Spotify Is Not Going to Kill Podcasting

Spotify isn’t ending the world. They’re acquiring quite a few properties, and are obviously big and imposing on the landscape, but I believe that they’re not actively killing the podcasting dream. But how far they have to go to do that is open to debate. A debate we have on this episode.

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Music: [00:00:00] Springy, upbeat, acoustic music plays.

[00:00:04] Bryan: [00:00:04] SAI, DAI and Spotify. That's what we were talking about this week on Sounds Profitable with me, Bryan Barletta.

[00:00:20] This episode is sponsored by Claritas. Check out their recent, "The marketing insider podcast", and learn how to use current trends, such as industry specific, lift success and CPM comparisons in podcasting to increase advertiser adoption. You can find out more at claritas.com.

[00:00:40] I know that you're listening to Sounds Profitable because podcast ad tech is important to you, but it's important to me that you are kept up to date on the latest news from the entire podcast industry. To help with that here's what happened last week. No matter when you're listening from James Cridland at Podnews,

[00:01:06] A few months back, Spotify purchased megaphone. Now there've been major acquisitions since, and there were major acquisitions before. And as with all of them, the sky was suddenly falling for a ton of outspoken people in the podcast industry. I wrote an article trying to quell that fear a bit called "No, the Spotify and megaphone deal won't put an end to podcasting." It's linked in the description. In that article. I mentioned the work of Nick Hilton and his article about Spotify, "The Lesser Spotified Pig". He was kind enough to come on the show and we got to talking about our different views on the world Spotify is bringing about.

[00:01:43] Music: [00:01:43] Music fades out. Interview begins.

[00:01:45] Bryan: [00:01:45] I worked at Megaphone, so full disclosure there.

[00:01:47] I left before the deal. So I left in August, so 2020 and it was really important to me to provide my view on it and highlight some of the other people in the space that were talking about it. And. I called out Jay Richmond of Spotify. Nick Cuav, hot pod and Ashley Carmen of the Verge with their views on it?

[00:02:06] But specifically, Nick, I really liked first off your lesser Spotified pig (Laughing) drawing up how to butcher a pig as Spotify and all the different parts of it. But I wanted to dig in because you had some really interesting points of view coming from a little bit of a different angle. Now, everything I do is ad tech focus, right?

[00:02:23] A lot of what I'm doing is about the people are already in this space already working with these tools, trying to improve their skill and set to become decision-makers or their decision makers and become better informed. And it's very easy for me to forget about the people who are trying to enter the space from the creative side.

[00:02:39] Oh, the production side or the people that, that are starting off without getting a paycheck from it. So why don't we dig in a little bit and if you can sum up your view on Spotify buying megaphone, maybe we can walk through that and like who you're view was for.

[00:02:56]Nick: [00:02:56] Okay. I would self identify as a sort of mouthy pessimist in this space, because I think there are a lot of people who evangelize a podcasts and podcasting and feel like it's going to be the next big things.

[00:03:09]We hear that every month for the last 15 years. And I've always been a little bit more depressive and someone who feels there is a carnivorous appetite within certain big conglomerates and corporations to take away the magic that is podcasting or the dream that was podcasting, as I often say.

[00:03:28] So with Spotify, I saw last year and the year before, which I guess were two big years for Spotify in terms of acquisitions, in terms of stamping its authority on the market flexing it's venture capital money. And anytime that a company that comes in that doesn't make money itself, but just has loads of venture capital money comes in and starts, buying up production companies and ad tech and all the things that Spotify has done, it raises my defensiveness a little bit, because I think, what I, Spotify done to earn this. And I don't really, I think where maybe we differ on this is that I think that. However promising elements of this are in terms of the ad tech and you're the expert and the ad tech and your, what megaphone can do, what it's capable of.

[00:04:12] However, promising that is I look at the impact that Spotify has had on the music industry. And I would look at the impact that YouTube has had on video creators and the way that revenue is dispersed from those things. And, I think that's best case scenario for podcasting and it's pretty terrible.

[00:04:30]And that's why I struggled to be like, this is a really exciting thing that Spotify now has this kind of complete pathway from, allowing people to create with anchor through, to distribution on Spotify, through the, all the ad insertion. The dynamic ad insertion technologies that they have and megaphone and stuff like that.

[00:04:48] So that was my skeptical take was that I just don't see Spotify as a benevolent force in this space. And I think that it's just typical of a kind of very gradual erosion of the things that made podcasting so exciting, which is the fact that people in their garage could make something that would be listened to by hundreds of thousands.

[00:05:09] If not millions of people.

