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Insider February 3, 2022 — Inside a leaked Spotify meeting

Why CEO Daniel Ek pursued podcast exclusives

Hello, Insiders! Welcome to your Thursday edition, and hello to the new folks joining us here — thanks for doing so. Today, as much as I wish this wasn’t the case, we have to talk more about Spotify and its Joe Rogan happenings. But then Aria is making a special Thursday appearance to catch you up on the earnings news you need to know.

Spotify-palooza

We left off in Spotify’s ongoing Rogan debacle with the open question of what would come next. The company publicly issued its moderation guidelines on Sunday, along with a plan to roll out COVID-19 advisories on any podcast episode that discusses the virus. Since then, well, things have happened. Let’s catch up in bullet point form:

  • Brené Brown, who put her exclusive Spotify shows on pause “until further notice,” issued a lengthy note explaining her decision on Instagram. She says she’s in ongoing discussions with Spotify leadership to learn about their moderation policies and how they will be applied. No new episodes have been published yet.
  • Musicians David Crosby and Stephen Stills joined their pal Neil Young in wanting to pull their music off the platform. Crosby also wants “very badly” to speak with Taylor Swift. I wonder about what!
  • White House press secretary Jen Psaki issued a comment on the situation and said: “Our hope is that all major tech platforms — and all major news sources, for that matter — be responsible and be vigilant to ensure the American people have access to accurate information on something as significant as Covid-19,” adding, “and that certainly includes [Spotify].”
  • Today, Roxane Gay published an op-ed in The New York Times saying she’s pulling her podcast The Roxane Gay Agenda from the platform. “Joe Rogan and others like him can continue to proudly encourage misinformation and bigotry to vast audiences. They will be well rewarded for their efforts. The platforms sharing these rewards can continue to look the other way. But today at least, I won’t,” she writes. (For us podcast nerds, I did, of course, have to ctrl+F to see if she mentioned Luminary at all — a rare marketing opportunity — and she did not.)

Then, yesterday, on the corporate front, a couple major things happened. For one: Spotify announced its quarterly earnings. Revenue’s up, subscribers (180 million) are up, and monthly users (406 million) are up. Interestingly for us, Spotify says advertising now represents 15 percent of its revenue, and because of that, it’s going to start experimenting with windowing content rather than fully distributing it as an exclusive, says CEO Daniel Ek. Also in the call, Ek positioned the company as one hyper-focused on audio creators with the stated goal of reaching 50 million on the platform. Broadly, things are chugging along with Spotify’s podcast strategy, although investors did bring Rogan up a couple times and, in one case, asked whether any account cancellations were showing up in more recent numbers. (Ek said it’s too early to say.)

Which brings us to the second big thing that happened at the company yesterday — a major contrast to a tame call with investors. Executives, including Ek and Dawn Ostroff, chief content and advertising business officer, addressed employees in a town hall where Ek clarified why he doesn’t think of Spotify as a publisher and essentially told employees they’ll have to accept that Spotify licenses, distributes, and monetizes The Joe Rogan Experience. I published the entirety of Ek’s 15-minute speech here, along with additional quotes in answer to employees’ questions, of which there were many. I also get into the growing tension inside the company, with employees wondering how to square the work they do, particularly around diversity or science, with what Rogan and his guests say. 

There is a lot for us to chew on, frankly, and I’m going to save a longer column for Tuesday, but one of the soundbites that caught my attention was Ek’s explanation for why Spotify pursued exclusives in the first place. To quote myself:

“Despite Rogan’s show never being available on Spotify prior to its deal, the program was the most searched podcast on the platform, he says, and when the company decided to enter the podcasting industry, its catalog was ‘not that differentiated’ from competitors. It had been struggling to make deals with ‘critical hardware partners like Amazon, Google, and even Tesla,’ given that they were building ‘similar streaming services with essentially the same content.’ 

