Why Spotify needed podcast ads: label fees scale with subscribers
Quote
their only escape hatch was to make more money through podcast advertising, because this just getting more premium subscribers through podcasts doesn't help you with your main with your main expense, which is record labels.
Episode 119: Bowl of Noodles (episode page, opens in a new tab) 00:18:13 (play audio from this timestamp, opens in a new tab)
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Summary
Spotify's record-label contracts make payouts rise in lockstep with subscribers and revenue, so its margin is stuck. More premium subscribers from podcasts don't help, because they only raise label fees. Dave says the only escape hatch was higher-margin podcast advertising.
Also said
Episode 119: Bowl of Noodles (episode page, opens in a new tab) 00:18:27 (play audio from this timestamp, opens in a new tab)
Because the more because the more subscribers you have, the higher your fees, go to the record label.
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