Five Times Spotify Has U-turned on Its Content Strategy

“[When] I started Spotify … I was single and 23 and spraying champagne on people in bars in downtown Stockholm … I used to think that people who went and picked up their kids from day care were losers and were checking out too early. That’s the honest truth.”

Daniel Ek is a changed man. As the Spotify founder revealed at Helsinki’s Slush conference in 2016, over the first 10 years of him building Spotify, he underwent a dramatic personal evolution. By the time he’d reached the grand old age of 33, he said: “Today I am semiboring. I have two kids at home, I go home and watch Homeland and do emails, fall asleep, and start over again. The point being that I am a different person.”

Ek’s willingness to transform, to add and strip things from his personality as time has worn on, is reflective of the metamorphosis of his other beloved offspring – the world’s biggest subscription music-streaming service. Spotify has revolutionized the music business, becoming a $28 billion-valued company trading on the New York Stock Exchange – yet it still burns money. In its past four financial years (2014-2018), its cumulative annual net losses have exceeded $2 billion.

Ek knows that in order to become profitable, Spotify probably needs to find something else – an additional lynchpin for its service that can drive ancillary income. Right now, that lynchpin is podcasts. Spotify has earmarked between $400 million and $500 million for acquisitions in the space this year, with more than $340 million being splashed on two podcast companies in February: Gimlet and Anchor. And in March, Spotify added true-crime podcast specialist Parcast to its list of buyouts, for an undisclosed fee.

Podcasts seem like a long-term bet for Ek and Spotify, and the firm’s investors are banking on the strategy. Witness the fact that following headlines that Apple is set to invest in original podcast production, Spotify’s market-cap value immediately fell by more than $500 million on July 16.

Recent history, however, suggests that Spotify doesn’t always make the most consistent strategic plays outside of music. While it’s common for tech companies to “launch and iterate”, Spotify has done so more than most. In fact, over the course of its 11 years of existence – and since its 2011 debut in the United States – the company has announced, and then dumped, a string of key new-content initiatives to help lead its financials into the light. Here are just a few of them.

1) Spotify apps (2011)

Rolling Stone readers may remember that Spotify launched its own App portal in November 2011, allowing a select few partners to host branded areas within its platform. These apps were designed to curate and recommend music from trusted partners like Rolling Stone, Pitchfork, and Billboard, and included things like reviews, charts, and playlists. The desktop-focused launch enabled users to discover these apps via Spotify’s prominent “App Finder.” 

Spotify told potential partners that building a Spotify App would “enable you to engage deeply with your users, build awareness of your brand, and drive traffic to your other services outside of the Spotify environment.”

This was major news in tech circles. Cnet even reported thatSpotify apps are a big deal, and a real challenge to iTunes. Further branded apps came in 2012 from the likes of McDonald’s, Intel, and AT&T, as well as music companies such as Universal Music Group, Sony Music, Warner Music, and [PIAS].

By March 2014, however, Spotify had frozen out any new app partners. That same month, it acquired music recommendation engine the Echo Nest, in a €50 million ($66 million) deal – indicating that it wanted to take exclusive control of music curation on its own platform.

Sure enough, Spotify’s App Finder died out soon after … and hasn’t been seen since.

2) Short-form video content (2015 and 2016)

There is a classic episode of British sitcom Alan Partridge in which the eponymous antihero – a clunky, outmoded TV presenter clinging on to his career – is being informed by a fictional controller of the BBC that his chat show is to be axed. In a panicked flap, Partridge starts flinging a series of desperate new show ideas at the exasperated BBC exec, often based on ludicrous titular puns.

His ideas include: Arm Wrestling With Chas & Dave, Inner-City Sumo (“We take fat people from the inner-city, put them in big nappies and then get them to throw each other out of a circle that we draw with chalk on the ground”), and, in a pique of desperation, Monkey Tennis.

It was hard not to recall this scene when scanning through Spotify’s press release from May 2016 announcing a host of new original-video content coming to the platform, including (in Spotify’s own words):

  • Rush Hour – “Two hip-hop artists (one legend, one young buck) are picked up in a van during the height of L.A. rush hour. As they drive to an undisclosed location they must come up with a remix or mashup of one of their well-known tracks. Once done, they arrive at the downtown L.A. parking lot stage of Russell Simmon’s [sic] new company All-Def Digital, where they perform their new collaboration (as well as other songs) before a crowd of raucous super fans.”
  • Trading Playlists – “Two celebrities trade Spotify playlists for a day, in the process discovering new music, learning a bit about each other, and highlighting all the ways music is tied to identity and culture.”
  • Public Spaces – “Each installment of PUBLIC SPACES features a notable act performing in one of the world’s great public spaces. Whether it’s Macklemore in Union Square, or A$AP Rocky at the Brandenburg Gate, this series will redefine ‘music for the masses.’ “

All of these flopped, or were never made. Rush Hour eventually became Traffic Jams, a series that was all-too-easily dismissed as “hip-hop Carpool Karaoke” at the time. Try searching for it today in the Spotify app, and it’s nowhere to be seen. (Traffic Jams’ association with Russell Simmons’ All Def Digital also looks, erm, interesting in retrospect.)

This was actually Spotify’s second attempt at becoming a video company. In 2015, Daniel Ek announced that his platform was welcoming short-form video content from a host of media partners including Vice Media, Maker Studios, Comedy Central, the BBC, ESPN, Nerdist, NBC, and TED.

Yet by October 2016, Swedish tabloid Breakit was claiming that this venture was a “videoflopp,” and that the viewing of Vice Media’s content on Spotify had been “almost nonexistent.” Its sources indicated that Spotify had spent more than $50 million on the media partners video project.

