What you need to know: 

• Spotify is making its move on video after signalling a new vodcast-forward content strategy at its annual Now Playing event in November. 
• The annual upfronts event saw the platform rebadge its podcast hosting platform to Spotify for Creators, which in tow with a new Spotify Partner Program, enables video podcasters to manage and monetise their content in the one place. It also means that ads will no longer appear on videos viewed on Spotify Premium. 
• It marks a departure from the audio streamer's Originals content strategy, which saw the business spend years and hundreds of millions of dollars building out an exclusive library of big name podcasts. 
• The win for Spotify appears clear on paper – more premium video on its platform will likely draw more paid subscribers, and more creators publishing that video directly through its hosting platform means broadens the reach of its sales distribution. 
• The question, per market conjecture, is whether the move will pay off for creators, with some suggesting it is the latest bid by Spotify to cut out the middleman.
• But Spotify AUNZ podcast lead Prithi Dey holds firm that the deals as good as it sounds – "giving creators the tools that they need to grow, to monetise themselves, and to reach new audiences".

After years spent dipping it toes, Spotify has gone fully bullish about carving itself a slice of the video streaming market – but not in the way you might think.

The audio streaming giant has officially switched off dynamic video ads for its Spotify Premium subscribers – circa 40 per cent of its total user base – opting instead to remunerate its creators with audience-driven payouts based on hours of engagement.

The new strategy was debuted at Spotify’s annual upfront-style event Now Playing in November, where global executives converged the platform’s video and audio publishing features via a rebadged podcast and video hosting platform, Spotify for Creators.

Touted as “the biggest ever” change to Spotify’s podcast business, the revamped platform was promised to work in conjunction with a new Spotify Partner Program, to enable creators to better manage and monetise video podcasts – or vodcasts.

There’s some technicality to how it works – which we’ll get to – but the upshot, as Spotify put it, was a better experience for users, and more diversified income streams for vodcasters.

“Our focus really is on evolving the creator ecosystem – it's more about giving creators the tools that they need to grow, to monetise themselves, and to reach new audiences,” AUNZ podcast lead Prithi Dey told Mi3.

“Instead of looking at the strategy as a walled garden of exclusive content that just sits on Spotify, we want to ensure that we can give audiences the content that they want, whether it's podcast or video content.”

Either way, it’s a major departure from the dealmaking era that saw Spotify spend years and hundreds of millions of dollars building out a slate of exclusive titles with celebrity hosts under its Spotify Originals banner.

Originals out

Spotify has been on the video path since 2020, when it debuted its vodcast capability with a select few titles – including the enduringly popular Joe Rogan Experience. But, per Dey, it was only in the last 12 months that the streaming service got serious.

Though Spotify had been quietly pulling back from its exclusive content strategy for some months, the last big deal signed with Rogan at the beginning of 2024 signalled something of a line in the sand. The platform committed US$250 million to secure an extension with its biggest star, but eschewed exclusivity in favour of a cut of ad revenues acquired through broader distribution. Since then, the business has more or less put a lid on its originals entirely, lapsing on its deal with Alex Cooper’s Call Her Daddy, while locally the likes of The Inspired Unemployed failed to secure another season.

It comes on the background of growing demand for vodcast content, with 64 per cent of podcast listeners in 2024 preferring video podcasts over audio-only, per Spotify. Locally, the share of podcast listeners watching vodcasts on the platform was up 25 per cent year on year, and vodcast consumption hours are up 11 per cent.

Hence, video has become the new lever for growth, with efforts at full steam to onboard video podcasters onto Spotify for Creators.

Rather than “spending a lot of money and just having those exclusive shows”, per Dey, Spotify’s new approach empowers creators to “try different revenue streams” – and Spotify gets to take its cut.

To that end, the question of who stands to benefit from that monetisation system still stands, with little clarity yet as to how audience-based payments will stack against the ad revenues creators previously earned on their video content. Will certain creators be worse off?

Dey says that conversation is yet to be raised by creators themselves, but she assures that there’s still plenty of advertising opportunities to be had. Ads will still be played for users on Spotify’s free tier, as well as on other platforms, with creators retaining a 50 per cent revenue share on those income streams. They’ll also hold onto the ability to preload their content with baked in sponsorships – the likes of host-read ads and broader integrations.

One month into the launch of that new model under the Spotify Partner Program, and it seems to be delivering on its promises. According to the platform, payouts to creators grew 300 per cent this January compared to January last year, with hundreds of podcasts clocking tens of thousands of dollars in brand new revenue. Vodcast consumption was said to be up 20 per cent on Spotify since the program's launch, with the top 20 vodcasts on the program having seen an average of 24 per cent uplift in consumption since December.

Win-win?

While many have taken the move as being YouTube-inspired, Dey says Spotify is not looking to cut YouTube’s grass.

“We believe that creators should be able to have their content on all platforms – so we're providing them with another platform to reach audiences on, and what we're actually encouraging creators is to think about a multi-platform strategy, because I think each of those platforms actually have their own benefits and a unique user experience.”

While that may be true for now, the play has certainly got a few eyebrows raised, with some seeing the new monetisation model as another for Spotify to cut out the middleman. It has, after all, been a long journey to get the business model right – this month Spotify finally recorded its first full year profit since it was founded in 2006.

The business has made a reputation of taking audio ad tech innovations in-house to draw more advertisers through the door. Take Spotify’s propriety streaming ad insertion (SAI) tech, which inserts ads in real time, as opposed to when an episode is downloaded. And there’s Spotify Ad Analytics, built on the acquisition of pixel-based tracking platform Podsights.

Scale plays a big part too. The Spotify for Creators hosting platform remains unmatched globally, with 27 per cent market share in January according to the latest data from Livewire. For reference, its nearest competitor, Spreakers, accounted for only 14.3 per cent of new episodes published during the month, while the popular Megaphone platform – owned by Spotify since 2020 – sits on fifth placed with 3.7 per cent. Acast, meanwhile, is at number nine, with 2.2 per cent share.

All of that said, Dey has a more altruistic view of Spotify’s intent.

“The way I see it, is that what we're trying to do is give independent creators an opportunity – there are so many independent creators out there that we speak to that struggle to create their content and monetise,” says Dey. “I think that this ecosystem that we're creating is to help those independent creators to stay independent and have the freedom to create and monetise as they see best."