‘To combat this, we needed to find leverage, and one way we could do this was in the form of exclusives,’ he says. ‘To be frank, had we not made some of the choices we did, I am confident that our business wouldn’t be where it is today.’ He says the company now operates the number one podcast app in the US.”

It’s wild to hear this so plainly put, and I think it can help us all better understand the broader motivations behind the tech world’s push into podcasting. Yes, it’s about signing up users and inking content deals and ensuring a well-rounded app experience, but it also comes down to keeping competitors wanting more. In Spotify’s case, exclusives are a preventative measure against even bigger tech companies’ stranglehold on operating systems and hardware. You can see why Spotify speaks so loudly about Apple and antitrust, though Ek doesn’t mention the company by name.

On Tuesday, we’ll discuss Spotify’s mission, as defined by Ek, so your homework is to check that part of the story out now, so you’re well prepared!! Book club!!

Now, a bonus nugget for you Hot Pod Insiders that didn’t make the piece: Ostroff also addressed Science Vs’ note from earlier this week about dedicating its show to combating misinformation on Spotify and says she had “a very constructive discussion” with host Wendy Zukerman and will have another next week.

“We’re very happy for Wendy and Blythe to be able to make shows that represent different points of view. And we really encourage having different voices on the platform, so we’re getting together, and we’re meeting, but I think we’re already having great conversations, and we’re very encouraging of a different point of view as it relates to what Wendy and Blythe want to do.”

And now, I’m going to step away and let Aria take it from here:

$100M+ price tag for My Favorite Murder +

We’ve finally got the numbers. Amazon’s recent deal with My Favorite Murder and the rest of the Exactly Right Media podcasts cost over $100 million, according to Lucas Shaw at Bloomberg. Amazon gains the exclusive rights to sell ads for the shows, which will also go live one week early on Amazon Music and Wondery Plus before being playable elsewhere.

Earning for your love

I listened to all those gravel-y, recorded voices on companies’ earnings calls in order to highlight some numbers and also bring you some juicy quotes that you can only get by tuning in. From Apple, The New York Times Company, and SiriusXM, here’s what you need to know today.

First off, all three companies set records this year. The fourth quarter of 2021 was Apple’s biggest ever, yielding $123.9 billion in revenue. It was also the NYT’s “largest ever quarter for digital advertising,” and 2021 as a whole was its “second best year ever for net subscription additions.” And for SiriusXM, 2021 marked a record high for revenue, clocking in at $8.7 billion.

While Apple didn’t offer up any specifics about money and podcasts, NYT did. When asked how the company might cash in on audio (e.g., by way of The Daily, through the beta NYT Audio app), CEO and president Meredith Kopit Levien had this to say: “In any scenario, we’re optimistic that audio’s going to play a big and important role, either directly or indirectly, in our subscription business.”

Here’s what can be extrapolated from Kopit Levien’s vision. Considering that The Daily has not only pulled in considerable advertising revenue for the Times but done the work of, as she said, “directing attention to other podcasts,” even if The Daily itself never gets paywalled, it may soon be used to funnel people toward Times products that do get paywalled, podcasts or otherwise.

Now, regarding SiriusXM, get a load of this: ad revenue within the Pandora division (which includes Stitcher) increased from 2020 to 2021, even though Pandora listeners went down — like, by a lot. Last year, there were 6.6 million fewer monthly listeners than there were in 2020 (an 11 percent drop in listenership), but it doesn’t seem to have done much harm. That may be because Stitcher has been such a success, though. As the report states, “Stitcher and the company’s off-platform advertising businesses contributed $348 million of revenue, representing nearly 23 percent of [Pandora’s] total revenue.”

If you feel so inclined, you can dig deeper into the numbers in either the written statements (Apple, NYT, SiriusXM) or the recordings of the earnings calls (Apple, NYT). The calls in particular are always a time, but whoever publishes the recordings without transcripts or the ability to change playback speed, I don’t forgive you.

That’s it, folks! Aria will be here tomorrow, and I’m back Tuesday. Bye-bye!