Spotify started out as a legal way to stream popular music. Then it flirted, unsuccessfully, with becoming a video company, too. Now it is trying out a new identity: It wants normal people, not just people you’ve heard of, to start uploading songs and podcasts — and then it wants to make money getting those songs and podcasts out to many, many more people.
Spotify still wants the biggest stars in the world on its service. That’s why it spends most of its money on licensing deals with the big music labels, and why it paid a ton of money to sign podcast king Joe Rogan last summer. And it’s also why it is working with Barack Obama; the service just announced that Bruce Springsteen and the former president have a new Spotify podcast where they discuss “modern manhood.”
But the main message behind a promotional event Spotify held Monday, where the company announced a slew of new products and several new podcasts, was aimed at a much larger group of musicians and podcasters who will never be Obama-level famous, or even a little bit famous: Spotify wants all of them uploading their content to Spotify.
Spotify thinks it can make money by distributing that stuff to hundreds of millions of people through a combination of advertising and subscription dollars. In theory, some of that may come back to the people who made the stuff in the first place.
After the event, I spoke with Spotify’s content boss Dawn Ostroff, a veteran of the magazine and TV business, about Spotify’s big-picture ambitions and how it is navigating the change from being a content distributor to a content owner. And, specifically, how it’s responding to the challenges that come with being Joe Rogan’s employer.
Here’s an edited transcript of our conversation:
Who is this event aimed at? It seemed reminiscent of all the streaming video launch events companies like Apple and HBO and Disney have done over the last year or so — kind of aimed at investors, but also for consumers.
Actually, we’re trying to reach creators. For us, it was about being able to show where we’ve come from and where we’re planning on going for creators.
When you think back to what Daniel [Ek]’s mission and vision was early on for Spotify, it was how do we connect millions of artists and creators with billions of users. This was explaining that we’ve come a long way, we still have a long way to go, and where we are in the journey. And also being able to communicate to creators the different tools, the different products that we have, to help and support them in our journey in terms of not only creation, but monetization, and of course reach.
There has been a long-running discussion with Spotify and creators/artists, back to its earliest days, where artists were complaining that they weren’t getting value out of Spotify but Spotify was getting value out of them. How much of that discussion informed what you’re doing today — both the way you talk to artists and what you’re doing for them?
Well, we have deals with the labels. That’s been pretty transparent: People know what we pay out, out of our revenue, to the artists and their labels. But I think really part of what Spotify is about is democratizing a form of distribution for artists in order for them to be able to experiment, create, and hopefully grow. Because there’s a lot of room for artists who aren’t necessarily the top artists in the world. And similarly for podcasters, there’s a lot of room for people who are interested in having podcasts, that aren’t the top podcasters in the world.
And the idea that you’re able to globalize the platform in a way that music is crossing over all boundaries and borders, and similarly, we’re seeing that with podcasts — it’s really unifying the world.
You don’t have to look any further than the performance of all the major record labels. The music catalogs are going for record amounts. There are hundreds of artists now earning millions of dollars from Spotify alone. And that’s part of what we wanted to be able to illustrate today.
One thing that’s changed since Spotify’s start is the way that consumers and certainly regulators view big tech platforms. They generally had favorable feelings about them, and now there’s a lot more suspicion of them. You have your own complaint about Apple — you say it has too much power. But it strikes me that in audio, Spotify has so much power that there is likely to be even more suspicion about its motives, and what happens when you give Spotify your data or your livelihood.
To start off with, compared to Google, Amazon, or Apple, we’re still very small. We’re not in that league. But we’re incredibly focused on audio. And there should be competition for the tech giants. And that’s what we are. We’re competition for them in this one area.
Since we’re talking about the giants: For years, Apple didn’t seem interested in making a business out of podcasting. It seems to have woken up — I guess because of Spotify — and now seems to have some plans to invest in podcasting and to offer a paid podcast service. What do you think of Apple starting to compete with you in podcasting?
I can’t comment on their plans. And quite honestly, I have no sense of what their plans are. But we think any company that’s spending money on the audio space is smart. We think the audio industry is still growing — we’ve seen an explosion, but we don’t think we’re anywhere near plateauing yet.
You’ve spent nearly $1 billion on podcast startups and content. When Spotify first started buying podcast assets, you said you might spend $500 million in your first year. Do you think you’re going to continue spending at this clip?
Our goal is to continue to grow. I can’t comment on the exact figure. But we’re pursuing it because it’s working.
When Spotify signed Joe Rogan, people like me wondered what would happen when Joe Rogan offends someone, and that has happened. And it turns out some of the people work at Spotify.
What kind of discussions did you have about whatever kind of blowback Rogan was going to generate? And did those discussions include what would happen if your own employees are upset?
In terms of Joe: He’s been held to the same policies that everyone else at our platform has to adhere to. And for us, it’s about having a diverse voice of people, for a global audience — a wide and varied group of people who listen to Spotify. And he happens to remain wildly popular.
I can’t comment on our internal discussions, but debate is also a big part of Spotify’s internal corporate culture. And it happens not just with something like Joe Rogan but it happens with different areas of our business. It’s nothing new for us.