[00:05:11] Bryan: [00:05:11] Yeah.

[00:05:11]Honestly, I agree with you on a lot of your points. I think the thing to keep in mind is that with ad tech as an industry I like it because there's so many people being employed by all this, there's so many people able to do this. I'm not creative.

[00:05:23]I'm making a podcast here because I'm talking about podcasting. I want to make sure that. Tech works exactly how I say I want to provide live examples and want to step up. That's neat. But on my own, I'm not creative, but to me, like it's nice being a right-hand man. It's nice being a guy who works at a company that helps people monetize and helps people set up and take advantage of things, being able to host their podcasts, being able to do cool things with it. So like I forget sometimes. The differences in worldviews. And I think you're spot on with your examples. But the one thing that I want to call out is I super agree that creators on YouTube creators on Spotify for music are really treated poorly.

[00:06:06] Like I have a friend who was just like, yeah, all the last year, I made $300 for royalties from music on Spotify. And that's not, a little bit less than that might not be enough for Spotify to cut a check for a year. And I think the thing to think about is that with podcasting the open RSS format, anybody can build an app.

[00:06:25] Anybody can build that environment. It can always be available that basement or that garage mindset of sitting there and recording with your pals and putting it out to the world. It can be available to anyone I can't right now do an equivalent for video. I can't make a video and I know that there's a bunch of different apps out there that are gonna catch it and make it available.

[00:06:47] I can't do the same for music. Heck there's a lot of regulation on what you can do related to music with podcasting. It seems like it, it apparently, like I can't just put my whole album on a podcast because you get into some rights issues. It feels so with. I think you're talking about very valid things in very clear limitations, but I think that podcasting the uniqueness in that limitation of RSS that people keep like riling on is the thing that's going to keep the part that you love alive.

[00:07:17] Because Spotify will continue to make Spotify audio stuff. They just released their audio books, to combat audible, by going for the ones that don't have licensing that they don't know, I have to pay, which is gross to start there. Yeah. But I don't know. What do you think about of that?

[00:07:34] What do you think about the fact that I can't do this with video. I can't make a video available in an RSS feed in the same way and have the same type of adoption I could with guessing.

[00:07:44] Nick: [00:07:44] Yeah, I'm in you're definitely right. And I don't doubt that the, the move of Spotify has become a bigger player in this market will only expose more people to podcasts.

[00:07:53] And in the last, In the last couple of weeks, I had a podcast that got featured somehow mysteriously on Spotify. And, the switch from it being 70% iTunes to it being 80% Spotify was, it was just happened to overnight. And that shows me that, it is bringing new audiences.

[00:08:07] It is capable of actually becoming a relatively dominant player, but, going back to what you're saying about your friend, cutting a check for $300 from its music and, Spotify is a music distribution company and it cannot. In its current business model, it cannot make money because of the rights issue and that.

[00:08:23] So I think someone said something like for every $5 that Spotify brings in, it has to give off $3 75 in, so it's never going to make a profit under its current music agreement. So the idea that even those paltry sums that musicians are making a Spotify podcasts is going to make no. Spotify is getting into podcasting because it's a way that they can gouge money without.

[00:08:47] Having to pay creators. Music has all these rights issues as possible. Podcasting is hamstrung in a way by its open RSS stuff that it's, that we're never going to come to a point where Spotify has to pay everyone who gets streamed on Spotify. That's not going to happen under the current podcast format.

[00:09:06]They see it as a, I think they see it as a way of. Getting a cheaper amount of content onto that platform that doesn't feel promising to me from creative perspective. And then, as Spotify have done more originals and, yeah. You talk about these audio books, which again, they're categorizing the podcasts at the moment.

[00:09:23]It's a curation thing and it's, and we're seeing, I think we'll see this year, what happens with Apple, but certainly we've seen it with, audible and increasingly the barriers to entry. Are, what Spotify and what Apple and what audible and the other apps in this space, even excluding payroll stuff like luminary while they're choosing to put forward.

[00:09:45] So I think there, again, the focus on their own content I think will only grow. And I don't think that is to the, a good thing. A net for the whole ecosystem.

[00:09:54] Bryan: [00:09:54] I agree that the approach that Spotify is taking on a lot of things isn't great. I just feel like the same artistic and interesting view that you have for what makes it unique and indie about podcasting that anybody can make it and anybody can distribute it.

[00:10:11] And th that RSS feed is going to be what saves it, right? Because there are. There are so many options out there and Spotify is trying to diversify too far. They want to just be audio, everything. And like you say, they're trying to pay less in royalties. So that's why they're doing audio books.

