Spotify is learning the tough way that while you can build perhaps the most sophisticated software platform that scales beautifully and completely redraws the revenue model of the music industry, “content moderation” is hard. Particularly when you’ve backed the person at the centre of things with a $100m investment.
Spotify has finally responded by finally publishing it’s relatively inadequate rules for what they allow on the platform and a promise to include a Covid advisory on relevant podcasts – because everyone reads the show-notes of a podcast.
Lots of (digital) ink has already been spilled about the question of Joe Rogan, Covid vaccines, Neil Young’s response and Spotify, so there are limits to what I can add to the mix. But this does draw together a few things are separate, but at the same time, linked.
There Are Differences Between Being Listed, Being Hosted and Being Owned (or Licenced) by a Podcast Platform
I sometimes make the analogy that podcatchers – the apps on your phone that you use to listen to podcasts – are actually a bit like web browsers. You point your podcatcher at an RSS feed in the same way that you point your browser at a web page. Apple Podcasts isn’t really responsible for that content* any more than Google Chrome is responsible for what I see on a website.
The analogy does break down a bit though.
With Apple Podcasts, Apple maintains a directory of podcasts – they don’t actually host or own (for the most part) any of the audio. Apple can choose not to include a podcast in its directory – they have rules that in the past has seen them, for example, remove Alex Jones’ podcast for hate speech. But they are not paying someone to listen to every podcast on the directory looking for infringements. It’s mostly responsive following listener complaints. Whether speech to text and AI technologies allow this to be automated in the future is a separate question.
So at basic level, podcatchers do no more than surface podcasts via searches of their directories. Indeed many will let you add RSS feeds directly even if the podcast isn’t in their directory. In other words, you can listen to objectionable podcasts on their apps just as you can visit objectionable websites without Google even indexing them.
The next layer down is to not be responsible for the content of a podcast, but to somehow profit from it. That’s likeliest to mean being the advertising partner for podcast, but it could also mean offering to place it behind, say, a subscription paywall and taking a cut.
This can be quite a headache. Just ask YouTube.
You want to operate in an environment that is safe for advertisers, and as a private company, you can choose where you draw the lines. As long as that content is legal the rest is up to you. For the most part, companies who work with advertisers want to make those advertisers feel comfortable. The Parlers and Gettrs of this world may yet discover this should they want to rely on advertising as part of their business plans.
Spotify operates Anchor, essentially a podcasting YouTube that allows anyone to create a podcast and host it with them. In return, Spotify takes a cut of the advertising. When Spotify said recently that they’d removed more than 20,000 podcast episodes that broke their rules, you have to imagine that nearly all of these would have been Anchor hosted podcasts, but we don’t know. It’s also unclear how those podcasts were identified. (There’s a separate question of whether this is a big number. It sounds big, but without knowing how many new episodes are published on Anchor every day, we can’t really say.)
It’s in this area that technology companies like to have their cake and eat it. They operate the platforms, monetising things that are uploaded to them, but wanting little responsibility for what it uploaded. In reality, they are of course now media companies since they’re providing advertising and monetisation services to content on their platforms. And that’s what media companies do.
The next level beyond that is creating or licencing your own content. And in this, unequivocally, the responsibility lies with the platform itself.
If a TV channel commissions – or buys – a TV show from a production company somewhere, they are intimately involved and ultimately responsible. In TV you could expect network notes and lots of meetings over things like casting decisions and the direction of storytelling. Even big channels that are commissioning hundreds of hours of programming care about these things. For example, is there a children’s TV channel that isn’t watching through all the episodes of a series before putting them on-air? Famously, there was an episode of Peppa Pig in which our favourite porcine picks up and plays with a spider. In Australia, this episode was not broadcast because Australian spiders tend to be rather more dangerous that cute loveable European spiders, and kids there are very much taught not to pick them up. That’s the kind of thing you catch when you’re a responsible broadcaster reviewing things before you blindly retransmit them.
And this is where Spotify is with Rogan. They might technically licence rather than own the show. But they promote and sell actively sell advertising against it.
They are responsible for it. That’s a choice they have made.
It’s Hard For Spotify to Back Away From Its Rogan Deal
I mean, obviously they could.
There’ll be language somewhere in their contract that lets them back out should they need to, but they need Rogan right now. Whether Rogan entirely needs them is another question.
There was an interesting, and much criticised piece by Lucas Shaw of Bloomberg a few weeks ago in which he posited that podcasting hasn’t had a big new hit in years. What he meant was that if you look at Edison Research’s Top 50 podcasts in the US, most are at least a couple of years old now, and three of the top five are more than a decade old.
To anyone who has worked in radio/audio for a long time, this isn’t tremendously surprising. Listening is incredibly habitual. That’s why successful radio breakfast shows can run for years and years. They become part of listeners’ lives – people they wake up to each day, listening on their commute, or otherwise fitting into their lives like they do anything else.
Certainly, if you get in early, you can be big before the masses arrive and it becomes a lot harder to get to the top (see also YouTube, Tik Tok, and pretty much any other platform).
[Incidentally, the “no new hits” thesis is flawed, and Tom Webster of Edison explains some of that in his newsletter.]So in Rogan’s case, Spotify came in and bought the biggest podcast it could find rather than growing their own. That instantly gave them a massive boost in their podcast monetisation plans.
