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Home / Technology / Spotify pays podcasters tens of thousands of dollars to bend their own sponsorship tool

Spotify pays podcasters tens of thousands of dollars to bend their own sponsorship tool

John Newman is the type of personal business that Spotify will engage in podcasting. He has a niche interest – collecting sports playing cards – and is passionate and knowledgeable about the subject. When he was looking for a way to start his own show, Sports Card Nation, in 2018, Anchor stood out. The podcast creation app, now owned by Spotify, makes it easy to record an episode, and it offers a new feature for new podcasters: sponsorship opportunities for everyone.

What Newman did not expect, however, was that the main advertiser who used Anchor̵

7;s sponsorship function would be Anchor himself. Newman says that in the course of two and a half years on the platform, he has only had three sponsors through Anchor: Anchor, Pocket Casts and a company called The Black Tux. One of these companies, Pocket Casts, did not even pay for the sponsorship, confirms a source close to the company – instead, Anchor covered its costs to market the feature. Newman says both the Pocket Casts and Black Tux sponsorships lasted less than a month and gave him no more than $ 50 in total. Anker, on the other hand, has paid him around $ 2,500 to advertise his own service.

“It’s just a blip compared to Anchor,” he says.

Nine podcasters tell The Verge the same story: Anchor’s sponsorship function seems to be lacking sponsors, and they have been given few, if any, opportunities beyond Anchor or Spotify itself. Three people say they have earned thousands from Anker and Spotify alone. Tre also says that they have now traveled or want to leave Anchor’s platform because they do not receive new sponsors.

Anchor’s software is designed to let anyone start a podcast just by recording on the phone. It promised to help podcasters monetize these shows through a feature called Anchor Sponsorships, which was launched in November 2018 in the United States, just months before Spotify bought the company for $ 140 million. The functionality is similar to YouTube ads – advertisers are automatically matched with podcasts to suit demographic goals, and hosts can then do ad readings for the sponsors and make money.

It’s a radical idea, especially for smaller creators. Usually, advertisers only work with shows that reach tens of thousands of listeners. With Anchor’s approach, sponsors can distribute their advertising impressions on multiple shows, instead of focusing on one or two on a specific network. The hosts can always pass on a sponsorship opportunity, if they are not interested.

“We are committed to leveling the playing field for revenue generation through podcasts by enabling new creators to get paid and new brands to enter the market,” Anchor said when announcing the feature.

But it now seems that the big vision is not coming out, and it may actually cost Anchor money to continue running. Sponsorship is becoming more and more a marketing path for Spotify to entice new creators to join the platform and keep them there.

Most podcasts The Verge spoke with registered for Anchor’s sponsorship function last year and received Anchor himself as his first sponsor. They received $ 15 for every 1,000 people they reached. These podcasts say that their Anchor sponsorship ended in the second half of 2020, and that they were not offered a possible renewal date or a new sponsor to replace it. Three hosts say they only earned around $ 50. Newman said his sponsorship ended short about three months ago, but he sent an email to the company, and Anchor turned it on again with a different CPM, or cost per 1,000 listeners . It is unclear why.

Newman says he has not had a sponsor other than Anchor in the last two years, although his show has grown and now reaches anywhere from 1,500 to 3,000 people per episode. He estimates that Anchor has paid him around $ 2,500 during his nearly two and a half years on the platform. He is currently running his Anchor sponsorship at a $ 17 CPM, along with other ads he received on his own outside of Anchor.

Blake Chastain, a podcaster who makes two shows, including one called Exvangelical about “getting to grips with the confused subculture of evangelism,” says both of his shows lost anchor sponsors last year. His podcast on spirituality reliably reaches 2,000 or more people per episode, he says, while the other is incipient. He says he and five other podcaster friends have not been matched with a sponsor for several months since the Anchor sponsorship ended, and they now want to move to Megaphone, a host company recently acquired by Spotify.

