So, as you may or may not know, I help publish Water+Music, Cherie Hu’s fantastic newsletter on innovation in the music business, and I had Cherie join me on-stage during last week’s Hot Pod Summit — yes, it’s a second name-check, sorry – to co-moderate a session on Sony Music’s recent excursions into podcasting, which now includes a joint venture with ThreeUncannyFour and investments in Neon Hum Media, along with the UK’s Broccoli Content and Somethin’ Else.
From that conversation, she produced this great column, where she gives considerable meat to the argument that Sony Music’s increasing involvement in podcasting is a direct, and in many ways competitive, response to Spotify.
Here’s an excerpt:
Spotify now has a stake in almost every source of value in the podcast industry: content (production companies), distribution (streaming platforms) and monetization (ad technology and marketplaces). This verticalization likely gives Spotify more leverage in licensing negotiations with Sony Music and other major record labels.
But I think Sony is essentially betting that it can erode that position of power by diversifying its own content and intellectual property into the kinds of verticals that Spotify might need most, especially beyond music.
“We’ve got certain things up our sleeves that would touch different verticals for our partners, which is a slight shift” from how the label side of Sony Music traditionally engaged with streaming services, said Mirabal. In other words, future Sony Music-backed podcast projects could live, say, within the sports or comedy verticals on Spotify, instead of being delegated by default to music.
Mirabal also insisted that Spotify is “a very important partner of ours,” rather than a competitor. But as of now, Sony Music isn’t making any podcast-specific revenue directly from Spotify (yet); rather, it’s pulling in revenue from traditional ad deals off-platform, as most other podcasts in the world do today. This is a stark contrast to music, in which Sony is likely making between 10% and 15% of its recorded-music revenue from its direct licensing deal with Spotify alone (assuming directionally similar finances to those of its major-label rivals).
Hence, I don’t think it’s unfounded to assume that Sony Music and Spotify are competing directly — for listening time, for ad dollars and especially for talent.