A Critique of Spotify’s Podcast Strategy
Writing about the music streaming platform’s recent “exclusive” podcast deals with Amy Schumer and Joe Budden, Fast Company’s David Lidsky writes:
If these moves were as exclusive as the headlines typically purport, that really would be something: Schumer is one of the most popular comedians in the country, and Budden currently has three of the top five podcast episodes in the music section of Apple Podcasts. Securing their output would deal a blow to rivals such as Apple. If that were the case, I would be writing about how Spotify is going to destroy what’s good about podcasting by locking up stars and fracturing the freedom of choice listeners currently have.”
But here’s the thing: These deals are not as exclusive as reports often have made it seem. Lidsky was referring to Spotify allowing both podcasts to be distributed on other platforms despite the apparent “exclusivity” of the deal. You can easily find Schumer’s podcast on Apple Podcasts. Budden’s episodes will be released on YouTube two days after first being introduced on Spotify. And Dissect, the indie podcast brought into the fold earlier this year, drops new episodes into Apple Podcasts about a week or so after first debuting in Spotify.
So much for an “exclusives”-driven strategy, Lidsky argues.
Lidsky’s frustration with Spotify is fairly justified; all of this does seem pretty incoherent. I’ve been tracking Spotify’s various adventures with podcasting for some years now, first with its Mogul package during the Tom Calderone era and now whatever we’re seeing under the Courtney Holt era, and it seems that the core issue feels largely the same: what, exactly, is the goal of Spotify’s podcast strategy? And what is the mixture between its thinking around “podcast exclusives” and what are merely windowing campaigns? The two pathways perform different functions; the former being something that’s meant to draw more users into Spotify and the latter being something that’s meant to extend Spotify’s branding into other spaces. Furthermore, I’d argue that those concerns are secondary to a more primal problem that Spotify would need to solve: the company has to acquire better-than-the-outer-market programming, consistently and in general.
Anyway, let’s take a significantly larger view of this and think about Spotify’s potential position in the podcast (or whatever you want to call it) space. For what it’s worth, I’m thinking of two things:
- With its extensive history and relationships when it comes to managing rights issues, Spotify has the opportunity to capitalize on music podcasts — or, at least, utilize music within podcasts — in a way that very few podcast-native publishers have been able to do.
- Spotify has the opportunity to open up its narrative beyond just being a “music streaming” company, but something that extends towards all of audio.
I’m getting shades of Audible in this conversation.
Meanwhile, in Oakland…
We have yet to see what Pandora’s “Podcast Genome Project” or its broader podcast strategy turns out to be, but it’s nonetheless worth paying attention to their machinations given its CEO’s apparent bullishness on podcasting. As a reminder, here’s CEO Roger Lynch speaking to The Verge’s Casey Newton earlier this month:
“If you think about podcasts, even though listening is growing fast, we think that there are two big problems. One is discovery. Gee, that’s a core strength of Pandora. And the second is monetization. Gee, that’s a core strength of Pandora.
And here’s the development to watch: “Pandora introduces capabilities for shorter, more personalized ads.” (TechCrunch)
What’s the upside, anyway?
Which is to say: why would podcast publishers want to work with platforms like Spotify and Pandora anyway?
When it comes to Spotify’s “semi-exclusive” strategy, publishers respond well to the upfront money, which takes the risk out of having to rely on the more volatile doldrums of the advertising sales process in order to guarantee breaking even on costs. Plus, that upfront money feels further useful if the podcast is… a little too risque for some advertisers, at least in the outset.
When it comes to Pandora… and again, we don’t quite know what the shape of the product looks like yet, but I imagine the value perception may come down to how, say, you’d view foreign markets if you were a film studio. At the moment, it’s not your core business concern, but rather a separate investment vehicle that’ll get you money and eyeballs back according to their own logics.
This view is premised, of course, on the idea that the current way of doing podcast business holds.
Addendum: August 31, 2018
An interesting conversation ensued in my inbox after yesterday’s Insider went out, as a few readers wrote in to point out that the unlikelihood of Spotify’s actually having any advantage when it comes to rights, music podcasts, and music in podcasts given the fact that… well, music labels have a complicated and fraught relationship with the platform.
My original thinking was that, given Spotify’s on-going interactions with music labels in the first place, they’re in a more accessible position to enter conversations about music licensing than most other podcast publishers, which would often be starting from scratch and/or would not have robust systems in place to bake music licensing into their production processes. The counter-argument that emerged revolved around the idea that music labels, which view Spotify as a threat to their profits and relationship with music consumers, would likely seek to thwart (or be ambivalent towards) any attempt by Spotify to build further value for itself.
Which makes sense, and upon some reflection (and poking around), I think I buy into that. Then again, that theory is further complicated by the following factors:
- Spotify appears to building towards a future where they’re less reliant on or defined by their relationships with the big music labels… and that there will, over the long run, be a rising tier of musicians and artists that will opt to work directly with the platform instead. This Recode article has good context on that, and a good follow-up.
- It also appears to be increasingly successful in developing a better leverage in its dealings with record labels, and in doing so contributes to the solution of its core problem: cost-control. From the NYT Dealbook: “Spotify’s main cost is what it pays record companies for the music it streams to its customers. As Spotify has grown, that expense has fallen as a share of its total revenue, which shows that Spotify is negotiating increasingly advantageous deals with record companies.”
- Then again… there’s a good chunk of musicians who don’t like, or at least have mixed feelings about, what Spotify has done to the business in the first place. The Guardian has a list of good reads on this.
Lots to chew on here.