer side – through word-of-mouth propaganda à la “Hey, did you already hear the podcast?” – but also through the talents that we were able to acquire.

WORLD: Do you think that here in Germany we are more interested in podcasts than the rest of the world?

Krause: The spoken word is more important than in many other countries. Firstly, the children’s radio plays such as “The Three Question Marks” and “Benjamin Blümchen” – there is no other country like this. Listening to the spoken word is a tradition for us. This also comes from our history: after the Second World War, most theaters were bombed. Accordingly, the radios have closed a gap with the radio plays. The second factor is that we are a country that is very used to synchronization. There is hardly a TV film or series that has been broadcast on mainstream television in English or another foreign language in the past ten years. This is also a good prerequisite for podcasts.

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WORLD: How did it come about that podcasts also became an issue for Spotify?

Krause: We are an app that has always been about listening – namely listening to music. So we already had the technical basis. Our app is already represented on over 250 different speaker systems and audio hardware partnerships. Basically, you can use Spotify almost anywhere, and the on-demand principle of being able to hear something at any time is already well developed in Germany. Since the podcast has blended seamlessly. We already had experience with curated content and integrated podcasts, for example in our personalized “Daily Drive” playlist, a mix of podcast and music, which we had never had before.

WORLD: Do you have the feeling that the trend towards the spoken word tends to decrease or does it continue to increase?

Krause: The growth is rapid, more and more new titles are coming onto the platform. I also believe that podcasts will be mainstream after the boom. If you look at the individual countries, the podcast is by no means established in every country and works as well as in Germany, the USA and Great Britain. We recently launched the first Indian podcast. It is a very large market with a lot of growth potential. In Southeast Asia, podcast usage is also increasing extremely. There we also work a lot with social media stars who produce a podcast.

WORLD: What do your experiences say, why do people listen to a podcast?

Krause: There are several reasons. One is definitely to be entertained. But also “companionship”, meaning that you are not so alone, is a reason for many. You have the feeling that someone is sitting there with you. One of the three main reasons is also “self-improvement”, ie knowledge acquisition, podcasts with tips on how to do something better; Mediation podcasts and documentaries work very well.

WORLD: And which subject areas are particularly popular?

Krause: The top genres in Germany are comedy and crime. “Mixed Hack” and “Fest & Fluschig” clearly fall into the category of comedy and entertainment. Third place goes to the “Crime” podcast of “Zeit”, which deals with criminal cases. But there are also many areas that work very well and we are surprised. Especially socially relevant topics are very trendy. The influencers tend to do entertainment and self-improvement. But there is still room for improvement. Innovation is super important. With “Gimlet” in the USA, we have also taken over a company that specializes in fictionalized content. The crime trilogy “The very last interview” with Visa Vie is also a fictional title.

WORLD: So are the boundaries between podcast and audio book blurred?

Krause: You can definitely state that, they are becoming more fluent. There are also many authors who podcast between their book releases to keep the reader’s excitement. Charlotte Roche and Benjamin von Stuckrad-Barre are primarily authors who we were able to win for a format. We certainly want to do that even more soon.

WORLD: What makes a podcast interesting, especially for a “Spotify Original”?

Krause: On the one hand, we see our own data: We see which content is exciting and where we may still have a gap and could need new content where concepts are not yet there. That’s the nice thing about us: that we have a lot of data about the market and see exactly what works how. We are also lucky and have the tailwind to be the largest platform – at least in terms of access. If we then see, for example, that there is still no real couple podcast where there is a professional discussion about couple therapy and such things – and certainly not with prominent faces like Charlotte Roche and her husband – then such concepts tend to be exciting, and we are considering tackling this.

WORLD: So is the content crucial?

Krause: In the “Exclusives” section, we see which formats are exciting, what has worked well on our platform so far, and what fits well with our previous content. Then there is something like “Herrengedeck”, “A Mindful Mess” or “Mixed Hack” – these were the three largest titles that we signed this year (2019). This also means that there should be a certain diversity in the podcasts. We have already noticed that the number of female speakers in the top podcast titles is still too small in our view. There is actually no reason why this should not be balanced. That is why we have also signed podcasters like Palina Rojinski or Charlotte Rochen. In the summer, for example, we also organized a “Sound Up” workshop with the LGBTQ community and promoted it there and gave support for the podcasts. Because we felt that so far there was relatively little content from this community. We specifically approached it and asked: Why actually? And promoted accordingly.

