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Apple's Plans For Original Podcast Content Will Heat Up The Market

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Apple is planning to invest in exclusive podcast content for its market-leading Apple Podcasts platform, according to a Bloomberg report. Though in its preliminary stages, this move could hasten the transition of the podcasting market from one of open platforms and freely distributed content to one with exclusivity and paid licensing deals.

Spotify is the reason for Apple's move into podcast content. Apple Podcasts, which is pre-installed on iOS devices (iPhones and iPads), has been the overwhelming favorite podcast listening app since its introduction five years ago. But recently its market share has declined as Spotify has made its big push into podcasts.

Spotify is now a solid No. 2 in the market, the only podcast platform other than Apple with a double-digit market share. Spotify has been betting that an emphasis on podcasts can draw listeners away from other subscription music services (including Apple Music) as well as possibly cost the company less for listenership than it pays record labels and music publishers for music. That has led to the company investing hundreds of millions of dollars in original podcast content as well as podcast publishing capabilities.

Meanwhile, startups such as Luminary and Himalaya have entered the space with major venture investments and plans to create paid subscription podcast services, joining Stitcher's Premium service—and Apple has done little more than sit on the sidelines.

Spotify's success has forced Apple into wading into the unfamiliar waters of content—just as the success of Netflix and Hulu in adding original shows to the video content they license from networks and studios led to Apple's push into television programming with Apple TV+ back in March. Apple is a relative latecomer to streaming video content; in contrast, the podcasting market is so much in flux right now that it's not likely to be seen (in hindsight) as a latecomer there.

Amazon, SiriusXM/Pandora and other startups will surely join in the acquisition and licensing of podcast content. This is bound to happen whether paid subscriptions become popular or podcasting remains dependent on revenue from ads, sponsorships and crowdfunding.

What remains to be seen is just how exclusive these arrangements between podcast platforms and podcast producers will be. It's possible that a hot independent podcast will enter a licensing deal with a platform that enables it to make deals with other platforms, too. For example, comedian Marc Maron's podcast WTF with Marc Maron is so popular that it could conceivably make deals with, say, both Apple and Spotify to distribute it on their platforms but not on any others.

The podcasting world will evolve into a majors/indies dichotomy, just as it has been in music for the past decade: Indie podcasters will build audiences and then negotiate paid licensing deals with one or more of the walled-garden podcast platforms. Services could emerge that act as hubs for licensing indie podcast content, just as services exist for licensing music to digital services; right now, podcast service providers like Libsyn, Blubrry, and Podbean handle hosting and analytics but not licensing of content.

The question, then, is whether podcasting will become like video or like music. In video, platforms like Netflix and Hulu each have limited catalogs of content (between 1,500 and 2,000 TV shows each), with some but not much overlap. In music, the subscription streaming services have almost entirely identical catalogs of tens of millions of sound recordings. Podcasting is currently more like the latter: There are roughly as many podcast episodes as there are songs on Spotify or Apple Music. But it could become more like the former as this cycle of investment and consolidation goes forward.

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