Sometimes Open Systems Beat Those Who Try To Lock Them Up: Spotify’s Podcast Colonization Flops

We wrote a few times about the problems of Spotify's attempt to colonize the podcast market. While it was, perhaps, an understandable move driven by the economics of our totally broken copyright systems which made it impossible to be truly profitable with just music, Spotify's decision to go after the podcast market, shelling out massive dollars for podcast-focused companies like Gimlet Media and the Ringer, was all about taking a system based on open protocols - mainly mp3s and RSS - and trying to lock it up behind a proprietary moat.

We worried about this back when Spotify purchased Gimlet, fearing that it was a warning sign of an attempt to wall off the open podcast market. It's why we kept noting that every time Spotify paid some famous podcaster to only release their audio through Spotify that we should stop calling them podcasts, since they were now proprietary audio. And, we highlighted that the open internet stood to lose a lot if we allowed this kind of colonization of the open protocol podcasts into locked silos of proprietary audio.

Of course, there's a pretty long history of companies trying to do this, and sometimes succeeding, but (thankfully) it sounds like Spotify's big bet has been an even bigger bust.

In hindsight, I probably got a little carried away and overinvested relative to the uncertainty we saw shaping up in the market," Ek said on an earnings call in January. So we are shifting to focus on tightening our spend and becoming more efficient."

Spotify was a one-company podcast bubble. Its drastic cuts have triggered a podcast winter, as the small studios it helped support consolidate and lavish narrative productions wane. But rivals from tech giants Amazon and Apple to the radio company iHeart have found better returns on more cautious bets. Spotify's pivot has more in common with the recent cuts to Hollywood's spending on streaming television.

Notably, the bets by those other companies have (mostly) been on retaining more open podcasts, though some of them (Amazon for one) offer early access to podcasts for Prime subscribers.

Spotify has still built up a big audience that now listens to podcasts (including actual podcasts alongside Spotify's proprietary audio programing), but it's increasingly looking like its plan to move open podcasts into a silo that you can only get through Spotify and in a proprietary format are fizzling.

There's a reason that I keep pushing for protocol-based solutions over proprietary platforms. Those open systems prevent lock-in, they prevent silos, and (perhaps most notably) they keep the ecosystem more open and free for everyone, so that a single company can't come in and twist the system solely to their own advantages.