How Apple and Spotify's Podcast War Benefits You

Spotify just let creators offer paid podcast subscriptions direct to their listeners, just like Apple did last week.

Until recently, podcasting was simple. Creators could provide the show free, take money in exchange for in-show sponsor reads, or set up a paid subscription program using a service like Memberful. But, last week, Apple added a new option: paid subscriptions, exclusive to Apple’s Podcasts app. Now, Spotify has added a similar option, only with way better terms for podcast creators. It looks like the gloves are coming off.

"I see podcasting as one of the best innovations on the internet in the past decade," podcaster Aaron Bossig told Lifewire via email.

"One of the key factors behind it is that podcasting really isn't owned by any single company—all one needs to get started is some storage space and an RSS feed,"

Apple Started It

For years, podcasting trundled along without much interest from the big players. Apple maintained an open podcast directory that became the de-facto standard, but did nothing to monetize podcasting.

Plenty of startups came and stayed, either trying for exclusive distribution or creating advertising networks that connected sponsors and creators.

And yet, the space has remained open and accessible. Anyone can record a podcast, upload it to the internet, and add its feed to the podcast directory. There is no YouTube of podcasts. But that may be about to change.

Apple Vs. Spotify

Apple's subscription service operates only inside its Podcasts app, currently only available on Apple’s devices. Creators must provide their original audio, to which Apple adds its own DRM layer to prevent copying.

Apple inserts itself between the podcaster and the listener, cutting off any direct relationship between the two. For this, it takes a 30% cut of the subscription for the first year, dropping to 15% after that.

Spotify’s new paid subscription plan lets podcasters charge $2.99, $4.99, or $7.99 per month. You can listen to paid episodes in the Spotify app, or you can subscribe to them in the podcast app of your choice via RSS feed—just like any regular podcast. Spotify takes no money for the first two years, and then takes 5%.

But then it gets complicated. Spotify users can’t subscribe to paid podcasts in the app. There’s no "subscribe" button. That’s almost certainly because Apple takes a cut of any purchases made inside iPhone apps.

Valuable and Unexploited

Podcasting is so valuable, partly because it remains underexploited. Compared to a big network, an individual creator needs a relatively tiny income to succeed and earn a living. There’s much more money to be made, especially for whoever monopolizes the market, YouTube-style.

"The appeal is clear," says Bossig. "By making themselves the gatekeepers for podcasting, they get the benefit of monetizing billions of hours of content created by millions of podcasters."

Equally underexploited is the listener. We can only read so many Facebook and Twitter threads in a day, only look at so many Instagrams and TikToks. But we can listen to podcasts while we do other tasks.

You can listen while you walk, drive, run, wash dishes, or mow the lawn. These spaces are impossible to reach with words-and-pictures-based social media. It’s virgin territory, ripe for exploitation.

"Podcasting really is an innovation from radio. It's something we can have on at home and even multitask to," economist and tech advisor Will Stewart told Lifewire via email.

"So, whether it's chores around the house or just as a means of learning without a screen, putting on a podcast is only becoming increasingly more common to a larger audience in this pandemic world."

Wiser Creators

At the same time, podcast creators are savvier. "Two major things have happened in the past 12 months," says Stewart. "First, the rise of the creator economy and its real acceptance from big tech that creators are the ones driving actual usage—not publishers, brands, and the like."

"The second is that consumers are getting very used to buying, paying, and subscribing to things online from businesses and creators themselves."

This puts creators in a strong position for now. Services like Patreon, Memberful, and Substack let users pay creators directly for their work. And, notably, both Apple and Spotify have tailored their paid subscription plans around the creator.

Unlike music creation, which requires that musicians go through a middle person, like a record label, in order to get listed on Spotify and Apple Music, podcasters can sign up directly, set their price, and stay in control.

"I do think the creatives of today are wiser than creatives of the past," Patrick Hill, founder of indie streaming service Disctopia, told Lifewire via email.

"So as long as there are platforms that are willing to give creatives ways to monetize their content, I don't think we'll see some of the same corporate greed that we see in something like the music industry."