Why podcasts won't save Spotify
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View this email in your browser (|ARCHIVE|) http://hotpodnews.com/presents.... The fine print of innovation in the music business. This is issue #91, published on July 31, 2020. It’s Friday!!
Some notes before moving on:
👉 We have not one, but two major pieces about Spotify’s podcast strategy this week — one from me, and another from guest contributor Kenny Ning.
👉 I’m piloting a new section below the main headline stories called “Quick takes,” where I give my thoughts on three of the most interesting moves happening in the music industry and why they matter. If people like this section, I’ll keep it in future issues!
As always, thanks for reading :)
- Cherie Why podcasts won’t save Spotify Spotify has spent $650 million (https://www.musicbusinessworldwide.com/spotify-to-pay-250m-for-the-ringer-bringing-its-total-podcast-acquisition-deals-to-650m-in-the-past-12-months/) acquiring podcast content and tech companies over the last year, including Gimlet Media, Anchor, Parcast and most recently The Ringer. In the past few months alone, the publicly-traded company has amped up its content spending spree even more, landing an exclusive licensing deal with Joe Rogan (https://www.wsj.com/articles/spotify-strikes-exclusive-podcast-deal-with-joe-rogan-11589913814) for over $100 million and additional deals with former First Lady Michelle Obama (https://www.theverge.com/2020/7/16/21326360/michelle-obama-podcast-spotify-release-date) and TikTok star Addison Rae (https://variety.com/2020/digital/news/addison-rae-podcast-spotify-exclusive-1234709818/) for who knows how much.
How has Wall Street responded? They (https://www.forbes.com/sites/aalsin/2020/05/22/we-think-spotify-should-be-a-500-stock-heres-why/#387a5587b8f7) are (https://www.yahoo.com/news/why-spotify-technology-spot-stock-144210130.html) loving (https://www.fool.com/investing/2020/06/28/is-spotify-stock-a-buy.aspx) it (https://www.cnbc.com/2020/06/22/jim-cramer-spotify-story-is-starting-to-look-a-lot-like-netflix.html) .
Narratives in support of Spotify’s bold podcast gambits generally consist of three kinds of arguments: * The revenue argument: Spotify will control (https://stratechery.com/2019/spotifys-podcast-aggregation-play/) the market for podcast ad spending, which is projected (https://www.emarketer.com/content/podcast-advertising-revenue-will-surpass-1-billion-by-2021) to surpass $1 billion in the U.S. by next year. * The user argument: High profile podcasters like Joe Rogan will attract new subscribers (https://www.billboard.com/articles/business/9420215/spotify-licensing-deal-joe-rogan-benefits-will-it-pay-off) . * The cost argument: Unlike music costs which are proportional to company revenue, original podcasts are paid for in one lump sum, which would allow Spotify to keep its cost of content down.
Improve revenue, bring in more subscribers and reduce content costs? If you take these assumptions at face value, podcasts really do sound like a silver bullet. However, upon closer inspection of each of these assumptions, they start to look dicier. [Read more. (https://www.patreon.com/posts/why-podcasts-39805220) ] Does Spotify want to be more like Netflix or like YouTube? Spotify’s latest earnings call (https://investors.spotify.com/financials/press-release-details/2020/Spotify-Technology-S.A.-Announces-Financial-Results-for-Second-Quarter-2020/default.aspx) revealed a crucial bifurcation in its podcast strategy that will likely be unsustainable.
On the one hand, Spotify’s podcast catalog as a whole is larger than ever: There are now 1.5 million shows on the platform, 50% of which launched in 2020. Three-quarters of these new releases are powered by Anchor (https://anchor.fm/) , a podcast hosting, distribution and monetization platform that Spotify owns (https://techcrunch.com/2019/02/14/spotify-gimlet-anchor-340-million/) .
On the other hand, Spotify is also investing $650 million and counting in original content and exclusive licensing deals with some of the world’s best-known personalities. Countless critics (https://www.theverge.com/21265005/spotify-joe-rogan-experience-podcast-deal-apple-gimlet-media-ringer) and analysts (https://divinations.substack.com/p/the-open-podcast-ecosystem-is-dying) have decried the inevitable downfall of the open podcast ecosystem that these deals foreshadow.
