On Tuesday, Bloomberg reported that Apple is planning to fund the production of several original podcasts for exclusive distribution through its platform. The Silicon Valley giant is also reportedly looking to acquire the rights to some existing audio programs.
Though the corporation’s Apple Podcast application represents 50 to 70 percent of the podcast market, the firm has never funded its own original non-music audio content before.
Why Apple is Getting into Podcasting
Apple’s newfound interest in the podcasting industry is due to the sector’s remarkable financial performance. The Interactive Advertising Bureau notes that podcasting companies generated $479 million in ad revenue in 2018. The firm also reports that the medium’s sales have increased 65 percent in the last three years.
A surge in popularity has caused the episodic audio content market’s recent rise in profitability. Since 2014, the number of monthly podcast listeners in the United States has doubled.
Though Apple has been ambivalent toward podcasting since the 2000s, its rivals are not. In February, Spotify spent a reported $230 million to acquire the Gimlet podcast network. The streaming audio company also noted that it intends to spend $500 million this year to expand its podcast offerings. In the future, Gimlet’s programming will only be available through Spotify.
Because of its expansion efforts, Spotify now owns 10 to 20 percent of the podcast segment. However, despite its success, news of Apple’s interest in the market drove the firm’s stock price down by 2.7 percent.
Apple vs. Spotify
Corporate rivals Apple and Spotify are currently engaged in a bitter legal dispute. In May, Spotify filed an antitrust complaint against the iPhone maker with the European Union (EU). Consequently, the region’s regulatory body is now investigating Apple’s alleged anticompetitive practices.
Spotify argues that Apple uses its position as a vendor and marketplace host to hurt competing companies. For instance, the music streamer argues that the Cupertino, California-based corporation has chosen not to interpolate its services with its products to impair its growth. The Swedish firm might make the case that Apple’s new podcast venture gives another indication that the firm is unfairly acting as a content provider and distributor.
Furthermore, the Supreme Court recently ruled that Apple can be sued as a monopoly because of the way it operates its App Store.
If the European Commission finds Apple guilty of antitrust violations, the company’s restructuring plans will come into question. Not only will a negative judgment harm the company’s profits and reputation, but it might also impact its plans to change its business model.
In recent months, the Big Tech firm has been taking steps to transition away from being an electronics company. Facing steep declines in its mobile device business, the company is reinventing itself as a services provider. That’s why the corporation will be offering banking services and streaming video content later this year.
Apple’s ability to execute a successful pivot away from electronics depends on its status as a platform and a provider. However, the firm’s transition won’t happen if it’s forced to spin off its App Store into a separate business.