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Why ‘white noise’ podcasts are costing Spotify $38M per year in profits


Spotify is reportedly missing out on $38 million in annual profits because its users can’t stop listening to “white noise” podcasts that are less lucrative for the company.

“White noise” podcasts, which feature calm and relaxing sounds such as falling rain, crashing waves or just plain static, generated a whopping three million daily consumption hours on Spotify as of January, according to an internal document obtained by Bloomberg.

The podcasts are purportedly so popular that Spotify considered nixing them from the streaming service entirely and redirecting users to music from the likes of Drake or Ed Sheeran and other “comparable programming” that is more cost-effective from a revenue perspective.

Spotify’s annual gross profit would increase by an estimated $38 million if the company removed “white noise” from its “talk” section, blocked future uploads and nudged users toward other audio content, according to an internal analysis.

Ultimately, the company decided not to follow through on the move. For now, white noise is still available on the platform in podcast form.


Spotify recently hiked monthly prices.
AFP via Getty Images

“The proposal in question did not come to fruition — we continue to have white noise podcasts on our platform,” a Spotify spokesperson said in a statement.

Bloomberg noted that the podcasts were “inadvertently boosted by Spotify’s own algorithmic push for “talk” content (versus music)” – at the expense of the company’s bottom line. The outlet previously reported that white noise podcast “hosts” could earn $18,000 per month in ad revenue.


Spotify
Spotify shares are up nearly 60% this year.
REUTERS

The Post has reached out to Spotify for comment.

Some Spotify users have grumbled on Reddit that their preferred white noise podcasts had recently “vanished.”


White noise
White noise podcasts are popular on Spotify’s platform.
Getty Images

Spotify shares have surged more than 60% since January. The stock is still up for the year even after dismal second-quarter results that came in well below Wall Street’s expectations.

The music streamer reported a larger-than-expected net loss of $333.4 million or $1.71 a share. That was an increase compared with a year-ago loss of $138 million or 94 cents a share.


White noise
Spotify

Spotify also rankled users in July by announcing plans to hike monthly subscription prices by up to $2 for ad-free service.

“The market landscape has continued to evolve since we launched. So that we can keep innovating, we are changing our Premium prices across a number of markets around the world,” the company said in a blog post. “These updates will help us continue to deliver value to fans and artists on our platform.” 



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