With this backdrop, Spotify is at an inflection point where it has to make a critical decision about its future: Does it want to be more like Netflix — closed, paid platform, extensive slate of IP with a strong point of view, high content moderation — or more like YouTube — open, free platform, little to no IP and low content moderation? Trying to be both at the same time is expensive, and has never been pulled off successfully before. [Read more. (https://www.patreon.com/posts/39805197) ] Small music venues embrace diversified strategies for survival In the wake of the COVID-19 pandemic, live performance will lose an estimated $5 billion (https://www.forbes.com/sites/markbeech/2020/03/05/bts-green-day-cancellations-highlight-5-billion-coronavirus-threat-to-music/#47bfe02a20cb) to $9 billion (https://www.latimes.com/entertainment-arts/music/story/2020-04-06/concert-industry-lose-9-billion-coronavirus) in revenue, shrinking in the United States against previous revenue estimates (https://www.prosoundnetwork.com/live/concert-industry-continues-growth-in-2020) . When venues do return, there will be built-in capacity limitations (https://blooloop.com/capacity-management-attractions-post-covid-19/) , based on each state’s respective reopening policies (https://www.wksu.org/post/shuffle-pandemic-creates-uncertainty-music-venues-first-close-last-reopen#stream/0) as well as a loose set of federal guidelines (https://www.whitehouse.gov/wp-content/uploads/2020/04/Guidelines-for-Opening-Up-America-Again.pdf) .
Organizations like the National Independent Venue Association (NIVA) (https://www.nivassoc.org/) have emerged as tremendous advocates for live event venues. They feel mostly aimed at solving the sectors’ issues top-down (i.e. initially from the standpoint of 1,000- to 5,000-cap sites or larger). Yet due to lower overhead costs, many smaller venues will likely be able to open profitably at limited capacity earlier than their larger counterparts. Thus, it’s arguably ideal to think about successfully solving for the former group first and foremost.
Two small, 200- to 500-cap venues — Washington, D.C.’s Songbyrd Music House and Record Cafe (https://www.songbyrddc.com/) and Asheville, N.C.’s Grey Eagle Music Hall and Taqueria (http://www.thegreyeagle.com/) — are soldiering into this unpredictable era, aiming for a balance of nimble experimentation and long-term sustainability. While they don’t yet offer fully-tested solutions, they are developing what could emerge as a relatively clearer roadmap for the survival of small venues and the live music industry at large.
In particular, these venues are turning into truly multipurpose spaces — blending in-person, socially-distanced live performances with other goods for sale (typically food and drink) while incorporating a highly-produced live streaming component — in the hopes of eventually returning to pre-COVID levels of revenue. [Read more. (https://www.patreon.com/posts/39804919) ] Quick takes 📰 Roblox has a new Global Head of Music (https://musically.com/2020/07/23/roblox-head-of-music-tells-labels-and-artists-were-open-for-business/) (Jon Vlassopulos), and a landmark licensing deal (https://twitter.com/Monstercat/status/1288159490701791232) with indie label Monstercat. * The deal gives third-party Roblox developers (https://developer.roblox.com/en-us/) access to more than 50 tracks from Monstercat’s catalog to include legally in their own games. * It’s exciting to see the rise of blanket licensing deals that not only drive music consumption, but also facilitate genuine, decentralized creation of new experiences around music altogether. While indie labels are paving the way with these deals, we should expect major labels to follow suit quickly, although those conversations will likely take much longer. * The news also parallels how electronic artists like Marshmello are expanding into entertainment for kids (https://www.rollingstone.com/pro/features/moe-shalizi-marshmello-music-business-profile-1025357/) .
The Weeknd is partnering with virtual concert startup Wave (wavexr.com/) to perform a virtual tour on TikTok (https://go.wave.watch/thank-you-weeknd) , with a focus on Asia. * How does that work, exactly? Between August 7 and 10, The Weeknd will be livestreaming various performances featuring his own digital avatar across multiple regional accounts on TikTok, including @tiktok.africa and @tiktokmena_live on August 8; @tiktok_malaysia, @tiktokSG and @tiktok_russia on August 9; and @tiktok_JAPAN on August 10. * The Weeknd’s decision to perform on regional rather than global TikTok accounts will help him strategically maintain a sense of “locality” online, while allowing him to tap sustainably and at scale into overseas markets like Asia, where he last toured in person two years ago (https://en.wikipedia.org/wiki/The_Weeknd_Asia_Tour) . * This makes the artist the latest in a growing slate of acts like LION BABE, Zach Heckendorf and Miro Shot who are staging their own virtual livestreaming tours (https://www.patreon.com/posts/38849362) with multiple “stops,” in lieu of in-person events.
