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Apple launches new subscription platform. Will it be the 'Netflix of podcasts'?

Wendy Lee, Los Angeles Times on

Published in Business News

Fifteen years ago, Apple Inc. played a major role in bringing podcasts to the mainstream, offering a way to distribute free audio programs to the masses.

Since then, rivals such as Spotify have been chipping away at Apple's territory by offering podcasts exclusive to its streaming platform and generating revenue through advertising and monthly subscriptions.

On Tuesday, Apple signaled its intentions to remain a major player in the podcasting business by offering a subscription platform on its app next month.

The new effort allows Apple to start collecting a cut of podcast subscriptions on its Podcasts app. Previously, Apple did not collect subscription revenue through Apple Podcasts and publishers could charge subscription fees through RSS feeds.

"Apple is creating the Netflix of podcasts," said Ray Wang, principal analyst at Constellation Research. "They are enabling creators [with] a distribution channel to 1.65 billion devices."

The move also reflects growing competition in the podcast arena, analysts said.

 

"This service will further enable Apple to monetize its podcasting moat and ultimately we expect more exclusive content partnerships to be announced over the coming months to compete with Spotify in this quickly morphing podcasting arms race," Daniel Ives, an analyst at Wedbush Securities, wrote in a research note Tuesday.

Apple Podcasts subscriptions will be available in more than 170 regions and countries next month, Chief Executive Tim Cook said at an event Tuesday at Apple's headquarters in Cupertino, Calif. The subscriptions will allow customers to unlock new content, listen ad-free or gain early access, he said.

"Now you can help your favorite podcasters build their business and fuel their creativity," Cook said.

With Apple Podcasts subscriptions, podcast creators will set the pricing from 49 cents and up, receiving 70% of the subscription revenue each billing cycle in its first year, and 85% after that, according to a person close to the company who was not authorized to comment. Creators will receive 100% of the revenue generated by advertising, the person said.

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