Spotify's Unique Podcaster Tools Are a Big Competitive Advantage

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Spotify (NYSE: SPOT) opened its Spotify for Podcasters dashboard to everyone earlier this week, providing podcasters with access to loads of data and analytics. Importantly, Spotify is able to offer demographic data, including the age, gender, and location of listeners. That kind of data isn't available on any other platform, including Apple's (NASDAQ: AAPL) Podcast app, which still accounts for the majority of podcast listening.

Demographic data is particularly valuable in an industry almost entirely supported by advertisements. And that's the end goal for Spotify -- to create ad products for podcasters.

For now, Spotify for Podcasters offers creators the tools necessary to sell ads more effectively and create more content their audiences will love. That ought to prove a meaningful competitive advantage.

The Spotify for Podcasters dashboard is shown on two computer screens.
The Spotify for Podcasters dashboard is shown on two computer screens.

Image source: Spotify.

A unique service

Spotify can provide more in-depth listener data than Apple or any of its other competitors because Spotify requires an account to listen to music or podcasts and it grabs demographic data upon sign-up. Spotify is also uniquely positioned to share data about listeners' musical tastes, which may help inform advertising on both the targeting and creative side.

The company offers a similar service for musicians, Spotify for Artists, which helps musicians decide tour schedules, merchandise offerings, and what songs to record.

Apple provides podcasters with data including total downloads and some more in-depth data like average listening time. But Apple's privacy policies, combined with the fact that each listener isn't necessarily attached to an account, means it doesn't provide meaningful demographic data.

Growing both sides of the equation

Spotify says podcast listening increased 50% sequentially in the second quarter, and it's nearly doubled since the start of the year. The company has seeded the space by investing hundreds of millions of its own cash in acquiring podcast-related companies and producing its own original podcasts. It's also managed to partner with some of the bigger names in podcasting.

Earlier this year, the company introduced algorithmically generated playlists for listeners that include some short-form podcasts. It also made a change to its user interface to highlight podcast content.

On the creator side of things, Spotify is doing pretty well. There are currently over 450,000 podcasts on Spotify. That compares with an estimated 700,000 podcasts available on Apple Podcasts. (Apple's last official update was 555,000 in June 2018.) That said, there are some 2 million podcasts floating around the internet, according to some counts.