Skip to contents
Hot Pod Insider

Insider: February 6, 2020

- Follow-up to Spotify/Ringer - Notes on the new Sony Music investment story... and more!

Follow-up to Spotify/Ringer. ICYMI, Spotify is officially acquiring The Ringer, the podcast-centric operation founded by former ESPN personality Bill Simmons. Wrote a whole thing about the development in an extra newsletter sent out yesterday, which you can find here.

Laundry list of follow-ups:

(1) I had briefly characterized Spotify’s overall Q4 earnings as “largely good,” citing bumps in total MAUs, premium subscriber numbers, and total revenue, before quickly moving on to the analysis on the acquisition. “Largely good” was a hedge; within the broader financial market narrative, the company did miss analyst revenue projections and expects the possibility of some slowdown in premium subscriber growth in the next quarter. The effect of the earnings on Spotify’s stock price has been somewhat mixed, at least so far.

(2) Quick recap on the newsletter sent out yesterday. There are, to my mind, three prominent pieces to this specific story about a deal:

  • The strategic Sports angle, which feels like a vital component to the broader long game Spotify has for its push into podcasts;

  • The operational angle, anchored in oddity of the fact that Spotify now owns a digital media company that stretches across multiple platforms and is powered by a full creative staff that isn’t purely audio-oriented; and

  • The labor angle, propelled forward by the union effort and whatever interaction it will have with the Spotify powers that be in the days to come.

(3) However, beyond the specific deal story, there is a larger story about podcasting to be acknowledged, one that largely revolves around how Spotify’s vast spending on the category will affect the fate of independent and open podcast publishing, whether directly or indirectly.

There exists a general feeling, among some outside of Spotify, that such heavy spending happens within the context of a zero-sum game. Specifically, that every major podcast-related move (or structural gain) exhibited by Spotify is one that necessarily translates to a poorer picture for every podcaster operating outside the Spotify system or advocating for open podcasting.

Of course, Spotify presumably does not see things this way: whether it’s the Streaming Ad Insertion (SAI) play or its various talent acquisitions/signings, the company phrases things in terms of mutual gain — that all the things that Spotify is doing on the podcast front will, directly or indirectly, trickle down in value to everyone else in the ecosystem. Then again, Spotify would say that. And then again, it’s only natural that folks outside of Spotify would be wary of its tangibly aggressive overtures, for we have seen what a world of corporate consolidation tends to bring. (Generally speaking, nothing good.)

(4) Back to the deal, briefly. The Verge’s Ashley Carman has a useful new detail in her piece about the acquisition: “A source close to the company says The Ringer will finish out its existing ad selling deals, but then shows will be given the Spotify treatment, meaning its internal sales team will sell their ads.” Presumably, that means via SAI.

(5) Speaking of which, the SAI stuff is the big, big, big thing to watch, perhaps more so than any talent/show acquisition item, because it fundamentally contributes to a situation that could transform the underlying financial pipes of the podcast ecosystem.

Here’s Spotify CEO Daniel Ek in the earnings call, when asked about the economics of user listens on podcasts they own versus third-party pods:

We haven’t broken out what our share of listening is for our own original content versus not. But I think it’s fair to say that we’re just very early in the monetization of podcasts overall. And as it relates to third-party content, i.e., content that we’ve just licensed and put on the service, right now, all monetization is their own, and we’re not participating in that….

… as you look at the ad opportunity going into 2020, part of that is us experimenting with ad tools. And quite a few of them have the potential of, obviously, of being very powerful for third-party podcasters as well. So long term, we feel very, very excited about the opportunity. And we think we can bring a whole (other) game of monetization for podcasters and that, that will lead to just the overall growth of the podcasting industry.

(6) Two bits in the investor letter that strike me as interesting:

  • “During Q4, we also released 26 shows in markets outside of the US to capitalize on the growing global trend of consumption. These included, but were not limited to, Hypnosis Radio in Japan, Fausto in Mexico (which quickly became the #1 podcast in the country), an adaptation of Parcast title Cults for German audiences called SEKTEN & KULTE, and our first three original podcasts in India: 22 Yarns, Love Aaj Kal, and Bhaskar Bose.”

  • “After previewing with the US audience, we also expanded the Your Daily Drive concept to encompass users in Germany and Sweden in Q4.”

(7) One last thing: personally speaking, I’m mixed on the question of whether Spotify and the broader podcast ecosystem are locked in some zero-sum setting. But I’m less mixed on the fact that there’s been a really clear negative in the Spotify’s acquisition track record we’ve seen so far. It’s not lost on me — and many others — that all four companies that have been acquired by Spotify were all founded by… well, white dudes.

The distribution of podcast riches is kind of a funny thing to talk about, given the persistent claims of a podcast bubble (yes, I’ve received your messages) and how close we remain to a time when podcasting, to many, was the epitome of a digital backwater. But the subject is nonetheless a really important thing to appraise, because Spotify, as the largest conduit for podcast wealth distribution by far, is replicating a long-standing inequity in power, ownership, and wealth opportunity that we’ve long seen entrenched in other parts of the media industry, not to mention the economy more broadly.

It’s a big bag to unpack, and I hope to do so a little more in Tuesday’s letter.

Anyway, we’ve gone way too long in this Insider, but I wanted to quickly flag two other things:

Quick follow-up to the Sony Music story. The Billboard write-up of Sony Music’s global partnership with Somethin’ Else is being passed around a lot, and I’d just like to gently push back against the write-up’s move of contextualizing Sony Music’s various podcast effort as being somewhat on the same plane as rivals Universal Music Group and Warner Music Group. (“Similar moves” was the exact phrasing.)

For what it’s worth, I think Sony Music is much deeper into the territory, having spread its investments across a wider range of native-to-the-space podcast entrepreneurs, and more importantly, built out a relatively robust executive team — two of whom were Panoply alums — to power those efforts.

Speaking of Panoply…

Andy Bowers, Chief Innovation Officer at Megaphone (nee Panoply), is leaving the companyand the Graham Holdings family more broadly. (Twitter thread!) And an end of an era, truly.