Spotify, Music, and Podcasting: The Meteor is Coming
In sports, after a big trade or acquisition, sportswriters are fond of writing “winners and losers” columns, where they give their assessments of how the teams involved fared. I eat those up. Today, our increasingly growing little world of Podcasting has its own big acquisition to announce: Spotify’s purchase of both Gimlet and Anchor for hundreds of millions of dollars.
I’m not going to write about any of the “losers” here. Not my style. But there are winners aplenty. Certainly, the companies involved. The whole industry may now see increased investment, which will lead to increased reach, better tech, and better content.
But there is an eventual domino to fall here that could lead to the biggest winner of all: music listeners. Walk with me for a moment.
First, why is Spotify doubling down on podcasts? There is an overt reason and slightly less overt reason. The overt reason: you can’t become the #1 audio platform in the world (their stated goal) if you don’t feature the nearly 25% of consumed audio that is spoken word programming, at least here in the USA that is the portion seen in Edison’s Share of Ear® research. So to attract and retain audio’s best customers, Spotify needs to represent all of the interest in audio. That one’s simple.
The slightly less-simple reason: In its current form, Spotify’s best customers are not necessarily the ones who use the platform most. Every song that is played for every listener, Spotify has to cut royalty checks to pay the performer, composer, and other rights holders. The longer a Premium listener stays on the platform, the more of those checks get cut, and the more music-per-dollar value the Spotify Premium listener gets from the platform. If you are Spotify, the answer is NOT, “please listen less…” Instead, it’s to introduce content they actually own, like, say, podcasts. If the Spotify listener converts from 100% music to even 90% music, 10% podcasts, that’s a 10% decrease in checks cut to other entities on behalf of that listener.
Let’s continue walking. Imagine, if you will, that spoken word’s Share of Ear continues to approach or even surpasses 25%. And imagine that Spotify (and let’s NOT forget about Pandora and other services) manages to migrate the listening patterns of their users to 75% music, 25% spoken word. Now, imagine you are running a label or other music publishing entity (or that you are Justin Bieber or Rihanna. I know, I’m asking a lot of your imagination).
Are you ready to take a 25% pay cut? That would be pretty devastating. Even a 10% cut will change things.
Evolution, according to the late Stephen Jay Gould, is not a gradual process. There’s no slowly boiling frog. Instead, it’s a process called Punctuated Equilibrium. A freak flood races across a plain, and all of a sudden those 5% of cockroaches that happen to be able to breathe water survive and become lobsters. OK, it’s been a while since I had that class at Tufts. Work with me. The point is that a sharp change, like the amount of revenue the labels are collecting from the big streaming players, will force some evolution.
And here is the evolution it will force. Today, as I am fond of saying, if you use licensed music in your podcast, a lawyer will shoot you in the face. A raft of draconian licensing restrictions treats a podcaster who plays music as if they were selling a CD. So the only way you can play music on a podcast, besides playing unlicensed, “podsafe” music, is to either feature music you actually own the rights to (my beloved Anjunadeep Edition, for example, plays a lot of music from the Anjuna labels) or you can be like Bill Simmons and cut your own deal with Pearl Jam.
Here’s what I can tell you–the labels are interested in podcasting. First, because they see it as a threat. But soon, hopefully now, an opportunity. If there were a simplified, not-draconian licensing scheme that allows podcasters to feature licensed music without needless bureaucracy or crushing royalties, we’d get a lot more music-oriented podcasts.
And guess what? We still listen to more music than spoken word, and we always will. That’s in our DNA. If podcasts can fully integrate licensed music, we will consume a TON more podcasts. Royalties will flow back to the labels and the artists, audiences will be happier and larger, and the concept of podcasting as an overwhelmingly spoken word platform will die in a fortnight, or maybe even faster than I die in Fortnite.
We are still walking. My last thought exercise: what will those music podcasts sound like? They’ll be tightly-curated. They will have defined points of view. They will have likable, knowledgeable hosts who guide you through their selections and expand your horizons or just give you an hour of great prog rock to fix your car by. There won’t be many commercials. A few. Some of them host-read. They’ll be skippable, so they’ll have to get better.
It’s going to sound fantastic. It’s going to sound like FM radio did in the ’70s. We are going to know the names of DJs again. We will listen to more audio than ever.
Now, as our journey here comes to an end, think about where that audio is going to come from. And think about where it is not going to come from. Or where it still could come from.
And that’s evolution–it’s not a nice easy glide path to change. It’s a meteor. The meteor is coming.