With 200 million audio streaming users around the world, 96 million of whom are paying subscribers, Spotify has been credited with giving new life to the music industry. Over the past two years, the company has diversified, quietly becoming the second-largest podcasting platform behind Apple Music.
Two recent acquisitions have further fueled that expansion. In February, Spotify bought Gimlet, which produces original podcast content, and Anchor, which makes podcast creation tools.
Producing original content is not new—Netflix has made it a tenet of its business model, and others are expanding their roles from content distributors to content creators. With its move into podcasting creation, Spotify is betting on the medium’s growth, high profit margins, and monetization possibilities.
As it does, Spotify may find that location data plays a key role in optimizing user experience. Even on digital platforms, physical location influences user preferences and provides valuable clues that can be used to attract and retain new customers.
Capturing Growth with Analytics
Podcast listeners are a new and valuable audience. Spotify estimates that its podcast users spend twice as much time on the platform as music listeners. Unique podcast programming could draw new users who might not have previously considered joining Spotify. It could also entice existing users to upgrade to the company’s paid Premium service.
US podcast advertising revenue is predicted to grow to $659 million by 2020—a jump of more than 110 percent over 2017 ad revenue. Spotify is positioning itself to leverage that growth by applying robust data analytics and customization algorithms to podcasting.
Spotify already uses demographic data and location analytics in its music business to help creators understand and engage their audience. Spotify shows artists where their fans are to help generate ideas for marketing, promotion, and tour planning. Visualizing the geographic locations of listeners on a map provides instant insight that raw data alone doesn’t typically deliver.
Now Spotify will be able to do the same for podcasts. Podcast creators could use Spotify’s location data to drive engagement, for instance. They might interview a guest from a location with a high concentration of listeners. Or they could plan a speaking engagement in that locale.
Advertisers, meanwhile, can increase their impact. Using demographic data from a modern geographic information system (GIS), marketers can identify where their target markets might live. Then, they can map those locations to relevant podcasts.
Ads can be built into the beginning, middle, and end of podcasts, played to everyone who listens to that episode. Alternately, ads can be rotated algorithmically to match the locations and demographics of listeners. In either model, GIS-driven location intelligence can be used to identify target audiences, a tactic that’s proven effective for advertisers even in print publications.
Even for companies whose customers are digital natives, physical location can be a potent tool for understanding how to deliver the perfect user experience.
Data Leads to Discovery
One of podcasting’s historical issues has been discovery. How do people find the podcasts that interest them? How do creators reach new listeners?
Like Netflix does for video content, Spotify uses advanced analytics, including location intelligence, to predict the kind of music listeners might like. For its India launch, Spotify supported multiple regional languages, curated both Indian music and international music playlists popular in India, and introduced location-specific content like Bollywood and Punjabi movie soundtracks. The company now tracks and shares trending content in cities such as Mumbai and Delhi.
Those discovery algorithms could be used to recommend podcasts that subscribers are likely to enjoy. The data could even be used to help plan original content—predicting what type of podcasts might be worthy of investment (and therefore a priority for Gimlet).
Spotify could take the recommendations one step further, creating GIS-powered geofences (as Burger King did for its recent marketing effort) to alert users about podcasts related to their location. An episode on Italian architecture might be recommended for someone traveling through Rome, or a sports commentary on the New England Patriots might appear for residents of Boston.
Spotify may be known for the digitization of audio, but the physical location of listeners, creators, and now podcast content provides valuable insight that helps deliver value, increase engagement, and drive revenue.