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Insider: October 29, 2020

Spotify Earnings The Alex Jones Appearance Audible's third-party pod distribution goes live... and more!

Spotify’s Earnings and the Alex Jones appearance. The Swedish audio streaming service reported quarterly earnings this morning, but of course, the big story about the company this week is all about Joe Rogan.

Let’s go over the big picture stuff on the earnings report first. Here’s the big picture from the Wall Street Journal:

Spotify Technology SA moved past a slump that hit early in the pandemic, as customers collectively spent more time listening to the service than before Covid-19 shutdowns.

The music-streaming company added more users than expected in the most recent quarter and said consumption habits have normalized, with in-car listening hours — which had fallen with time spent commuting — exceeding their prepandemic peak. Listening on home devices, which exploded during lockdowns, also remained high.

Meanwhile, the company beat its new subscriber estimates and continues to lead rivals in terms of paid subscribers, at least based on publicly available numbers, but missed on its revenue estimates, though, as CNN notes:

Spotify reported that its advertising revenue has rebounded, which it partly attributed to podcasts, and consumption hours in the third quarter surpassed pre-pandemic levels.

While Spotify makes the vast majority of revenue from paid subscribers, ad-supported revenue grew 9% in the third quarter of 2020 compared to the year prior.

It’s worth isolating a few of the key podcast-specific data points from the earnings report itself.

Firstly, it notes that “as of Q3, we had 1.9 million podcasts on the platform (up from more than 1.5 million podcasts in Q2).” One should probably note that some considerable portion of this number likely refers to Anchor-generated shows.

Secondly, the report further stated that “22% of our Total MAUs engaged with podcast content in Q3 (up from 21% of MAUs in Q2 2020).”

Thirdly, the chunk on The Joe Rogan Experience itself is also worth highlighting:

In September, The Joe Rogan Experience arrived on platform with video capability and became the #1 show in all of our English-speaking markets while outperforming our audience expectations. We look forward to the start of our exclusivity period for this podcast by the end of this year.

Note the exclusivity bit. That, in many ways, is the defining portion of the value that the Rogan deal is supposed to bring to the platform.

Alright, with all that laid out, let’s go over the new-old Rogan controversy. On Tuesday, The Joe Rogan Experience — for which Spotify is reportedly paying over $100 million in a licensing deal — published a three hour-long episode with Alex Jones, the notorious conspiracy theorist whose various shows were pulled from the platform two summers ago for violation of its Hateful Content policy.

Appearing with comedian/podcaster Tim Dillon on the episode, Jones did all the things you’d expect from the face of Infowars. From The Verge:

Jones, who previously claimed that Sandy Hook was a hoax, also said that “a lot of studies show” that masks won’t protect people in large groups from getting COVID. (The CDC recommends people wear a mask “anywhere they will be around other people.”)

At another point, Jones exaggerates an incident in which an oral vaccine caused polio in recipients. Jones says the vaccine caused 100 percent of recipients to get sick after taking it, before Rogan pulls up an AP article that details the cases of two children who were paralyzed after receiving the vaccine. Dillon and Jones also claim that the Democrats are intentionally trying to keep the US economy down in order to get Trump out of office.

It should be noted that Rogan did attempt to fact-check the often stream-of-consciousness Jones throughout the episode, pushing on certain claims for sources and pulling up here and there. I should say: that attempt at fact-checking complicates the narrative about this particular episode, since Rogan’s team can (I think justifiably) argue that this isn’t simply a situation where he gave Jones free reign to spout misinformation, even if he did inarguably give a platform to the previously de-platformed Jones. And it’s also worth noting that Rogan does see himself as a person who is held up to some form of factual standards: he had previously apologized for repeating a debunked conspiracy theory claim that “left-wing people” have been arrested for intentionally causing wildfires in Oregon, just last month.

The Alex Jones appearance drew a torrent of criticism towards Rogan and Spotify. Throughout yesterday, the company did not publicly respond to the controversy, but BuzzFeed got its hands on leaked emails that featured the company’s chief legal officer and head of global affairs, Horacio Gutierrez, internally defending the show. From the BuzzFeed report:

“If a team member has concerns about any piece of content on our platform, you should encourage them to report it to Trust & Safety because they are the experts on our team charged with reviewing content,” Gutierrez wrote in an email obtained by BuzzFeed News. “However, it’s important that they aren’t simply flagging a piece of content just because of something they’ve read online. It’s all too common that things are taken out of context.”

The email also contained talking points for the company’s management to adopt if they had to publicly comment on the situation. Those talking points included: “We are not going to ban specific individuals from being guests on other people’s shows, as the episode/show complies with our content policies.”

We saw that talking point deployed in the earnings call this morning, when Spotify CEO Daniel Ek was asked to respond to the controversy. Here’s that response, pulling from CNN reporter Kerri Flynn’s transcription of the text:

We obviously review all the content that goes up. It doesn’t matter if you’re Joe Rogan or anyone else. We do apply those policies, but it’s important to note that this needs to be evenly applied, no matter if it’s an internal pressure or an external pressure as well, because otherwise we are a creative platform for lots of creators, and it’s important that they know what to expect from our platform. If we can’t do that, then there are other choices for creators to go to so that consistency is super important.

