Analysis

Spotify CEO Daniel Ek talks Bollywood, creators and battling radio with live features


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“I believe 100% that we’re going to see a rise of Bollywood and new types of Indian music making it into the global scene in the very near future.”

Not the first prediction of this kind, but it carries extra weight given that the person making it was Spotify CEO Daniel Ek. He was talking to Music Ally after the company’s ‘Stream On’ event yesterday, in response to a question about Spotify’s expansion to 80 more countries.

“The easy answer is, obviously, if we want to be a global service and we want to be the number one audio service in the world, we have to be everywhere. This [week’s expansion] allows us to get to more than a billion new potential users,” said Ek.

“But it also means there will be millions of new creators that will have the opportunity to now have a platform to be heard on,” he continued, citing a stat from the earlier presentation that 80% of creators – the catch-all term Spotify is using for musicians and podcasters – on its service are listened to outside their home country.

“The music story in the past decade has gone from a very anglo-centric repertoire to now having reggaeton being one of the most successful music genres globally,” said Ek, who sees other previously-local genres repeating that trick.

“On a personal basis, I love Bollywood content as an example,” he said. “And then we have the entire African continent, and all of the amazing people that create music there.”

Ek also suggested that Soundtrap, the ‘mobile-first’ music studio that Spotify acquired in 2017, will play a key strategic role in these markets.

“Many of these African creators don’t have a computer to create music on: many of them are using their mobile phone, even a low-end Android phone, to be able to create way more easily. I don’t know where that’s going to lead 10-plus years in the future,” he said.

Soundtrap may still be a somewhat under-the-radar part of Spotify from the music industry’s perspective, but its longer-term importance for the company – its very own GarageBand, to put it in terms of Spotify’s most famous corporate rivalry – is clear.

During yesterday’s presentation, Spotify also revealed that Soundtrap is being used by “tens of thousands” of teachers for their pupils.

“It’s the next generation of music songwriters and music producers that are using it,” said Ek. “We’re in this world where this quick feedback cycle is what gets highlighted, but what we’ve learned is many of the things we’re doing take many years to have full force in the marketplace.”

The last time Music Ally interviewed Spotify’s CEO, the piece sparked fury among a number of musicians: particularly comments that seemed to be suggesting that artists struggling to earn money from streaming were clinging to traditional release cycles; and needed to work harder and release music more often.

Ek has since clarified those comments: “I did not mean to imply that people need to work harder or crank out ten albums a year,” he told Variety earlier this month. “It’s very difficult sometimes to be as eloquent as you can be in a five-minute conversation before an earnings call… and I probably could have phrased it a lot better than I did.”

To some extent, the ‘Stream On’ presentation was Spotify’s most public response yet to the ongoing debate around musicians’ streaming royalties, including news that it paid out more than $5bn in royalties in 2020, and particularly when chief content and advertising business officer Dawn Ostroff announced some artist earnings stats.

“Over the last four years, the number of recording artists whose catalogues generated more than $1m a year across recording and publishing is up over 82% to more than 800 artists… and the number generating more than $100,000 a year? That’s up 79% to more than 7,500 artists,” she said.

Ek told Music Ally that addressing these issues more openly is a necessity for Spotify.

“We’re not a startup any more. We’re actually a key driver of the future of audio, and as such what we realised is we need to reshape the narrative, and be a lot more transparent than we’ve ever been before,” he said.

“We don’t just want to announce things as they come, but put it together and contextualise it. The only time we’ve done it in the past was during an investor-type presentation. The keynote [yesterday] was focused on our creative constituents.”

Spotify still has its mission statement of “giving a million creative artists the opportunity to live off their art” – it was flashed up during the presentation yesterday. But Ek also said that Spotify had eight million creators on its platform by the end of 2020, and that “by 2025 we could have as many as 50 million”.

One way these figures will be looked at is: 98% of creators on Spotify won’t be living off their art – if the ‘million creative artists’ goal also runs to 2025.

Another view on that is that Spotify wants to become a YouTube of audio: a huge community of aspiring amateurs making music and podcasts, hoping to join the ranks of professionals who are actually making a living.

(Yes, SoundCloud should have first dibs on the ‘YouTube of audio’ moniker. And when you see how many of the musicians who came up on SoundCloud remain fiercely loyal to it, you can see what Spotify is hoping for too. Perhaps even more in podcasts, where it could break the next 20 or 30 Joe Rogans itself rather than just spending big money to poach existing stars.)