[00:10:27] That's why they're buying content creation. That's why they're pulling in podcasts so that they can say less time is being listened to music. So we're going to pay you less. That's an important distinction. One thing that like you brought up with Apple, and obviously we're recording this several months before this is going to go live.

[00:10:42]Because I like a strong back catalog. Apparently the rumor is that people are going to be able to list their podcasts up there for per purchase on a per episode or per season basis, or even a subscription that. Seems like the type of thing that can take the wind completely out of Spotify, right?

[00:10:59] Like Apple, Amazon, and Google have all proven the app store model. And all three of them have also proven that model for buying TV shows or movies. So if they just apply that to podcasting and people can list that up there. Spotify either has to compete with that. Or people are just going to stop listing their content on Spotify, outside of the free stuff.

[00:11:24] They want to drive to their paid content. If I can put up a season at $5 or $10 or whatnot, like that's really compelling. I'm taking advantage of their app store. I'm taking advantage of their distribution already and I'm selling a product. So they're motivated to. Push it out there because obviously they're going to take a cut.

[00:11:42] What do you think about that?

[00:11:44] Nick: [00:11:44] Gosh, it's a, almost a different conversation, but I am extremely skeptical about the ability of Apple to sell podcasts. Now, I think it's very hard to sell a product that you've been giving away for free 15 years, I think with TV and with movies and with apps, there's just always been an expectation.

[00:12:05] That in order to consume these products, you have to pay something for them. And because podcasting has become a really, mainstream medium on the back of being free. And even with, early pioneers in this space like slate plus, it was always like an additional content.

[00:12:20] You still have to give their product away for free. And then you could maybe tease a little bit out. And Patreon is doing that, I guess at the moment, again, it's a good format for additional content, but in terms of the number of shows. That I think would actually gain financially from essentially pay walling their entire product from step one and excluding it from platforms that were open.

[00:12:44]I guess I just think that's very. Probably very few podcasts that would be beneficial too. So it'll be interesting to see how it happens. And I know that a lot of people, when I work in journalism, when I work at magazines and newspapers, people always say the mindset people's mindset is changing because of Netflix because of Amazon and people are just used to paying for stuff, signing a subscription, or just, doing the thumb print on their phone and making that little payment And I can understand that the law, the logic of that, but if you told me tomorrow, what's a podcast I listen to every week, no such thing as a fish.

[00:13:16] If I suddenly had to pay 10 pounds a year for that, I would, I probably would do it. But I would have kind of one or two second thoughts about it and, probably three-quarters of their listenership, wouldn't do it. And they, so it's it's a balance. I don't think it would drink Spotify is milkshake straight away

[00:13:34] Bryan: [00:13:34] What a good podcast to reference.

[00:13:35] So that's probably one of the first podcasts that I listened to. No such thing as a fish. So

[00:13:41] good.

[00:13:41] Nick: [00:13:41] It's a podcast. I would love to know how much money they make, because they should be making an absolute fortune from that sort of suspect. They're not,

[00:13:47]Bryan: [00:13:47] I super agree with you. I get the strong feeling that they're definitely not making as much as people like me and you would hope they were.

[00:13:55] But I agree with you. I think that, you can't put it immediately behind a paywall. You can't move it away, completely behind the free aspect. But if you take advantage of that app store, these subscription services, like Patreon, super cast, remember full kind of an uphill battle. They have

[00:14:09] to-

[00:14:09]Nick: [00:14:09] the, the thing is with those ones, you're teasing them.

[00:14:11]How would you tease them with the free content and then you add something a little bit extra, but something like luminary has a, I think it has, I think we can say now it's probably failed because it's. Trying to sell a product that people were getting for free. Is that not what's the difference between that and what Apple plus is mooching.

[00:14:28] Bryan: [00:14:28] Yeah. I think there's

[00:14:29] a way to, to migrate into it. I, this is where I deviate. I'm not the content guy, I'm the tech guy. And so I think you're right. That you can't, we can't just immediately flip a switch and it's all behind the paywall, but I think it's options, right? It's I think it can be a transition.

[00:14:42] We're seeing a lot of things with newsletters, right? Similar content that was just available. And you could see ads on a website and now people are doing it through newsletters and you have to pay for it. But a lot of the times there's a free version and then a paid version. Some of them just have a paid version, but.

[00:14:56] The thing I really wanted to focus on with all this, is that just like with creating YouTube content or a website, or being famous on social media, on Twitch streaming, not everybody is going to make it. We don't complain about the New York times versus a blog. We-

[00:15:14] Nick: [00:15:14] I do

[00:15:14] (laughing)

[00:15:14] Bryan: [00:15:14] Look, (laughing) maybe you get better content over there, we don't compare them.