Artists are [re]releasing their music in unusual ways to keep fans engaged during a pandemic. * Process as product: Taylor Swift made the original voice memo (https://twitter.com/aaron_dessner/status/1288218664496508928) of her song “Cardigan” available only on her website and on iTunes — no streaming — for just three days this week (July 28 to July 30). * Re-releases as playlists: Lauv and AWAL re-packaged many of the artist’s older songs into EPs whose title and artwork resemble playlists, including ~WORK OUT W LAUV~ (https://open.spotify.com/album/6QiY6eVn30vO2ofQsazN7g?si=MK2kyuc3QoOv32McLyfm7w) , ~PARTY VIBES~ (https://open.spotify.com/album/1LhNtkKA4CYbgYmA8qc3yI?si=ey3Abb9GRay-IJCNzAUA9A) , ~DRIVING VIBES~ (https://open.spotify.com/album/2Eg1G6WhWzqlfcuWzvDYAw?si=qf4HGa-fTN-vNkIBVncd6A) , ~NIGHT VIBES~ (https://open.spotify.com/album/2iSOueNp9vDsHqzIDdilUO?si=_e5-SPm_QtWlCYyY2E_nfg) and more. With the right market research, taking ownership over communicating the functional contexts of one’s own music in this way is a smart move. * Self-remixing: Troye Sivan released an official “slowed n reverb” version of his single “easy,” (https://www.youtube.com/watch?v=ZppaPF10I3Y) which is just like it sounds — slowed down, with a ton of reverb. He’s co-opting a decentralized remix trend that has taken off online without artists’ involvement: There are entire YouTube channels (https://pitchfork.com/thepitch/how-slowed-reverb-remixes-became-the-melancholy-heart-of-music-youtube/) , run entirely by fans, that are dedicated just to uploading “slowed + reverb” versions of popular songs, making their original source material both smoother and trippier in the process. This is a prime example of recognizing and serving existing fan behavior without necessarily diluting the integrity of the original work.
Good reads from the web 📖 On enduring racism and sexism in the music industry: * Amid a Racial Justice Reckoning, Pioneers of Rap, Reggae, and R&B Recount Their Struggles to Get Paid (https://pitchfork.com/thepitch/amid-a-racial-justice-reckoning-pioneers-of-rap-reggae-and-randb-recount-their-struggles-to-get-paid/?curator=MusicREDEF) (Marc Hogan / Pitchfork) * Rosie: Investigating a Crime at the Heart of the Music Industry (https://switchedonpop.com/episodes/rosie) (Switched On Pop) * Now & Then: Toxic Masculinity in Music Culture and DIY Spaces (https://sheshreds.com/now-then-toxic-masculinity-music-culture-diy-spaces/) (Cynthia Schemmer / She Shreds)
On technology’s role in artist development and brand-building: * TikTok Is Music’s Latest Gold Rush. But It Won’t Be Enough for Artists (https://www.rollingstone.com/pro/features/tiktok-gold-rush-music-dangers-1029729/) (Max Gredinger / Rolling Stone) * COLORS, DSCVR, and NPR: The Growth Power of YouTube Sessions for Artist Careers (https://blog.chartmetric.com/colors-dscvr-npr-youtube-sessions-artist-careers/) (Michelle Yuen / Chartmetric) * Game On: What Travis Scott is Teaching Music Stars About the World’s Biggest New (Virtual) Stage (https://www.billboard.com/articles/business/9422287/travis-scott-fortnite-billboard-cover-story-interview-2020) (Tatiana Cirisano / Billboard) * How Advertising Builds Artist Brands (https://medium.com/@justinwdemarco/how-advertising-builds-artist-brands-9f825b2f0ed7) (Justin de Marco)
On the business of TV and film: * The Rise of the Netflix Hit (https://www.vulture.com/2020/07/the-rise-of-the-netflix-hit.html?utm_source=pocket-newtab) (Bilge Ebiri / Vulture) * R.I.P. Cable TV: Why Hollywood Is Slowly Killing Its Biggest Moneymaker (https://variety.com/2020/tv/news/cable-tv-decline-streaming-cord-cutting-1234710007/) (Michael Schneider & Kate Aurthur / Variety)
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…and much more! Thanks so much for reading! ❤️
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