Who's right about the future of radio?
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View this email in your browser (|ARCHIVE|) http://hotpodnews.com/presents.... The fine print of innovation in the music business. It’s Monday, August 24, 2020. Editor’s note: Thanks so much to the nearly 9,000 of you who are now subscribed to the Water & Music newsletter! If you enjoy these updates, I would highly appreciate if you forwarded today’s issue to a friend or colleague in your network. Our growth has been 100% organic so far, and I would love to keep that amazing energy going!
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- Cherie SPOTIFY AND APPLE MUSIC DISAGREE ON THE FUTURE OF RADIO. WHO’S RIGHT?
Story by Cherie Hu Spotify and Apple Music have recently made polar opposite statements about the future of terrestrial radio — and the role that their own on-demand services will play in that future.
On one end of the spectrum, Spotify is in direct, self-proclaimed competition with terrestrial radio for both listener share (https://jacobsmedia.com/buckle-up-radio-spotifys-in-car-strategy-is-in-the-rear-view-mirror/) and music-industry advertising dollars (https://www.bloomberg.com/news/articles/2020-05-05/spotify-ceo-sees-an-18-billion-opportunity-in-selling-ads) . The company is taking an aggressive stance of cannibalization, rather than coexistence. CEO Daniel Ek made this clear during Spotify’s Q1 earnings call in April 2020, during which he declared (https://s22.q4cdn.com/540910603/files/doc_financials/2020/q1/Spotify-Prepared-Remarks-Q1-2020.pdf) :
“While most focus on the competition between streaming services, we continue to be focused on the billions of users that are listening to linear radio. The 20-year trend is that everything linear dies and on-demand wins. This is a trend that we suspect will be accelerated by the COVID pandemic.”
On the other end of the spectrum, Apple Music is leaning more, not less, into linear radio experiences than ever. On August 18 (https://www.apple.com/newsroom/2020/08/apple-announces-apple-music-radio/) , the service not only rebranded its five-year-old Beats 1 radio station as Apple Music 1, but also launched two new 24/7 radio stations, Apple Music Hits and Apple Music Country, featuring a wide variety of celebrity hosts. Oliver Schusser, vice president of Apple Music, Beats, and International Content, declared (https://www.apple.com/newsroom/2020/08/apple-announces-apple-music-radio/) in a statement:
“Apple Music radio provides an unparalleled global platform for artists across all genres to talk about, create, and share music with their fans, and this is just the beginning. We will continue to invest in live radio and create opportunities for listeners around the world to connect with the music they love.”
So, here are two otherwise similar music services, presenting two vastly different theses about the role of radio in growing an on-demand streaming business. Who’s right?
** Spotify: “Linear dies and on-demand wins”
What needs to happen before any discussion about the “future of radio” is a reckoning with what the word “radio” even means.
When people say the word “radio,” they’re typically referring to some combination of three elements: A content format, a curation logic and/or a delivery channel: For example, traditional radio consists of a linear, synchronous audio format with a mass-market, non-personalized, lean-back curation logic (i.e. multiple listeners tuning in at the same time will hear the same thing, and cannot choose specific songs or segments on-demand), and a delivery channel like AM/FM transmission or satellite broadcasting.
This three-part framework can help us understand what exactly Spotify is trying to disrupt about the terrestrial radio experience. Namely, it’s trying to disrupt all three parts: The content format (on-demand and asynchronous rather than linear and synchronous), the curation logic (unbundled, personalized and automated, rather than mass-market and handpicked) and the delivery channel (a desktop or mobile app via the cloud rather than old-school transmission technology or receivers).
The “Radio” tab on Spotify’s desktop app is rather underwhelming. Similar to Pandora, it’s just a small collection of algorithmically generated playlists inspired by particular artists or songs that continue onad infinitum, with no manual, “human-touch” curation behind them (see sample screenshot below). The tab as a whole is sparsely populated compared to the “Home” and “Browse” tabs on desktop, and there is no corresponding “Radio” section on mobile. But it’s not the “Radio” section that Spotify is gunning for as the main competitor to its terrestrial counterpart. Rather, it’s the service’s sprawling suite of algorithmic playlists that focus on the user, rather than on the artist or song, as the center of curation.