WORLD: Could the “Originals” for Spotify be what the in-house productions are for Netflix or Amazon Prime?

Krause: I don’t know if you can compare it one to one. But I do believe that it is important. We have restructured our strategy in recent years. We are no longer just a pure music provider, we are an audio network for all types of hearing. Because we saw that people apparently got tired of just looking at their display all the time. Hearing is another experience. It is a very intense usage scenario. In this respect, we are already careful in our strategy to continue the originals and exclusives and that this will probably also differentiate them. That users say: “I go to Spotify, they have the cool originals.”

WORLD: Are more podcast listeners actually opting for a premium subscription?

Krause: One can say that the more time our customers spend in the app – whether with podcasts or with music – the higher the likelihood that they will become premium customers. Because the benefit for yourself increases when you spend so much time with an app. Then the five euros a month for a student subscription or ten euros a month at the regular price seem much fairer. That’s why the time someone spends on the platform is crucial for us. People who listen to podcasts often tend to listen to more music on average. That means they are generally more active with us. This increases the level of engagement – even if they stay in the free offer, they hear more advertising. It is therefore crucial for us that people feel comfortable with our content and find what they want to hear and do it for as long as possible.

WORLD: What advantage does it have for me as a podcaster to publish my content on Spotify and not on Apple or Audible – except that I could potentially have 200 million listeners?

Krause: Well, as a podcaster, I have an idea and start small with the content that I would like to do. At some point, however, the question arises how to monetize it. In principle, we are a marketplace model: I create content, have built up a certain reach and can then market it accordingly. Similar to a blog or YouTube channel. If, for example, we would now enter into an exclusive agreement with you and that fits both sides, we would also co-finance and support the content. This also includes marketing the titles for the podcaster. This is basically the big difference.

WORLD: What would you recommend to someone who has an idea for a podcast?

Krause: At the beginning, I would recommend every podcaster to just start and create a great reach with exciting content. It’s all about the concept. We notice that again and again. Simply babbling on it can sometimes work, but usually even with such podcasts there is much more preparation than you think. Many podcasts now also have their own editorial offices. In a talk format on television, you don’t just talk about it, someone also thinks about questions and the topic of the show beforehand. I think that is quite comparable.

WORLD: Is the inhibition threshold for producing a podcast lower than it used to be when radio broadcast the word?

Krause: Sure, that plays with it. With Anchor, we have also taken over a company with which you can easily record, edit and edit a podcast with your mobile phone and build a professional teaser in front of it. In principle, anyone can do that. I think that’s very good. We have seen this in music too: If you democratize a media genre and allow everyone to be artistically active, then it also helps the whole picture. The cards are then reshuffled.

WORLD: For many publishing houses and media groups, podcasts seem to be the new cure because they make the desire for digitization relatively easy to implement. Spotify also has the “Spiegel”, the “Zeit”, the “Süddeutsche Zeitung” and so on. How does Spotify work with publishers?

Krause: The exciting thing about the medium podcast is that it is basically for everyone who wants to tell stories and spread the word. Both the local newspaper and a comprehensive newspaper as well as a radio station or a television station tell stories that are exciting and that can also be implemented as audio. Those who have the right content at an early stage and who can also convince in terms of concept and content have good chances. There are also some successful examples from the TV sector. The “Baywatch Berlin” podcast on Klaas Heufer-Umlauf’s “Latenight Berlin” show is new in the top ten.

WORLD: Well, it was more or less foreseeable because the person in the age group who listens to podcasts very often is quite popular.

Krause: This is not automatically a guarantee of success. It is sometimes surprising that names that appear to be promising do not automatically storm the listener charts. There are a lot of examples in the bottom 100 – from star chefs to Bundesliga professionals who don’t work as well as a podcast. It also depends on the content.

WORLD: What about the rest of Europe? Are podcasts as popular as in the US and Germany?

Krause: The Nordic countries are very podcast-savvy. Their advantage is that they have never localized their entire media usage. Scandinavia or the Netherlands have always watched most major films and series in English with subtitles. Of course they are now also using the huge podcast repertoire of the USA. Rather, the international titles are heard there. In Germany you tend to rely on a German-language offer. Podcasts are a worldwide phenomenon. It is not irrelevant anywhere.

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