The streaming wars are heating up - but we’re not talking about video. Our data shows that the recent acquisition of podcast catcher Stitcher ($PRIVATE:STITCHER) for $325 million by SiriusXM ($SIRI) could be the start of a heated contest between SiriusXM and Spotify ($SPOT) to gobble up exclusive creators, content and most importantly, customers.
SiriusXM has spent the last few years acquiring companies like online radio station Pandora (for $3 billion in 2018) and Podcast creation platform Simplecast in an attempt to move its company towards the verticality that Spotify built itself around from day one. Spotify acquired its own creation platform in Anchor in 2019, and it’s becoming clear that for now the battlefield in the audio streaming wars will be fought over podcasts. Podcasts grow in popularity and volume every year, and the IAB found that podcast advertising revenues increased 48% in 2019, showing there is plenty of territory to be claimed.
Acquisitions on their own will not be enough to launch SiriusXM ahead of Spotify’s massive foothold in the music and podcast streaming industry, it will certainly position them well to compete down the line.
In terms of size, the starting gap between Spotify and Sirius wasn’t too wide as Sirius lagged only 300 employees behind Spotify’s 5,980. However, the gap started to widen significantly as 2020 went on. Spotify has increased its headcount by almost 20% as its share price has soared into an all-time of $274.79 by market close Friday. In comparison, SiriusXM headcount has jumped by a middling 2.5% and its stock is sitting at $5.70 per share. As Spotify began to rack up celebrity exclusivities like Joe Rogan and the Kardashians, Sirius may have become more wary of the growing threat Spotify posed if it continued to grow unchallenged.
On the surface, Spotify’s massive Facebook following of 22 million makes SiriusXM look like the old Hank Williams cassette your grandpa listens to on the rocking chair. It’s hard to overstate the prevalence of Spotify in people’s everyday lives. Spotify has pursued an extremely aggressive marketing strategy, from showcasing new releases on Times Square Jumbotrons to its yearly “Spotify Wrapped” which visualizes users’ listening habits and never fails to go viral.
And Spotify Wrapped gives the game away in terms of why users tend to stick with the platform - it tracks your data closely to give you music and podcast recommendations that keep you dependent on the app to find new music. With all these odds stacked in Spotify’s favor, it may seem like Sirius has no chance of catching up.
But Facebook ‘Talking About’ counts show the gap is much closer than it seems. Despite all that weight in Spotify’s favor and the over $250 lead it currently has in market value, SiriusXM is consistently able to keep up with and even surpass Spotify in terms of buzz. In fact, in the days after December 5, 2019 when Spotify released its largest “Wrapped” campaign ever, SiriusXM actually soared ahead of them and kept that level of engagement until well into February. That SiriusXM is able to hold consumers’ attention just as strongly or even stronger than Spotify even with such a gap in following and value is proof that Sirius may be poised to capture a significant chunk of the market from out of Spotify’s seemingly comfortable grasp.
SiriusXM has signed on creators like Conan O'brien and Andy Cohen for exclusivity deals, and last fall signed onto a partnership with Disney to produce exclusive shows related to Marvel properties. While such moves didn’t generate the buzz that Spotify’s Joe Rogan deal did, ‘Talking About’ counts show that SiriusXM may have invested wisely in the many exclusivities it does have under its belt, which may go a long way towards retaining users in the long run and growing to a size to trade blows with Spotify.
Update: As of 7/14 Spotify has added a Podcast Chart feature to help users discover new shows as they would discover new music.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