Today, each Spotify subscriber gets access to five different kinds of daily, personalized playlists that mix music, podcasts, news and other kinds of audio content based on their own tastes: 1. Daily Mixes (launched in September 2016 (https://www.vox.com/2016/9/27/13070726/spotify-daily-mix-playlist) ) — A rotating selection of mixes that each focus on a particular genre or scene 2. Your Daily Drive (launched in June 2019 (https://newsroom.spotify.com/2019-06-12/your-daily-drive-music-and-news-thatll-brighten-your-commute/) ) — A mix of music and daily news “microcasts (https://hotpodnews.com/will-podcast-playlists-elevate-the-microcast/) ” from third-party sources like NPR News, PRI and the BBC 3. Your Daily Podcasts (launched in November 2019 (https://newsroom.spotify.com/2019-11-19/your-daily-podcasts-playlist-makes-finding-your-next-favorite-show-easier-than-ever/) ) — A daily-updated playlist of 20 recommended episodes from a wide range of podcast shows 4. Daily Wellness (launched in April 2020 (https://newsroom.spotify.com/2020-04-27/daily-wellness-a-new-mix-of-motivational-podcasts-and-personalized-music/) ) — Music plus short episodes from health, wellness and meditation (https://www.patreon.com/posts/36471606) podcasts 5. Daily Sports (launched in August 2020 (https://newsroom.spotify.com/2020-08-17/daily-sports-a-new-mixed-media-playlist-fans-of-any-team-can-root-for/) ) — Music plus short episodes from sports podcasts
As indicated by the above timeline, the majority of these attempted radio killers have launched in the past 15 months alone. Spotify’s aggressive content acquisition strategy (https://www.patreon.com/posts/why-podcasts-39805220) for podcasts drives further investment in this kind of playlist format, in that both owned and third-party shows (1.5 million and counting (https://www.tubefilter.com/2020/07/29/spotify-podcast-listening-q2-2020/) ) can feed the recommendation algorithms and provide as precise of a bespoke radio experience as possible.
Interestingly, though, all of these daily playlists are still designed to be played in a linear fashion — i.e. in order from start to finish, not shuffled. The only difference is that if you can jump back or ahead to a specific song or podcast episode in the queue, if you want to. Like a traditional radio station, Spotify’s music curation actually used to be heavily personality-driven, in that you knew the names and faces of the editors who looked after the flagship playlists. One of the company’s most public-facing executives was Tuma Basa, the former Global Programming Head for Hip-Hop who oversaw the curation of RapCaviar and dozens of other official hip-hop playlists on the platform.
But as I argued (https://www.billboard.com/amp/articles/business/8224744/without-tuma-basa-spotify-flagship-playlists-public-ipo) in 2018 — the year Basa left for YouTube, and the same year Spotify went public — Spotify’s brand seems to have made an intentional shift away from these recognizable, quasi-celebrity figures, and back towards investment in personalization and algorithmic curation products in a way that feels more democratic, at least on the surface. The result is that playlists no longer have a face, and, in becoming more personalized, also feel less personal in terms of the human touch. (Spotify’s approach to podcasts, which relies heavily on personalities like Bill Simmons, Joe Rogan and Michelle Obama, is quite a different story.)
** Apple Music: “Get on our wavelength”
Apple Music is Spotify’s perfect opposite: No talk about algorithms, and all the talk about personality.
For years, Apple Music has tried to differentiate itself from the success of Spotify’s automated recommendation systems by emphasizing human tastes, with the goal of serving as a cultural hub for music fans. This spans small UX decisions like handwritten, paragraph-long descriptions for major albums and playlists, as well as more fleshed-out content initiatives like the “Up Next (https://itunes.apple.com/us/show/up-next-holly-humberstone/1382962898) ” series on emerging acts, exclusive distribution deals with Verzuz (https://variety.com/2020/music/news/verzuz-apple-music-beats-1-swizz-timbaland-1234711424/) , Boiler Room (https://hypebeast.com/2020/8/boiler-room-apple-music-stream-watch) and Tomorrowland (https://edm.com/news/tomorrowland-around-the-world-apple-music) and, most recently, the expansion of their 24/7 radio offerings. In Apple’s own words, these new stations seek to continue Beats 1’s work of “establish[ing] an inherent camaraderie with the artist community and champion[ing] human curation and discovery.”
