Spotify is facing a potential loss of $38 million in annual profits due to the popularity of “white noise” podcasts on its platform. These podcasts, which feature calming sounds like rain or waves, have generated three million daily consumption hours on Spotify. The company considered removing these podcasts and redirecting users to music by artists like Drake or Ed Sheeran, which would be more profitable. An internal analysis suggests that by removing “white noise” from the platform, Spotify’s annual gross profit could increase by $38 million. However, Spotify has decided to continue offering these podcasts for now. The popularity of white noise podcasts was inadvertently boosted by Spotify’s algorithm, which prioritized “talk” content over music. Some podcast hosts have earned as much as $18,000 per month in ad revenue. Despite disappointing second-quarter results, Spotify’s shares have increased by nearly 60% this year. The company faced backlash from users when it announced a price hike for its ad-free service in July. Spotify justified the increase by stating that it is necessary to keep innovating and delivering value to users and artists.
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