“We wanted to highlight just how much larger this community is than most people realise,” is how Ek answered Music Ally’s question on the 50 million ambition. “The growth from three to four to eight million creators highlights how large this community is.”

“Not everyone may be able to live off their art, of those, but a much larger number than ever before in history can. How do we build a platform for all of those people that aspire to be professional: to tell a story or sing a song?”

Spotify’s podcast creation app Anchor was centre stage during ‘Stream On’, including the announcement of plans for more interactivity features like polls and Q&As. That kind of two-way interaction is currently missing from music on Spotify, but Ek said he’s ambitious to extend it to artists too.

“Starting with podcasters is the natural place to start, but my goal is to enable a lot more interaction between musicians and their fans as well,” he said.

‘Stream On’ saw Spotify announce its new ‘Spotify Audience Network’ podcast advertising network, which will sell ads in shows both on Spotify and outside it. During the presentation, Ostroff said that in the US, people are listening to as much digital audio as they are watching digital video, but that the former still lags behind the latter for ad spend.

Why? Ostroff said it was because podcasts were traditionally measured in downloads, a metric that advertisers were far less keen on than radio’s focus on listeners – how many people actually heard their ads.

Changing that involves sucking listeners away from radio, and building the tech to bring the advertising dollars with them. That’s something Ek addressed with Music Ally after the presentation.

“The honest truth today is radio is still a massive part of how people consume music and audio widely. In the next decade, I’m fairly sure people will move from linear audio to on-demand audio in a big way, using the internet. For us, it’s really about building that platform,” he said.

“If you look at just the US radio industry, that’s about $17bn in revenue. It’s many multiples larger than the US recorded music industry. And most of that is ad-funded,” he continued, renewing his previous call for the music industry not to give up on ad-supported models, but to embrace any listener shift from radio towards streaming.

“The music industry will be the beneficiaries of that,” said Ek. “We’re entering this ambient computing world where you’re going to see way more opportunities for creation, growth and further monetisation. And all of that will lead to a much larger music industry than it has ever been before. I’m more convinced than ever that’s going to happen.”

Radio still has strengths for listeners though. It’s live, for a start, and (for this journalist anyway) the Covid-19 pandemic has provided a reminder of that: of why someone talking to you, live over the airwaves, feels… more human than listening to a playlist.

Meanwhile, the best radio shows are social: you’re part of a community listening together. The ubiquity of on-air segments revolving around people texting in or tweeting to the hosts is no accident on that score.

If there’s going to be this big shift from radio to on-demand over the next decade, do services like Spotify need to do more with those two features: live and community? Apple Music has its live radio stations and Amazon Music has in-app livestreams on the former front, for example. What could Spotify do?

“There are elements of live listening that will eventually exist on Spotify too. You should imagine that functionality being available,” he said.

“The sense of community I think is an interesting one. I look at our music and talk features [the ‘shows with music’ podcasts that blend chat with music streamed from Spotify] they are clearly resonating with consumers. People are sensing that sense of community.”

(This is why polls and Q&s in Anchor-created podcasts, which seem like small features, may be a step towards something more ambitious. How long until live podcasts are an option in that app, we wonder…)

At the end of the ‘Stream On’ presentation, Ek talked about Spotify’s decision to go “all in on audio”, and contrasted that market with video. But actually, it’s clear that video is playing a growing role for Spotify too: from artists’ looping Canvas videos to its stories-like Clips feature, and the addition of video to Anchor.

“That’s why we call it audio first, and not audio only!” said Ek, adding that while “audio is the primary way that these creators are creating”, the company sees video playing an important supporting role. He also came back to the idea of ‘ambient’ computing, which is clearly on his mind at the moment.

“When you think about the future state, imagine walking down the street, and you get a news alert from your favourite news source. You should be able to listen to that, but if you pull out your smartphone or your wristwatch or even your AR glasses, you’ll be able to see the video clips accompanying that too,” he said.

“We’re [the industry, and people generally] thinking about these as all separate things, but I think it’s going to blend way more in the future. And the number of hours a day you can consume audio is just going to explode, which will mean more opportunities for creators – and more opportunities for the music industry.”

“I’m 100% certain that audio is going to be a massive part of the internet. It’s going to be a massive part of creators’ success, and for the music industry, it’s going to mean a much healthier music industry as well.”

Stuart Dredge

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