I've long written about Spotify. When I was an undergrad software engineering student I was fascinated with working for them as an employee. They were Swedish, used cutting-edge data engineering practices, and even hired from my school.
While I continued using their service beyond undergrad, I decided to take other opportunities in my career, but followed them superficially. Beginning in mid 2020, I started noticing they were pivoting their business to ad revenue.
Earlier this month, I wrote the following thread:
"Spotify is making music directly compete with podcasts now.
Not only does Spotify MAKE $ from podcasts (ad rev), they must PAY $ to musicians (royalties), so don’t be surprised when they push podcasts heavily into your feed.
Anecdotally, I’ve noticed that my home feed on Spotify has podcasts pushed heavily to the top.
Think about how these incentives will impact the music industry. They are now competing with 1, 2, even 3 hour content that Spotify has an incentive to prioritize in the feed.
3 hours spent in a podcast is roughly 60 (3 min/song) songs of lost royalties for the music industry...."
Since then, I can't unsee the wild shift this is causing in the music industry. Finally. I realized just how much power platforms like Spotify have over entire global verticals.
Not only can they leverage their huge, global user base to drive down royalty payments - they can now decide, at the blink of an eye, to rank music lower than podcasts, full stop. In search. In your personal library. In your home feed. Because of the obvious economic incentives to do so, we should expect the platform to aggressively push podcasts to its users.
While it is possibly positive to put downward pressure on record labels, the 2nd order effects likely trickle down to artists.