Spotify’s $1bn podcast bet on star names including Harry and Meghan, Kim Kardashian and the Obamas is a LOSER as the company hemorrhages $600MILLION in six months

Spotify’s podcast empire is rapidly crumbling, despite exclusive contracts with some of the world’s most famous people — though executives claim it’s all part of a master plan for long-term profitability.

Multimillion-dollar contracts with the likes of Harry and Meghan, Kim Kardashian and the Obamas have coincided with a huge net loss for the subscription streaming service — including a $565 million bleed in just six months this year.

To blame is Spotify’s zealous over-investment in podcasting as a small part of the digital advertising industry, along with the monumental failure of shows like Meghan Markle’s Archetypes, which was shut down in June after just one series.

In recent years, business leaders have jumped at the opportunity to capitalize on the booming podcast business — a $2.3 billion industry that has grown 25 percent in the past year, according to the Interactive Advertising Bureau.

The Swedish streaming giant has invested more than $1 billion in building its podcast business, boasting an impressive selection of over 4 million titles.

Spotify’s podcast empire is rapidly crumbling, despite exclusive contracts with some of the most famous people in the world — including Harry and Meghan’s $20 million deal for a show that was canceled this year

Multimillion-dollar contracts with the likes of Harry and Meghan, Kim Kardashian and the Obamas have coincided with a huge net loss for the subscription streaming service — including a $565 million bleed in just six months this year

However, the podcast industry makes up just over two percent of the $200 billion digital advertising market, and the industry has even bigger competitors, from Apple to Amazon.

As a result, most of Spotify’s podcast shows aren’t profitable enough to offset the million-dollar contracts.

Spotify lost $565 million in the past six months through June, on revenues of $6.65 billion, according to the Wall Street Journal.

The company is worth about $31 billion today — down from $70 billion at the height of its power in early 2021.

“The size of the bet relative to the size of the market just seems irrational in hindsight,” media consultant Evan Shapiro told the WSJ.

Spotify claims it is on track to make its podcast business profitable by 2024, based on forecasts of monthly active user growth.

“We always knew that 2022 would be an investment year and 2023 would be a year where we would slow down investments and therefore operational expenses, while revenues continue to grow,” said CFO Paul Vogel.

However, some of the biggest deals have already fallen through, including a $20 million investment in Harry and Meghan’s Archetypes podcast.

Spotify signed an exclusive deal in December 2020 and their podcast premiered in August 2022 with Meghan’s girlfriend and tennis legend Serena Williams as the debut guest.

Spotify lost $565 million in the past six months through June on revenues of $6.65 billion

Shares of Spotify rose during the pandemic period, along with many tech companies, as people spent more time streaming and online, but plummeted last year during the launch of high-profile podcasts

But less than a year later, the ex-royals broke up with Spotify, releasing a statement saying they “mutually agreed to part ways.”

Top Spotify podcast executive Bill Simmons denounced the pair as “damned scammers” amid the fallout.

The acrimonious end to an anticipated second season came after Archetypes struggled to maintain a large audience.

Spotify stock prices also seemed to take a hit. Shares were at a high of 339.32 in December 2020 when the Archetypes deal was signed.

By the time the first episode aired in August 2022, the shares had fallen to 123.80, falling further to 71.22 in November of that year.

The acrimonious cancellation of a possible second season of Harry and Meghan’s Archetypes came after the show struggled to maintain a large audience

Meanwhile, the Obamas also cut ties with Spotify last year after clashing with the top over exclusivity and the extent to which they were expected to appear in episodes.

The former first couple went over to iTunes, Amazon and Vudu, where their podcast Higher Ground is now streamed, having previously signed a contract with Spotify in 2019.

Kim K’s eight-episode podcast The System launched in October 2022, but it went quiet just a month later.

By far the largest podcast deal Spotify has made is with Joe Rogan, who received an estimated $200 million as part of an exclusive multi-year deal in 2020.