According to Ashley Carman at The Verge, the minimum buy-in to get ads onto Rogan’s show is $1 million, at an extraordinarily high rate ($60 CPM). That $1 million doesn’t all go on Rogan’s show – you have to spread the spend across all of Spotify’s shows. This is no different from many other media outlets. You want to buy space on our hit? Sure, but you also have to buy space on our other stuff. That’s how sales work in seller’s market.
Spotify has its Spotify Audience Network, that means they can be super-efficient in delivering advertising. There are perhaps two key reasons why Spotify has a bit of an advantage here. If you listen to a podcast on the Spotify app, they know who you are. Most major platforms don’t have that luxury. Sure, Apple knows who you are if you’re listening on Apple Podcasts, but they only share some very basic anonymised data with podcast owners. When you registered for Spotify they captured your age and your sex. They also know where you’re listening, when you’re listening, how much you listened to, what other shows you listen to, and your preferred music. And Spotify bought Megaphone, the podcast sales house, to further this influence delivering revenues from beyond just those listeners who use Spotify.
Other podcasting companies have some of this data, but Spotify sits on a rich vein of it. And to do this, they really need you to listen in their app.
They had a head start by already having a vastly successful music streaming platform, but they want you to listen to podcasts there too. To force your hand as a listener, they’ve been buying up podcasts to make them exclusive on the platform. Everyone is doing this of course, which means, as a listener nobody is able to listen to everything exclusively on a single platform, but you get the idea.
All of this is to point out that Spotify has been building its podcasting business off the back of big hit, exclusive, podcasts.
Incidentally, while it’d be a bitter pill to swallow for Spotify to walk away from the Rogan deal, it’s entirely possible that Rogan could walk away from Spotify, or between them, they come to such an arrangement.
In the short term, Rogan has issued a kind of apology. But Casey Newton noted in a recent episode of the Vergecast that with legalised sports betting growing fast as US State laws change, there has been a flood of marketing money for big licenced betting companies and it’s entirely possible that one of them could do an even bigger deal with Rogan than Spotify is able to.
Leaving aside the problematic issues with gambling addiction, that might be a way out in due course, especially if some advertisers decide that Rogan is not worth the hassle. Speaking of which…
Where Are Advertisers In This?
When YouTube or Facebook have faced massive issues surrounding content moderation, it has typically been the advertisers who are targeted the most heavily. During various YouTube “adpocalypses”, big brands pulled their spending until they could be sure that YouTube wasn’t placing their ads next to some hate-speech video – or at least until the whole thing died down a bit.
I’ve not really heard a great deal of blowback directed at advertisers in Rogan’s show. At least not yet.
You have to think that this will be coming to some extent, although I’ve no doubt that Spotify will have booked spots months in advance on Rogan’s show but that any advertiser who booked spots in Rogan’s show surely did know what they were getting into…
One to watch.
Artists’ Rights to Keep Music On or Off Spotify Are Not Simple
Neil Young and Joni Mitchell might be able to manage it, but most artists probably can’t. While they were probably both earning meaningful revenues from Spotify, I suspect neither needs that revenue, and indeed Young sold half his publishing rights to Hipgnosis last year for a large sum of money. He has been able to work with his record label to support him in his endeavours over this, although I suspect that selling vinyl box-sets to his older (and probably wealthier) fanbase is as valuable as anything else that he does.
He’s not Adele or BTS.
Most artists’ won’t be able to pull this stunt – at least not alone. While everyone involved would probably bow to Taylor Swift’s will, the average artist will need to stay on a platform like Spotify whether they like it or not. (In Swift’s case, there would be added complexity given her re-recording of her back catalogue as a means to counter issues surrounding ownership of her original masters, meaning that even if she pulled the work that she had control of from Spotify, her original recordings would probably stay on the platform).
What’s interesting is that so much of the music industry is now tied with older, “heritage” acts. We have to be a little careful here. A recent US report from MRC said that 70% of music played in the US is “old” – defined as more than 18 months old. And in fact, all the biggest individual songs being played on streaming services like Spotify are relatively new. But the big money in music seems to be massive deals for heritage artists’ publishing rights, with the likes of Bruce Springsteen, Bob Dylan and Stevie Nicks joining Young in doing these deals.
Considering that streaming services are a major part of that revenue stream, and that Spotify is the biggest streamer in the game, pulling your music off those platforms isn’t an easy decision for rights holders (or artists) to make. The labels and investment funds that are spending big, do want a return on that investment, and cutting off the biggest share isn’t the best way to go about that aim.
Where Next?
I suspect that Spotify will hope that this all blows over, and no more major artists get involved. But this problem overall isn’t going to go away. As platforms become publishers and companies that thought of themselves as technology companies actually realise belatedly that they’re media companies, changes will have to take place. That means taking some responsibility for your own output.
What would be a fascinating test case would be if Rogan was to walk away, double-down on some of the stuff he’s been, let’s say, alluding to, and did it on open RSS. Would some of the podcatchers like Apple Podcasts do anything?
I don’t think that’ll happen, but it’s a fascinating “what if…”
* Sorry for repeatedly using the word “content” on this blog. I still hate it, but frustratingly, it does serve a purpose here.