Apple goes to battle with Spotify in premium podcast push

FILE PHOTO: The Apple Inc logo is seen hanging at the entrance to the Apple store on 5th Avenue in Manhattan, New York, U.S., October 16, 2019. REUTERS/Mike Segar

(Reuters) -Apple Inc is fighting to retain control of the fast-growing podcasting market it popularized years ago but did not monetize, analysts and industry experts told Reuters.

Nearly 16 years after Apple added the ability to find podcasts -- a portmanteau of "iPod" and "broadcasting" coined by a Guardian journalist -- to its iTunes software, the iPhone maker now seeks to court podcast creators with new subscription and creator tools, and fend off competition from streaming audio company Spotify.

Apple announced on Tuesday it will launch Apple Podcast subscriptions, which will let users pay to unlock new content and additional benefits like ad-free listening, said Apple Chief Executive Tim Cook during the presentation.

Pricing for each subscription will be set by the creator and billed monthly, Apple noted in a press release.

It also introduced a new Apple Podcasters Program that will cost $19.99 per month, and will provide creators the tools they need to offer podcast subscriptions.

The company will also redesign its Apple Podcast app to include channels, which will let users find new shows from their favorite creators and hosts, Cook said.

The features will roll out to 170 regions next month.

"Spotify has upped the ante on podcasting," spending an estimated $1 billion to expand its business beyond music, said Dan Ives, an analyst at Wedbush Securities. "Given that (Apple) basically originated podcasting, it would be tough to swallow to lose out to Spotify."

Spotify's acquisitions include about $340 million to buy podcast networks Gimlet and Anchor in 2019, according to filings, and a reported $235 million in 2020 to acquire Megaphone, which offers advertising technology for podcasts.

The company has also signed exclusive podcasting deals with major names including Michelle Obama, Joe Rogan and Kim Kardashian.

Apple has dabbled in creating original podcasts, which are available on the Apple Podcast app. Earlier this month it launched "The Line," a true crime series that includes both a podcast and documentary show on its streaming service Apple TV+.

The launch on Tuesday represents a deepening rift between Apple and Spotify, as the latter has complained to European regulators that Apple unfairly pushes its own music streaming app.

With its new service, Apple will face the challenge of convincing users to pay for podcasts "when there's a universe of it available for free," said Nick Quah, who writes Hot Pod, an industry newsletter about the podcasting world.

"We're already accustomed to paying for a catalog of TV shows," he said. "I don't think people are used to that for podcasts."

While the iPhone maker has long pushed to expand beyond selling devices, its previous forays into serving premium content have a mixed track record, some analysts said.

Apple Music, a subscription streaming music service which launched in 2015, years after Spotify, is now No. 2 by market share.

Apple TV+, its streaming video service with original shows and movies that launched in 2019, does not yet pose a threat to dominant players such as Netflix, said Jeff Wlodarczak, an entertainment and interactive subscription services analyst at Pivotal Research Group.

"I think Spotify management can sleep at night if Apple makes this move," Wlodarczak said.

(Reporting by Sheila Dang; editing by Kenneth Li, Lisa Shumaker and Cynthia Osterman)

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