Issue 219,  published July 23, 2019

Apple Music and Exclusive Podcasts: a primer

The podcast industry is buzzing in the midst of a Bloomberg report stating that Apple is in preliminary talks to finance original, exclusive podcasts for its platform. To better understand how Apple thinks about exclusive content and how this effort might maybe play out within podcasting, however, it’s worth examining the company’s current position in the music-streaming sector, whose dependence on exclusives has actually declined over time.

Ever since Apple Music launched in June 2015, the service has attempted to differentiate itself from competitors like Spotify and Amazon Music by signing an unparalleled collection of exclusive windowing deals with the likes of Drake (“Hotline Bling”), Frank Ocean (Blonde) and Chance the Rapper (Coloring Book). This was in part a financial necessity for Apple, since it did not, and still does not, have a free tier to lure in users — only a three-month free trial before charging $9.99/month for an individual subscription.

But since 2015, artists and record labels at large have mostly turned away from exclusive releases. That’s because under the dominant music-streaming model — which pays rights holders an average of around $0.005 per stream — an artist needs an enormous amount of reach in order to generate enough streaming income to recoup on the expenses of making a single or album. Exclusive contracts might offer the six- to seven-figure upfront advances required to recoup on said expenses, but they arguably still put artists at a disadvantage by minimizing the reach of their work, and therefore the amount of consumption that can be directly monetized.

It might be a different story for those with more regional appeal looking to expand their international footprint who could be comfortable making that trade-off; for instance, Apple Music struck a week-long, exclusive windowing agreement at the beginning of July 2019 for French rap duo PNL’s upcoming catalog. But for stars looking to play as global and comprehensive of a game as possible, an exclusive even with a big-tech behemoth just isn’t going to cut it. While Apple Music did recently surpass 60 million global paying subscribers, Spotify still has 40 million more global paying subscribers and counting, and there are a total of over 255 million music subscribers globally, according to the IFPI. It’s no coincidence that many celebrities previously considered darlings of the exclusives world, like Beyoncé and Taylor Swift, have since abandoned the strategy in favor of ubiquity.

Facing this mounting pressure, Beats 1 — the radio station named after the pair of companies Apple acquired for $3 billion in 2014, and arguably Apple’s most valuable owned-and-operated curation brand — has now become the least exclusive content venture at the tech company. Even with coveted, artist-curated stations from the likes of Drake, Frank Ocean and Nicki Minaj in tow, it’s free of charge for anyone to stream, 24/7. Beats 1 DJ Ebro Darden has promised to make the station more discoverable in 2019, a mission that has manifested in full force on the brand’s free YouTube channel.

Interestingly, Apple Music’s slate of exclusive video content has far outnumbered the service’s album-windowing deals to date, with a much more diversified set of both short- and long-form films. Recent additions from the past few years include exclusive concert films from Sam Smith and Christine and the Queens, album documentaries from Ed Sheeran and Kesha and docu-series about Wiz Khalifa and Apple Music’s Up Next program for emerging artists.

This type of content is arguably meant more for retaining superfans than for attracting prospective consumers who are on the brink of converting away from a competitor. (Ed. note: This analysis, by the way, would fall in line with the “Apple Music is for more serious fans vs. Spotify is for the more passive fan” strategic paradigm laid out by Slate’s David Turner in a piece last July.) From the artist’s perspective, this actually gives them more leverage in their content deals — and puts a fundamentally different twist on the cliché debate about whether “content” or “platform” is king. The answer in music is increasingly a combination of the two: custom content across multiple platforms at once.

For instance, while burgeoning pop star Billie Eilish did nail an exclusive music-video and merch partnership deal with Apple Music, she also had exclusive campaigns with Spotify, Amazon Music and YouTube Music for the same album, each of which dove into a different aspect of her creative process and output. And in terms of video content, SVOD services like Netflix may actually become even better multimedia partners than Apple Music, with respect to giving artists the creative wiggle room they need to tell interesting stories. Consider how Beyoncé and Thom Yorke both chose Netflix, not Apple Music, to host exclusive longer-form video content alongside high-profile, ubiquitous album releases (the concert documentary Homecoming and the conceptual short film ANIMA, respectively).

This strategy ensures that consumer choice is still preserved, while delighting fans with content that seems made for their preferred consumption habits, and maintaining a healthy sense of competition among different services. The case studies around Beyoncé and Eilish in particular prove that, at least for music, the game has fundamentally changed: in a world where music is culturally and financially mandated to be everywhere, streaming platforms are no longer bidding for content, but rather for credit. And you can’t meaningfully take credit for someone’s growth if your business model requires you to restrict it.