To revisit our three-part framework about the meaning of “radio,” Apple Music’s new slate of 24/7 stations is most differentiated in its curation logic and its delivery channel. The delivery aspect — namely Apple Music’s interface — is obvious, in terms of the stations having access to built-in reach across hundreds of millions of active devices.
The curation logic is where it gets more interesting. It’s one thing to have a 24/7 radio show on your platform. It’s another thing entirely to give the most prime real estate on your platform to 24/7 radio shows hosted by artists — a choice that, to my knowledge, no other radio broadcasting company or streaming service aside from Apple Music has made.
Unlike Spotify’s “Radio” tab, Apple Music’s “Radio” section is much more densely populated. The flagship stations — Apple Music 1 (f.k.a. Beats 1), Apple Music Hits, Apple Music Country — appear at the top, including links to their hourly schedules over a rolling 24-hour period. I took the below screenshots at around 6pm ET yesterday, and you can see that the flagship playlists all center artists, namely (from left) Vince Staples, Dave Grohl and Tim McGraw. These artist-driven radio stations seem to be Apple’s way of getting around the decline of streaming exclusives. The practice of windowing a new music release exclusively to one platform for a limited amount of time was in vogue between around 2015 and 2018, with Apple Music and Tidal being the primary beneficiaries (e.g. Chance the Rapper, Frank Ocean and Drake with the former, Kanye West and Beyoncé with the latter).
But the practice has largely died out as industry professionals learn that exclusive deals not only are bad for consumers due to lack of choice, but also encourage more piracy (https://www.vice.com/en_us/article/xwe4x7/streaming-exclusives-could-double-piracy-rates-study-warns) . Free, 24/7 radio stations are a way to keep talent at the center of Apple’s content strategy, while increasing accessibility and reach (e.g. Apple Music’s YouTube account (https://www.youtube.com/user/officialbeatsmusictv) , previously named “Beats 1,” uploads several new interviews with artists from their radio shows every week).
Apple Music also makes previous airings of radio shows available for on-demand consumption in their app, just like a podcast — but only for paying subscribers. If you try to stream one of the archival episodes on demand without a subscription, you will be greeted with the following push notification: “Get on Our Wavelength.” “Our experts’ take.” These are all powerful indicators that Apple Music wants to position itself as an of-the-moment cultural programmer, with human tastes rather than algorithms at the center.
It’s worth mentioning that Apple’s interest in radio isn’t just limited to its own artist-branded stations. For one, Apple Music’s “Radio” tab features sections for local and international terrestrial radio broadcasters, where listeners can stream terrestrial stations like KCRW, WXPN and KEXP within the app alongside Apple’s original programming. Moreover, as reported by the Financial Times (https://www.ft.com/content/07206714-f285-11e8-ae55-df4bf40f9d0d) , Apple was considering buying a stake outright in iHeartMedia back in 2018 — meaning that radio was a serious business interest for the tech behemoth, not just a branding or partnership exercise.
Now, for the big question…
** Who’s right??
In short, linear radio is something that Spotify wants to kill, and that Apple Music wants to facilitate and become. You could even make the transitive argument that Spotify wants to kill what Apple Music Radio has become today.
Let’s bring back our three-part framework of radio as a content format, as a curation logic and as a delivery mechanism. The traditional delivery mechanisms of radio are certainly dying. A recent study (https://variety.com/2017/music/news/traditional-radio-faces-a-grim-future-new-study-says-1202542681/) by NYU music-business professor Larry Miller found that self-reported radio listening among teens declined by almost 50 percentage points between 2005 and 2016. According to PwC (https://www.cnbc.com/2019/08/09/would-you-care-if-music-disappeared-from-fm-radio.html) , advertising revenue for terrestrial radio stations has declined every year since 2015, a trend that other outdated mass-broadcast channels like cable T.V. (https://variety.com/2020/tv/news/cable-tv-decline-streaming-cord-cutting-1234710007/) are also seeing.
