Spotify Launches Paid Podcast Subscriptions via Anchor

Today marks the official rollout of paid podcast subscriptions on Spotify, following their initial announcement at the “Stream On” event in February. Podcasters utilizing Spotify’s creation tool, Anchor, can now designate specific episodes as exclusive to paying subscribers.

Expanding Access and International Plans

These subscriber-only episodes can then be published on both Spotify and other platforms. Initial testing involved a select group of independent creators, and the service is now being extended to those who previously registered on the waitlist.

Currently, paid subscriptions are available only to creators based in the U.S. However, Spotify intends to broaden its international reach in the coming months.

A Competitive Landscape

This launch occurs amidst growing competition within the podcast market, particularly concerning paid subscriptions. Apple recently unveiled its own paid podcast subscription plan through Apple Podcasts, which remains a leading podcast destination.

Revenue Sharing: A Key Difference

A significant distinction between Spotify’s approach and Apple’s lies in how subscription revenue is distributed.

Apple will retain a 30% share of podcast revenue during the first year, decreasing to 15% in the second year – mirroring its standard App Store commission for streaming services.

Spotify, conversely, pledges to charge no fees to creators for the next two years, allowing them to keep 100% of their earnings. A 5% fee for access to the tool is planned for spring 2023.

Early Adopters and Subscription Tiers

The initial cohort of 12 creators will begin releasing paid, subscriber-only bonus episodes. These episodes will be discoverable and searchable within the Spotify platform, indicated by a lock icon on the Play button.

Early participants include Wild Thing, Tiny Leap, Big Changes, and The Mindful Minute.

Creators determine the subscription cost, with options of $2.99, $4.99, or $7.99 per month.

Attracting Listeners with Free Content

Spotify encourages creators to initially offer free episodes to attract a wider audience, then upsell bonus content to subscribers. However, larger podcasts may opt for a different strategy.

NPR Partnership and Paid Feeds

Spotify has established a partnership with NPR for paid subscriptions, featuring entire paid feeds. NPR will launch five shows – How I Built This with Guy Raz, Short Wave, It’s Been a Minute with Sam Sanders, Code Switch, and Planet Money – as sponsor-free versions for paid subscribers starting May 4.

These shows, branded as “Plus” (e.g., Planet Money Plus), will coexist with the free versions. Listeners are essentially supporting NPR rather than receiving exclusive material.

Additional NPR shows will introduce their “Plus” versions in the coming weeks.

Navigating Apple’s Policies

A recent report in the Wall Street Journal revealed that Spotify’s paid subscriptions would launch this week. It also noted that iOS users intending to subscribe would be directed to a website to complete the transaction, bypassing Apple’s in-app purchase requirements.

This approach could present challenges for Spotify, given its past criticisms of Apple’s App Store practices and recent testimony before Congress regarding anticompetitive behavior.

Creator Responsibility for Subscription Information

Spotify is circumventing in-app purchases by directing users to a website for subscription purchases. The company leaves the responsibility of explaining this process to podcast creators.

“It’s up to each creator to inform their listeners about how and where to subscribe,” explains Anchor co-founder Michael Mignano. He clarifies that the Spotify app won’t directly open the webpage due to App Store regulations.

Furthermore, because Spotify isn’t currently taking a cut of subscription revenue, it’s protected by Apple’s carve-out for creator donations.

RSS Feeds and the Open Access Platform

Creators utilizing the paid podcasts feature will mark episodes within Anchor after recording or uploading. Listeners accessing content on other podcasting apps will receive a private RSS feed upon subscribing.

Introducing the Spotify Open Access Platform (OAP)

Spotify is also introducing the Spotify Open Access Platform (OAP). This platform will enable creators with existing paid subscribers on other platforms – including competitors or private RSS feeds – to provide that content to current subscribers using their existing logins and billing systems.

Spotify emphasizes that this will allow creators to maintain direct control over their subscriber relationships. However, Spotify will re-host the content, gaining valuable insights into the paid podcast market.

Further details on the OAP will be announced in the coming week.

Expanding the SPAN Marketplace

In addition to paid podcasts, Spotify is expanding its audio ads marketplace, the Spotify Audience Network (SPAN), to independent podcasters using Anchor. This differentiates Spotify from Apple, where creators are responsible for selling their own ads and retaining 100% of the revenue.

Spotify has invested in ad technologies to enhance the podcast advertising experience. Previously, Megaphone’s inventory was unlocked via the network; now, SPAN is becoming available to select Anchor creators, starting with a group of 50 on May 1, with further expansion planned.