[00:15:17] How's that? We don't worry about how many blogs there are in and how many websites are making money off of things like that. We don't compare how news stations are making money versus YouTube celebrities. I think the problem is we're comparing all the podcasting, which is this open format with a lot of ways to go about it, selling individual content, putting it behind a membership-based paywall, allowing it completely free and doing ad supported, doing it completely free in hopes of it becoming something else.

[00:15:47] And we're comparing this format and then people are talking about YouTube. People are talking about other closed formats that are exclusive, like when you make a video. Yeah. You can put it everywhere, but YouTube is going to be where you get the distribution. There's no. I can't put a video up and make it accessible for everybody.

[00:16:05] I can't, I guess I could put my aunt, like I even a website, content write a newsletter or whatever. I can't put it up and make it accessible to everyone. They have to go seek it out. There's no catcher aggregator for these things. Podcasting is different in that. There's so many aggregators out there and it's so easily available.

[00:16:21] If a friend said to me I want to get into podcasting and I want to make it my career and they weren't ready to invest in it. I would roll my eyes, but. It would

[00:16:30] be -

[00:16:30] Nick: [00:16:30] a yeah, but that's, what I would say is that, every year we get more and more podcasts, we've, we've hit a million podcasts.

[00:16:36] We're now aware of that. And the more podcasts you get in the soup, the more important the curation at the distribution end becomes. Spotify has, I don't know what a 20, 30% market share plays optimistically and Apple has, 60, 70%, those guys have an incredible amount of power. To filter the soup that is podcasting.

[00:16:59] And, that's fine when Apple has had no skin in the content game, the more they get skin in the content game, the more that they have other priorities in terms of filtering that suit. So for me, it's almost a curation issue in that they the distributors all becoming every ever more content creators and.

[00:17:18]That creates a sort of inherent to their business model is they have to privilege their own content in the distribution. And that just changes the whole ethos of podcasting from something that was, this open and anyone could do it and it, you never knew what was going to go viral and what was not going to work to something which is much more, end to end.

[00:17:36] Bryan: [00:17:36] Yeah.

[00:17:37] That's real. That's bias on that end, right? There's no reason why Spotify and Apple can't have sections on their app that are specific content owned or run by them. Same with Amazon and. That gives those shows an unfair advantage. There's a limited amount of time that people are listening each day and week.

[00:17:54] And so if they're pumping it to the top, people are going to look at that over other shows, which then get less downloads and that's ad revenue have less ability to convert people to subscribers. And so for content creation outside of Spotify and Apple and Amazon and Google. You're right. That's a little bit scary there.

[00:18:13] And I think that what they're going to try and do is entice people over with, if they buy into whatever their hosting is, or they participate there, then they'll run ads for them. And if they're running ads for them, then they're moving to boost them up. What is the difference between a Spotify owned show and a Spotify show where they gain revenue from why wouldn't they want to see if they can boost shows that they didn't have to pay for their content production for, and they just get a flat.

[00:18:37] Percentage of the revenue so they can evaluate selling off content companies or stopping the investment there.

[00:18:44] Nick: [00:18:44] Yeah.

[00:18:44] And I, I can certainly say that over here in the UK, Spotify is very, patchily investing in shows and very patchily giving any upfront cash to productions, but what they are doing is signing a lot of agreements that they fall series will drop on Spotify.

[00:18:59] That it will be, there'll be a Spotify exclusivity period for a certain time in return, either for, I, I don't, I, I don't know what will happen ultimately with ants, but at the moment in return for, placement on their profile and, Being a featured podcast. And even though even podcasts that aren't Spotify, originals it's still a kind of, there's still a kind of uneven element to the curation.

[00:19:17]Look all of this with Spotify. I'm just with a degree of hesitation about a company like Spotify and what their end goals mean for podcasting, I guess?

[00:19:28] Bryan: [00:19:28] No, and that's good. And that's, that's a great way to To set up the ending of this is that I look at this, like the Boston dynamic robots, like I'm excited, that's cool technology.

[00:19:36] They can now dance and they do all these different things. And you're the guy over there. That's just yeah, but that means that robots can kill us now.

[00:19:42] Nick: [00:19:42] Yeah!

[00:19:42]Bryan: [00:19:42] You're the, you have a healthy skepticism from that. And that's good. I don't, I'm not here to sell my point of view. I'm here to share my opinions on a lot of things.

