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On 18 May this year, Spotify’s market cap was just over $30bn. Since then it hasn’t made any major announcements in music, but it has signed a run of high-profile, exclusive podcasting deals – with Joe RoganKim Kardashian West and (yesterday) with Warner Bros for a series of scripted podcasts based on DC superheroes and supervillains. At the time of writing, Spotify’s market cap is now $41.9bn.

We’re not naive enough to suggest that Spotify getting $11.9bn more valuable as a business over the course of a single month is entirely down to podcasts. The circulation of Goldman Sachs’ bullish music industry predictionsWarner Music Group’s successful IPO; The European Commission launching a formal anticompetition investigation of Apple sparked by Spotify’s complaint last year… these are all relevant too.

But still: Wall Street LOVES Spotify making big, splashy moves into podcasting, and right now, the more money the company spends on acquiring companies and signing stars to exclusives, its value grows by much more than that outlay. Yes, these moves cause tensions within the music industry: labels rumbling about protecting their royalties and artist-rights campaigners contrasting the golden handcuffs for podcast stars with average per-stream rates for musicians. But as a corporate strategy, the logic of ‘Audio-First‘ is very clear.

Obligatory warning, which Spotify’s management team will already know full well: what the market can add to a company’s value, it can also take away. It’s not so long since the days when Pandora was the high-profile public music-streaming service, with a share price capable of falling 20% in a day simply because of press rumours that Apple was about to launch an online radio rival. What impact might it have on Spotify’s share price (and thus value) now if Apple put more oomph behind Apple Podcasts at last?

As if by magic, 9 to 5 Mac reports that Apple is planning a revamp of its Podcasts app as part of its upcoming iOS 14 software – due to be unveiled on Monday – including a podcasts equivalent to Apple Music’s ‘For You’ personalised recommendations. It suggests there’ll be other new features too. Hardly a Spotify-killer, but recent reports claiming Apple is also keen to beef up its original podcasts slate suggest bigger moves afoot. Podcasts have made Spotify a significantly more valuable company, but its fiercest rival is unlikely to take that lying down.

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Stuart Dredge

Music Ally's Head of Insight

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