It seems the writing is on the soundproof wall: The podcast boom is over, and this week’s news is proof. Spotify laid off 17% of the company — its third round of layoffs this year — and canceled two blockbuster shows, including a Pulitzer Prize winner for audio reporting. But overall, the podcast industry hasn’t failed. It’s just that Spotify took a billion-dollar swing and fizzled, and now podcasters have to navigate the fallout.
“Spotify has defined the terms of the ‘healthy’ quote-unquote podcasting industry based on their actions as a technology company,” said Eric Silver, co-founder and chief creative officer at Host, an independent podcast collection. “But Spotify’s choices have nothing to do with me. They just keep failing so publicly, and now everyone thinks podcasting is dead, which really frustrates me.”
When outsiders think of podcasting, they might imagine mega-viral hits like “Serial” or long-running institutions like “This American Life.” But for the long line of podcasters—those who podcast for a living but aren’t getting multimillion-dollar deals from Amazon, Apple, or Spotify—the industry isn’t in as much danger as it seems. And yet, Spotify’s shadow looms so large over the podcasting industry that it’s impossible for its failures not to resonate.
In 2021, a year that saw venture capital flowing like champagne at a Gatsby party, Spotify CEO Daniel Ek he told Forbes that he wanted his company to be like the Instagram or TikTok of audio.
“Everyone underestimates sound. It should be a multi-hundred billion dollar industry,” Ek said at the time. “The sound is ours to win.”
Over the past few years, we’ve watched Spotify acquire too many podcasting companies to count – Gimlet, The Ringer, Anchor, Parcast, Megaphone – and then courted big names from Joe Rogan, Alex Cooper, Prince Harry to eight and nine figures Offers. The company threw more than a billion dollars into its efforts to turn podcasting around, but has now canceled more than a dozen shows of the studios spent hundreds of millions to acquire such as Parcast and Gimlet, which have since become combined into an entity and decimated.
“In hindsight, I was too ambitious to invest before our revenue growth,” Ek said after Spotify laid off 600 people in January.
After acquiring Gimlet and Parcast, Spotify made most of the networks’ broadcasts exclusively on the Spotify platform. In theory, this decision would force listeners of these popular shows to download Spotify to continue listening each week — and hopefully convert some of those listeners to paid subscribers. But according to the Gimlet and Parcast unions, that strategy backfired. Some shows lost more than three quarters of their audience after becoming Spotify exclusives.
“Spotify told broadcasting groups that their podcasts were being canceled due to low numbers,” said a joint statement by unions Gimlet and Parcast, published after a round of layoffs in October 2022. “But decisions made by Spotify’s leadership directly contributed to these low numbers.”
This is not necessarily a bad thing. During the funding boom of 2021, my inbox was flooded with pitches from creator economy startups seeking press for their latest funding rounds. Some of these companies were exciting, but many of them confused me — as a creator myself, I couldn’t imagine myself or my friends in the industry using many of these products. As SignalFire partner Josh Constine told me earlier this year, “Creators are not sophisticated buyers of enterprise software, nor do they have software integration teams.” In other words, VCs had thrown money at companies that didn’t actually solve any problems for the creators’ businesses. So it didn’t surprise me that when market conditions tightened, companies that seemed to only want to cash in on the creator economy hype were no longer funded.
“A media company has to aim to make enough money to survive,” Silver told TechCrunch. This may seem intuitive – sure, a business should try to make a profit. But that’s not how the world of venture-funded startups works. Spotify, for example, has reported quarterly earnings only a few times because its business has prioritized continued growth over returns. The company is far from unique in this way.
“It is critical for companies to ‘read the market’ and right now, the market values efficient growth and doing more with less rather than maximum growth with easy capital,” Creative Juice founder Sima Gandhi said in TechCrunch this summer.
This “max growth” mentality has poisoned venture-backed digital media companies like Buzzfeed, which came down from a shining star to one IPO embarrassment. The “middle class” of podcasters can’t rely on Spotify, and other media workers can’t rely on failed media conglomerates like G/O Media and Vice any longer. In recent years, worker-owned media outlets such as Defector, Aftermath and 404 Media have begun to emerge, often founded and staffed by journalists who had been repeatedly fired from mismanaged media companies. Now the podcasting industry is facing the same reckoning as Spotify’s losses prove that growth cannot take precedence over sustainability. Already, podcast studio Maximum Fun has embraced a collaborative worker-owned model, and as podcasters continue to lose trust in big companies like Spotify, we’ll see that trend continue.
“Spotify is not all about podcasting, although they act like they are and make choices like they’re the only ones in the room,” Silver said. “Podcasting is not dead.”