Lots to chew on here, and I’ll probably revisit this on Tuesday. But two quick thoughts before moving on:

(1) In case it isn’t crystal clear, Spotify should be thrust into the deep end of the overwrought Platform vs. Publisher debate, together with the big guys like YouTube and Facebook. Except, in my mind, this is clearly a situation in which Spotify is Rogan’s publisher: they paid money for this content. For what it’s worth, I think I’m more willing than most to entertain free speech arguments, but on the specific note whether Spotify is responsible for the ramifications and consequences of Rogan’s speech and content, it’s clear cut to me: Spotify owns it.

(2) With respect to the general chatter about whether Spotify is more a Netflix or a YouTube of audio, I also think it’s extremely clear: the company is a YouTube, and it should prepare for a future of YouTube’s problems.Audible’s podcast distribution goes live. As of yesterday, Amazon’s monster audiobooks service has officially added third-party podcasts to its platform. The service’s plans to do so were previously reported, and I talked through the context and possibilities of that feature addition in a column last month.

The official corporate word notes that some 100,000 shows were added to the platform, including biggies like This American Life, FiveThirtyEight Politics, and Pod Save America. A common move in some of the press coverage was to hold that number up against what’s available on Spotify and Apple Podcasts, which are each said to distribute more than a million third-party podcasts at this point. For what it’s worth, though, I don’t personally think the exact number of distributed third-party podcasts matters all that much as a concept metric; what matters more, instead, is the way in which any of these platforms are plugged into the open podcast publishing construct.

As a reminder, Audible practices an opt-in system for including third-party podcasts into its platform, not mimicking the pure third-party podcast app population convention of pulling from Apple Podcast’s directory. (Which makes sense, and which is also to say, do keep in mind of the terms and conditions if you choose to submit your shows to the platform.)

And keep in mind the bigger strategic picture for Audible: the distribution of these third-party pods adds to Audible’s existing lanes of audiobooks and original audio content programming that are already available on the service. In case it’s not entirely clear, the gambit seems to be a situation in which Audible is using third-party podcast distribution as a value add to the service, or at least as a way to keep users on the platform longer than they otherwise would, especially if those users like toggling between audiobook and podcast consumption. And given the fact that the audiobooks giant has advertised on a ton of podcasts in the past, one imagines that there are a lot of Audible users who also like, or would like, pods.

Anyway, I think my opinion on Audible and third-party podcast distribution hasn’t changed very much since I wrote about it last month. In contrast with the service’s growing original audio programming investments — which I like, because it puts money directly into producer’s pockets — I’m more skeptical about the long-term dynamics:

To begin with, the theoretical upside is potential “access” to the audiobook’s vast consumer base, but the problem with that is the platform context: consumers pull Audible to listen to audiobook and audiobook-like products, and not really anything else. And even if you do see it as a “why not?” proposition, there’s the general risk of long-term encroachment: sure, Audible might not do anything to the ads on your RSS feed right now, but there’s always the possibility that might change in the future. Again, consider the big picture trade-off: does the theoretical short-term upside for you outweigh the long-term downside of feeding the beast for everyone else?

One possible counter-argument to my own argument here that’s been bouncing around the back of my head: growing some portion of one’s podcast listenership on Audible could further reduce one’s dependency on Spotify and Apple Podcasts, which could be a nice check against being overly exposed to the whims of those two dominant platforms in the future.

One last thing before we move on, and this is just me being grumpy: contrary to the articulation in Variety’s lede on this story, distributing third-party podcasts that you don’t have direct monetary relationships does not make you a podcast network.This is interesting.From Protocol:

Netflix is testing a new audio-only mode with a subset of its Android users, according to code snippets found in the latest version of its Android app. The feature allows users to stream just the audio track of a show or movie in the background. This would effectively allow for a listening experience that’s similar to podcasts or audiobooks, while also cutting down on data consumption.

You know what’s crazy? This totally fits my personal consumption behavior. It’s a very common move for me, personally, to leave a TV show running in the background while I’m writing. I’m going to guess that there are enough people out there with this habit that substantiates this experiment… otherwise, I just feel hyper-targeted by Netflix’s innovation team over there.

Speaking of Netflix and video streaming services, there’s a tiny update to reports from last fall about HBO Max planning to add podcasts to its platform. From an interview with HBO Max chief Andy Forssell in Decider:

HBO and HBO Max has invested in companion podcasts, but you haven’t put them into HBO Max’s mobile app. Is that something you’re thinking about?

It is. HBO has been doing podcasts for a couple of years, and the Chernobyl podcast in particular was fantastic. I don’t have a date to announce, but that will be a part of the mobile app.

Kind of a no-brainer to add companion podcasts to a service like this, particularly if you’re looking for some mobile traction with the app. The notion of adding podcasts in general, however… not so much.One last thing.From Axios:

The Lincoln Project is looking to beef up its media business after the election, sources tell Axios… The group is in talks with the United Talent Agency (UTA) to help build out Lincoln Media and is weighing offers from different television studios, podcast networks and book publishers.

The interesting thing to watch here is the way in which Crooked Media gets evoked around political content-related developments like this.

The paradigm that the historian Nicole Hemmer laid out in my column about politician podcasts earlier this week — the one contrasting a politics of intimacy versus a politics of entertainment as a way to think about the potential efficacy of these political media businesses — is going to be a defining one, I think.