At the time, Spotify said it was “100 percent committed to video,” in an attempt to quiet Breakit’s claims. But today, there is no sign of these videos anywhere on its service. More to the point, the modern Spotify app’s search function encourages you to seek out “Artists, songs, or podcasts.” Original video productions? Not so much.

3) Censorship (2018)

Call it a U-turn, call it a climbdown; this will go down as a textbook case study of a company trying to do the right thing, but still getting it all wrong.

In May last year, Spotify made a major announcement: It was launching a newhate content and hateful conduct” policy. The first part (hate content) was easily understandable, and widely seen as a positive move. Any artist releasing music whose principal purpose was to incite hatred against people because of their race, religion, disability, gender identity, or sexual orientation risked, if caught, having their material removed from the platform.

The second part of the policy (hateful conduct), however, cracked open a hornet’s nest. Spotify claimed that “in some circumstances, when an artist or creator does something that is especially harmful or hateful (for example, violence against children and sexual violence), it may affect the ways we work with or support that artist or creator.”

In practice, this meant the swift removal of music by the likes of R. Kelly and XXXTentacion from Spotify’s key playlists. Importantly, these were artists who faced credible accusations of reprehensible behavior toward the opposite sex, but had not been convicted on any charges relating to these claims. By removing their music, Spotify was accused in some quarters of racial prejudice, and in others of acting like judge and jury. Some of the loudest fury emanated from those pointing out the questionable personal records of historic (white) rock gods in the decades that had come before.

In the end, Spotify publicly retracted the “hateful conduct” part of its policy, announcing, “While we believe our intentions were good, the language was too vague, we created confusion and concern, and didn’t spend enough time getting input from our own team and key partners before sharing new guidelines.”

Something that has always bugged me about this: If Spotify’s editorial teams decide not to add an artist to a playlist on nonmusical grounds, surely it’s up to them. Why – other than a desire to be praised for being “good guys” – did the company feel the need to announce this as an official strategy?

4) Digital distribution (2018)

In September last year, Spotify launched a feature that enabled independent artists to upload tracks, for free, to the service directly – without any requirement for a third-party aggregator or record label. Although this tool arrived in an invite-only beta mode, offering a few hundred artists the chance to test it out, Spotify made no bones about its ambitions to rival the likes of TuneCore, Ditto, Stem, Amuse, SoundCloud, and others in the user-upload space. “We have intentions to make it easy for anyone who has music to share it on Spotify,” Kene Anoliefo, a senior product lead on the project, told Rolling Stone at the time.

Within weeks, Spotify had doubled down on this strategy. It acquired a minority stake in aggregation service DistroKid, which, it said, would allow artists using Spotify’s own upload feature to also distribute their material to rival services simultaneously. Spotify promised this integration with DistroKid would launch “in the near future”.

Then … it all went quiet. That was until nine months later, when Spotify announced that it didn’t want to be a distributor after all. On July 1 this year, Spotify confirmed that it was shutting down its beta upload feature. Its reasoning? “The most impactful way we can improve the experience of delivering music to Spotify for as many artists and labels as possible is to lean into the great work our distribution partners are already doing to serve the artist community.”

Obviously that wasn’t what it appeared to believe less than a year prior – when Spotify went into direct competition with those same distribution partners – but there we go.

5) Spotify Running (2015-2018)

Daniel Ek had long wanted to turn heads on Wall Street when his crucial moment arrived: In May 2015, Spotify hosted a notably Apple-esque presentation in New York to show off new features, which was simulcast online. This was a real statement of intent from Ek, and a public show of the firm’s slickness, not to mention the scope of its ambition as a global tech leader.

One of Spotify’s big announcements that day was the aforementioned short-form video partnerships with Vice Media, Maker Studios, Comedy Central, etc. But it was another revelation that took up the majority of the conference, and irritated record companies. Spotify’s chief product officer, Gustav Söderström, took the stage to unveil Spotify Running – a new in-app platform offering music that responded, in real time, to a runner’s heartbeat. “We’re not trying to sneak simple beat-stretching past you,” boasted Söderström. “We’re talking about a new format where the composition itself seems to magically rearrange to fit your current pace.”

This was “interactive music,” and impressive new tech: Spotify announced six tracks that all changed to fit a runner’s pace, including one, “Burn,” that had been created for Spotify by superstar DJ Tiësto. Question marks surrounded whether Spotify had commissioned Tiësto to create this new format of music directly – cutting out any dealings with record companies.

Söderström explained that Spotify had borne the expense of commissioning “great DJs, composers, full-scale orchestras, and movie-score producers” for Spotify Running’s tracks. He added: “We took on the challenge of designing music that was specifically made for running; music that not only keeps your pace [up], but actually helps you sustain that running high.

“But this raised a whole new challenge: How do you make a single track fit the pace of millions of people who run at different tempo? Or even a single runner who changes tempo? The answer was to create a completely new track format; a track that can actually play at multiple BPMs, depending on your pace.” 

Adding to the excitement, a deal was struck with Nike to bring Spotify Running to the sports apparel giant’s Nike+ platform. In February 2018, however, Spotify Running wore out its sneakers. Spotify quietly announced to its community that the Running feature was being “retired” – though it offered no real explanation as to why. “We always take retiring features in Spotify very seriously,” it said. “We’re pouring our energy into new ways of creating the best experience for our users.”

Tim Ingham is the founder and publisher of Music Business Worldwide, which has serviced the global industry with news, analysis and jobs since 2015. He writes a weekly column for “Rolling Stone.”

Source: Read Full Article