Traditional radio incumbents have faced layoffs amidst consolidation and declining ad revenues, especially in the midst of the COVID-19 pandemic. According to Poynter (https://www.poynter.org/business-work/2020/here-are-the-newsroom-layoffs-furloughs-and-closures-caused-by-the-coronavirus/) , nearly two dozen radio and public broadcasting companies, including iHeartMedia, Entercom and Cumulus — which collectively own hundreds of local stations across the U.S. — have faced layoffs, pay cuts and furloughs in 2020. NPR reported in July that their radio ratings have collapsed (https://www.npr.org/sections/coronavirus-live-updates/2020/07/15/891404076/npr-radio-ratings-collapse-as-pandemic-kills-listeners-commutes) by 25% year-over-year. iHeartMedia had already laid off (https://www.rollingstone.com/pro/features/iheartmedia-mass-layoffs-937513/) several hundred staff members back in January, mostly in small and medium markets that were already struggling (and, pertinent to this discussion, executives at the company blamed A.I. (https://www.washingtonpost.com/technology/2020/01/31/iheartmedia-radio-artificial-intelligence-djs/) for the cuts).
But I would argue that the content format and curation logic of traditional radio — hand-picked tracks and conversations, delivered in a linear fashion — are alive and well.
Just look at livestreams, which are as linear, synchronous and human-curated as digital content gets. I found the timing of Ek’s prediction that “linear dies and on-demand wins” a bit odd, because that was in April 2020 — right as music livestreams were reporting record levels of creation and consumption activity, especially on platforms like Instagram (https://www.businessinsider.com/instagram-live-70-percent-increase-social-distancing-psychologist-explains-2020-4) (70% uptick), Twitch (https://www.patreon.com/posts/36314041) (nearly 400% uptick) and increasingly games like Fortnite (https://www.billboard.com/articles/business/9422287/travis-scott-fortnite-billboard-cover-story-interview-2020) . When President Trump first warned of a potential TikTok ban, many TikTok creators chose to livestream their reactions (https://www.nytimes.com/2020/08/02/style/tiktok-ban-threat-trump.html) on the platform in real time, rather than post to their static social feeds. Social audio platforms like Clubhouse (https://www.patreon.com/posts/37645574) and Chalk (https://apps.apple.com/us/app/chalk-voice-rooms/id1463101137) are gaining momentum in Silicon Valley.
Comments like Ek’s seem to ignore the value of the real-time, human connections — and serious (https://www.billboard.com/articles/business/touring/9424012/underoath-local-promoters-diy-live-stream-success) dollars (https://www.iq-mag.net/2020/06/bts-gross-18m-biggest-ever-paid-live-stream-bang-bang-con/) — that are being generated thanks to linear Internet experiences on a daily basis, especially in the midst of a pandemic. Beyond the pure financial opportunity, the format and curation logic of old-school, independent radio will also remain relevant in the context of underground, grassroots music scenes, where community and companionship are key factors in driving artist development and creative collaboration. The leading indicators of music culture will always be the platforms that best foster community and social spread. (Companies like Mixcloud (https://www.mixcloud.com/) and Currents (https://a.currents.fm/) , which both launched livestreaming features this year, are leaning into this thesis.)
Neither Spotify nor Apple Music is a good platform for social networking or community-building. By design, they cater to the individual, and their business model is utilitarian, treating music and sound like tap water. Music streaming accounts for at most 4% of Apple’s entire business (https://twitter.com/cheriehu42/status/1297705348183273473) , so the company has some spare cash to spend on attracting big personalities to their music platform — but the end result does not really involve fostering connection and interaction like today’s new generation of linear digital experiences would.
Hence the popularity of services like Spotify and Apple may be decimating the delivery mechanism of radio — but until those services figure out the community-building element, they won’t decimate the format, curation logic or general emotional spirit of radio.
