The majority of the conversation related to the latest round of Joe Rogan controversy has been centered, rightly, on the audio streamer’s ethical role in the gatekeeping and moderation of content hosted on its platform.
However, this situation has also starkly underlined elements of its business model that were intended to be forward thinking, but may end up being its Achilles’ heel.
During the height of the 2019 “audio gold rush,” Joe Pompeo writes for Vanity Fair, “Spotify mined its riches with a push into podcasting.”
Pompeo notes that the company’s $100 million acquisition of The Joe Rogan Experience in 2020 was one of several “mega deals” that the largest music streaming service inked as part of a plan “to attract new customers while showing Wall Street a path forward that didn’t involve siphoning roughly 70% of Spotify’s revenues back to the music industry.”
Other notables from Spotify’s podcast acquisition phase, the Obamas and Megan and Harry, did not come with existing content libraries and a track record of prolific audio offerings. They came with high profiles, good intentions, and lots of hypothetical fans.
The company’s reported $25 million investment in the erstwhile Sussexes’ Archewell has resulted in one audio special. The money pledged to the Obamas’ Higher Ground Productions is expected to be in the same neighborhood, and has added a few somewhat buzzy titles to Spotify’s RSS feed, but none that match their hype.
And then there’s JRE. Love him, hate him, trust him, revile him, people download Joe Rogan’s podcasts. Or stream them (since the video component is crucial to many listeners/viewers). At 11 million downloads per episode, Rogan’s reach is expansive, and, Spotify hopes, worth the expense in a way that its other star acquisitions have not yet been.
READ MORE: “Spotify Needs Him Way More Than He Needs Spotify”: Joe Rogan Drama Exposes the Drift of Audio Giant’s Other Mega Deals (Vanity Fair)
After all, as New York Magazine’s Kevin T. Duggan notes, “Clout and controversy tend to bring money, and I don’t think Spotify came into its $100 million deal to license the show exclusively with its eyes closed.”
And perhaps more significantly for the long game, Duggan writes, “Spotify’s gamble here is that its users aren’t going to care — and as for the people who do care and quit, it probably won’t miss them all that much.”
But even if principled Spotify users decide to stick it to the man, their ethical options are limited in 2022.
Duggan explains: “And ultimately, if anyone heeds the call to #DeleteSpotify, what are their options? There’s Apple, the largest company in the world by value— not exactly an inspiring choice for anyone trying to show their activist bona fides, given its questionable history on human rights in China. Tidal, the streaming upstart that had Jay-Z’s imprimatur, was recently bought by Jack Dorsey’s payments company. Other platforms like Bandcamp and Soundcloud don’t have the catalogue to compete. And Neil Young, the guy who tried to start his own streaming service and has fought music-industry executives like David Geffen in the past, directed his fans to stream his music through Amazon Music. Fucking Amazon? To have Young running into the arms of Jeff Bezos, a man who has become the planet’s second-wealthiest person amid his company’s sales of COVID misinformation and counterfeit masks, whose company didn’t inform warehouse workers about COVID outbreaks and has eased up on safety conditions, doesn’t make for a clear or satisfying choice for anyone who might be angry over Rogan.”
But in the meantime, as a few notable artists jump ship; Rogan issues a semi-apology; its other big bets have failed to gain equivalent or greater loyalty; it’s safe to say that least some Spotify execs may be feeling nervous about which direction the wind is blowing and how exactly they can best fulfill their fiduciary duty to shareholders.
Variety’s Todd Spangler reported on the Forrester Research poll, which queried 657 online denizens based in the U.S., U.K. and Canada about their feelings related to Rogan and Spotify.
Spangler writes, “If anywhere around 19% of Spotify users were to abandon the streamer, that would obviously have a huge impact.” Spangler acknowledges that’s a very big if.
But Forrester’s own VP/Research Director and Principal Analyst Kelsey Chickering don’t see their “pulse check poll” as indicating anything outside the norm in today’s culture (wars) for Spotify.
READ MORE: About 19% of Spotify Users Say They’ve Canceled or Plan to Cancel Over Joe Rogan Controversy, Poll Finds. But Will That Exodus Really Happen? (Variety)
Podcasting continues to be one of the fastest growing channels in digital media. Advertising revenue attained a new high in 2021, racing past the $1 billion mark for the first time ever to reach $1.4 billion. Revenues are expected to almost triple by 2024 to more than $4 billion, making it clear that podcasting and digital audio aren’t slowing down anytime soon. Gain insights into this burgeoning medium with a selection of articles hand-curated from the NAB Amplify archives:
- The Podcast Advertising Market Tops $1 Billion for the First Time
- Why the Podcast Medium Keeps Shapeshifting
- Understanding the Podcast to TV Pipeline
- Has the US Hit Peak Podcasting?
- When Podcasting Collides with Commercialization
So how and why did a streaming platform invented to solve the problem of music piracy (looking at you, Napster) become held hostage by a few marquee names?
To make a long and complicated story relatively brief and simple*…
Licensing music is expensive because record companies want to make a profit and/or musicians want to earn a living wage. Music must be written, played, and recorded before it’s uploaded to the cloud or lasered onto a CD, making the one-man band of yore require an audio engineer at a minimum to be heard by the masses.
Spotify broke into the streaming industry at a low price point with a lofty promise — it would be cheap for users and enable content discovery via cool curated playlists, full albums on demand, and lots more that would (theoretically) be great for both artists and listeners.
But as we covered earlier, music costs $$$ to create (and to legally distribute). Apple and Pandora had/have their own ways of covering costs (paying to download individual tracks or full albums or offering ad-supported streams that enable customers to have a freemium option).
Like many tech startups, Spotify entered the market with a good idea and a hope to make its books get into the black, eventually. It focused on scale and subscriptions and copied the popular ad-supported model that worked well for the competition. But the startup needed to innovate to stand out (and to satisfy investors).
Enter podcasts. Yes, the technology that technically entered the scene way back in 2004 — but only really entered our collective consciousness when Serial and its ilk took off. As podcasts became popular, many content creators and businesses saw an opportunity to put their stamp on the internet in the same way that blogs did in the early 2000s.
* There are a lot of moving parts to this, and I’ve presented a linear version to convey some bigger themes. If you want to dig into the history of how streaming music, podcasts, and Spotify got to where we are today, might I suggest:
- Spoken word audio is 🔥🔥🔥, according to this Edison Research report.
- This isn’t just about Joe Rogan. It’s another fair pay conversation.
- Dynaudio offers a very abbreviated history of music streaming.
- In 2015, NPR explored how streaming was changing music.
- There a lot of podcasts, and that’s affecting discovery. How are new entrants gaining traction — can they?
- Can anyone really moderate audio online? Is it worth trying?
- Audio moderation can be helped or hindered by misinformation policies. Spotify’s is a barely-there example, offering little real guidance for content creators and employees.
- What’s the difference between free speech and association, in the context of podcaster and platform/host?
- Misinformation and podcasting need to duke it out.
CONTEXT OF THE JOE ROGAN CONTROVERSY
- Here’s a link to the open letter that launched the conversation.
- Is Rogan a “menace to the public health” or a comic? Or both?
- Is Spotify a media company yet?
- Which artists are taking their music and headed elsewhere/nowhere in the streaming-verse as part of the #DeleteSpotify movement?
- Canadian video platform Rumble offered Rogan $100 million to take his podcast to their platform. He says he’s sticking with Spotify, since the company “inexplicably” hung in with him.