Apple mulls podcast subscription service to chase Spotify

Apple Inc. is working on adding a subscription service to its podcasting business in 2021, part of a broader push that has included funding new original programs, according to people familiar with the matter.

Apple has discussed the plan to create a subscription service with its partners, said the people, who asked not to be identified because of nondisclosure agreements. The company also has talked about stepping up funding for new shows and marketing, the people said.

The plan to create a subscription tier, first reported by the Information, would put Apple in closer competition with Spotify Technology SA. Shares of that company tumbled more than 7% on Friday.

Apple, based in Cupertino, California, declined to comment.

Apple has been the dominant distributor of podcasts in the U.S. for more than a decade, offering the programs for free. (The word podcast is a portmanteau of iPod, Apple’s portable music device, and broadcast.) But the company now faces significant competition from two of its biggest rivals: Spotify and Amazon.com Inc.

Apple also is under pressure to get more revenue from services, rather than just its big moneymakers like the iPhone. A podcast subscription would further that end. Bloomberg has previously reported that Apple is ramping up its push into original podcasts, partly as an attempt to promote its TV+ video service.

The company recently launched Apple One subscription bundles as well, and it would make sense to make the podcasts service part of that. If it does, Apple would likely add a significant number of users automatically by charging them little or nothing.

Contending With Spotify

Spotify, meanwhile, has invested hundreds of millions of dollars in podcasting shows and technology, and has robbed Apple of some the most popular podcasts in the world. The top show, “The Joe Rogan Experience,” is now exclusive to Spotify.

Spotify has already dethroned Apple as the leader in online music, and by fusing podcasts with its music service, the company threatens to do the same in that market. Spotify has eclipsed Apple as the leading provider in many territories outside the U.S.

Amazon, a competitor to Apple in the market for smart speakers, is also increasing its investment in podcasting. The company has bankrolled original series for its audiobook arm Audible and added podcasts to its music service as well. It also agreed to acquire podcasting company Wondery last month.

It’s still not clear how big of a business podcasting can be. Luminary Media, a podcasting startup, has struggled to attract customers to its subscription service. And Apple isn’t a big seller of advertising, the primary source of revenue for the industry.

But Apple does come from a stronger position than Luminary. There are already tens of millions of people listening to podcasts on the preinstalled Apple app, and hundreds of millions of people who own Apple devices.

The company also can leverage its existing subscription-based entertainment services, such as Apple Music and TV+. Apple hopes these services both make their devices more appealing to potential customers and generate additional sales from people who already own them.