Spotify’s thesis on the death of radio neglects the rising emotional and financial value of real-time human connection, especially in a pandemic — to the point where it’s questionable whether Spotify is really competing with radio in the first place. Apple Music is embracing linear radio that centers artists’ perspectives, but in a rather old-school way that doesn’t foster the kind of open community interaction that many fans expect from new digital experiences. So for now, in a sense, both companies are wrong. ✯ DEEP DIVES The direct-to-fan tech stack for artists (https://www.patreon.com/posts/40754474) Amidst the COVID-19 pandemic, “direct-to-fan” has become the new standard for future music-business models — and it extends far beyond just merch and pre-save campaigns. Cherie outlines four different kinds of tools that artists have used to build out their direct-to-fan businesses, across ecommerce, crowdfunding, memberships, premium VIP experiences and much more.
Four revelations from Amazon Music’s podcast plans (https://www.patreon.com/posts/40389230) Cherie digs into the latest news that Amazon Music and Audible will be adding podcasts to their respective platforms, and its implications for Amazon, for its music customers and for artists. tl;dr Amazon Music and Audible will eventually merge into a single platform that can become a formidable competitor to Spotify.
Artist-facing music business software is far behind Silicon Valley (https://www.patreon.com/posts/40601474) Artist and software engineer Kimberly Hou explains why many artist-facing tools fall far behind Silicon Valley’s standards for usability, particularly around actionable streaming data and product interoperability.
Where does Brazilian funk go from here? (https://www.patreon.com/posts/40435353) Raphael Tsavkko Garcia investigates the tech-powered rise of funk in Brazil — including the role of piracy, YouTube and Spotify in artist development — and the commercial and political challenges that currently face the scene.
Beyond IG Live: Three strategic case studies of fan engagement (https://www.patreon.com/posts/40176889) Jaelani Turner-Williams examines how artists like Kitty Cash, Lianne La Havas and Phony Ppl are engaging with fans and building their own digital stages in interesting ways online, in a way that amplifies their artistry and breaks through the monotony of pop-up IG Live sessions. GOOD FINDS FROM THE WEB On creator economies and internet communities: * We bought Cardi B’s OnlyFans so you don’t have to (https://www.youtube.com/watch?v=jNGUBzKadtw) (Colin and Samir) * Squad Wealth (https://otherinter.net/squad-wealth/) (Sam Hart, Toby Shorin and Laura Lotti, Other Internet) * New media platforms are enabling a new creator type: Digitally Native Vertical Creators (https://medium.com/@efeng/new-media-platforms-are-enabling-a-new-creator-type-digitally-native-vertical-creators-f2a75cbb54fd) (Eric Feng)
On artists’ careers and livelihoods: * business techno matters: how those who have the most sacrifice the least (https://dwellerforever.blog/2020/08/18/business-techno-matters-how-those-who-have-the-most-sacrifice-the-least/) (Frankie Decaiza Hutchinson, Dweller) * A Tale Of Two Ecosystems: On Bandcamp, Spotify And The Wide-Open Future (https://www.npr.org/2020/08/19/903547253/a-tale-of-two-ecosystems-on-bandcamp-spotify-and-the-wide-open-future) (Damon Krukowski, NPR) * Stop Letting Numbers Decide Relevance in Rap (https://www.complex.com/music/2020/08/rap-relevance-is-deeper-than-numbers) (Andre Gee, Complex)
On digital music culture’s pasts, presents and futures: * The Black Internet Gold Rush That Wiped Away $75 Million in 18 Months (https://level.medium.com/the-black-internet-gold-rush-that-wiped-away-75-million-in-18-months-7c6be78ddc95) (Aliya S. King, Level) * Intimacy Is Overrated: Concerts in the Livestream Era (https://www.nytimes.com/2020/07/21/arts/music/livestreams-intimacy.html) (Jon Pareles, The New York Times) * Digitizing Burning Man (https://techcrunch.com/2020/08/12/digitizing-burning-man/) (Lucas Matney, TechCrunch)
On adjacent industries: * Sweatpants Forever: How the Fashion Industry Collapsed (https://www.nytimes.com/interactive/2020/08/06/magazine/fashion-sweatpants.html) (Irina Aleksander, The New York Times) * Inside The Gaming Collective That’s Drawing Big-Time Music Investors — And Star Players (https://www.billboard.com/amp/articles/deep-dive/gaming-musics-next-big-play/9423526/inside-the-gaming-collective-thats-drawing-bigtime-music-investors-and-star-players) (Dan Rys, Billboard)
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