Megafon costs money to spend as a hosting provider, but in return it offers an advertiser market, which allows companies to have their ads placed in shows that fit demographically, in the same way as Anchor’s offerings. However, hosts do not read the ads. The main barrier to entry is that Megafon only offers its services to shows or networks with 20,000 plus listeners per episode, and therefore Chastain must coordinate with other podcasters.

“I feel that Spotify is well positioned to offer things to indie podcasters, as much as they are to developing their own stuff by buying outlets like Gimlet, but it just hasn’t materialized yet,” he says. “So that’s kind of the reason why when you’re younger, you just do things on your own, just keep the options open. That’s why we explore it. [move to Megaphone]. ”

Two other podcasters mentioned receiving sponsorship, in addition to Anchor’s own, including one for a sleep podcast called Deep sleep sounds and one for Spotify itself. Podcaster who received the Spotify sponsorship, Dalton Trigg, says that he and his co-host earned $ 1,700 from Anchor and $ 900 from Spotify while on the platform for about a year and a half. They have since left Anchor and joined the Blue Wire podcast network with their basketball show, Mavs Step Back, and use Simplecast for hosting.

“We switched because after almost two years of having some consistent ad money, we went two to three straight months at the end of last year where we had no sponsors at all,” he wrote. The Verge. “And the NBA season is our busiest time of year for the podcast, so it was frustrating for us – that it was just suddenly cut off. The anchor support continued to preach patience and said that they would continue to try to connect us with new sponsors, but it got to the point that we had to take the step so that we could continue to grow. ”

The fact that Anchor seems to be bankrolling its own sponsorship function does not bode well for Spotify, especially considering the critical role Anchor plays in the company’s growth strategy. Anchor offers its software and hosting service for free, which brings new podcasters into the field. It also increases Spotify’s own show catalog. It told the company The Verge that Anchor launched 1 million new shows in 2020 alone and operates 70 percent of Spotify’s podcast catalog. Spotify has also signed the Anchor creators to exclusive deals, and a spokesman said last month that 100,000 creators had generated revenue through Anchor’s sponsorship product to date.

Still, the situation suggests all of these podcasts show that while Anchor is attracting creators, it may not make much money by selling ads. In fact, it apparently uses only that. In addition, the success that some of these podcasts have had in attracting outside advertisers shows that when they reach a certain audience, they are sometimes willing to put Spotify behind them.

We reached out to Spotify for information on which other advertisers are currently using sponsorship, as well as how much money the company has spent on these ads, but it declined to comment on the post.

Spotify put us in touch with the podcast How long goneon the other hand, which was launched in March 2020 and distributed through Anchor with the most ads from Anchor Sponsorships. The hosts, Jason Stewart and Chris Black, say that the majority of their advertising markets show Spotify, Anchor and Anchor-made shows. Spotify and Anchor have paid them “tens of thousands” of dollars in advertising revenue in less than a year, they say. (They also host a separate Spotify-exclusive show that highlights Anchor’s latest feature – the ability to include music in shows – called How long has Radio gone.)

“It’s like an interesting ecosystem,” says Stewart. “It’s like a garden that waters itself, as long as you have the good Spotify deep pockets.”

They have had three other sponsors over the show’s existence who came from Anchor Sponsorships, including Manscaped, Solaray and Roman. All three of them ran for about a month each.

“It’s good to be able to just have that Spotify and that anchor as a baseline for where even if you make a dollar a day free of it, or whatever, in the beginning, it’s nice to just see it,” Stewart said. “It’s like playing or something. You look in your wallet, and you see every day how much more money you make, and then it helps you track your growth and goals, and having Spotify and Anchor there throughout was a fantastic foundation to build on. . ”

Analysts at Citi sent a note to clients last week advising them to sell the Spotify stock, especially since the podcasting work had not yet resulted in a meaningful increase in premium subscribers or app downloads. Anker has so far been a success story for the establishment. Even these podcasts, when asked, say that they do not regret using the app and thought it was made available. Receiving money from Anchor did not hurt either and was like a cherry on top.

But did Spotify enter the podcasting area to subsidize creators to create new shows, or to help themselves make more money? Anker’s sponsorship situation seems to be testing that choice.

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