[00:19:51] So that's why I try and highlight people like yourself who have disagreeing opinions, because everybody should be making their own informed judgements. Nobody knows what's going to happen. Apple could take a turn that unseats Spotify, even further. Spotify could do something that pulls everybody over to them.

[00:20:06]Everybody could agree to change the RSS feed together, all the hosting partners and all the apps could come together and say let's do something different and really blow my mind on that. And, but we just don't know. And the more informed we can all be on all opinions on this space, honestly, the better it is.

[00:20:23] Nick: [00:20:23] Yeah. I always try and represent the little person in this process because, we hear a lot about these kind of tectonic movements of Spotify. And, the really successful podcast will, get a news feature when, when Joe Rogan is bought up or when, Gimlet's bought up or whatever, but there's just such a huge community in podcasts that kind of exists just below all the kind of these movements.

[00:20:44]And I just want to make sure that continues to be healthy and continues to be sustainable and. Gets it's true in terms of when there is money in podcasting and, there needs to be more money to begin with. There needs to be, there needs to be more routes for it to come in, either through subscription or through advertising.

[00:21:00] Then once there is more money that. It's trickling down and it's cultivating that and it's cherishing the kind of heritage of podcasting as this counter-cultural medium. And I think that's just what I worry that Spotify doesn't feel a sense of responsibility. Hasn't shown a sense of responsibility to musicians.

[00:21:17] Won't show sense of responsibility to podcast is, and that's what makes me nervous.

[00:21:21]Bryan: [00:21:21] That's a really valid fear. And I hope you keep speaking about it. And I hope people can find, guidance and suggestions on how to move forward, cautiously from you on that end. And then hopefully you apply some of the Antech principles on my end on the way.

[00:21:34] And I'm sure that by the time this episode goes live a half, this information is going to be out of date (laughing) because of how fast things move. But Nick, thank you so much for joining me. I'm going to give you a lob ball because we already talked about it, but what's your favorite podcast?

[00:21:46] Nick: [00:21:46] Oh, my favorite podcast ever, or just recently, sorry, this is

[00:21:51] Bryan: [00:21:51] I'll take anything.

[00:21:52] That's not like a top 100 list. I love no such thing as a fish. I feel like not enough people talk about it. So I was leading you that way, but

[00:21:58] I'll take anything.

[00:21:59] Nick: [00:21:59] Okay. No, let's go for, let's go for no such thing as a fish because. I actually started listening to no such things as fish because I met one of them at a party and he says, Oh, if I do this podcast and I hadn't heard of it.

[00:22:08] And even though at that time, it was probably one of the 10 biggest podcasts in the country. And I just started out with politeness, listening to it and I've been listening to it. Ever since. And it is consistently of really stunning quality. It could be on radio. It could be on TV, the, but the podcast format, they use it so well to be loose and limber and do their own thing.

[00:22:28] And I have to say the consistency hasn't dropped at all in the time that they've been out of the office and working from home, it works. Whether they're. All in person in common garden, it works. If they're doing a live show and it works work from home. So if you haven't listened to it, it's funny. It's clever.

[00:22:43] It's it describes itself in within minutes of listening. So I think everyone should get on the bandwagon if they're not already.

[00:22:52] Bryan: [00:22:52] Yeah. I hope people check it out. I really enjoy the show as well, and I got to catch up on it. But Nick, thank you so much for joining me.

[00:22:58] Nick: [00:22:58] My pleasure

[00:22:59] Bryan: [00:22:59] Upbeat acoustic music rises.

[00:23:10] And stick around for some special bonus content. At the end of the episode, I've teamed up with Evo Terra to give you a minute long strategic thought that is guaranteed to shift your perspective on the present and future of podcasting. As we all work to make podcasting better. Thanks to Nick Hilton for coming on to help expand on my article.

[00:23:32] No, the Spotify and megaphone deal. Won't put an end to podcasting. If you liked what you heard and want to connect, you can find me Brian Barletta on LinkedIn, way less formally on Twitter @highfiverpg and of course you can email me, Brian, at sounds profitable.com. We'd love to hear your responses to the questions we're asking or questions you may have for us.

[00:23:56] So click on the Yappa link in the description and leave us a voice message, which we'll gladly respond to and include in our podcast with your permission, the Sounds Profitable podcast and all cool ad tech, bells, and whistles you've experienced for thanks to our host and sponsor Whooshka everything you've heard since the conversation ended was uniquely created to target you using their dynamic ad insertion features.

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[00:24:54] Music: [00:24:54] Music rises, then fades. (There may be some discrepancies in this transcription due to the insertion of dynamic content. We're working on a methodology to make sure these transcripts have access to all of our DAI. Thank you for bearing with us. ) .