Spotify, Please Stop Buying Podcasts

Jack

20 Nov 2020 • 9 min read

Spotify, every time you buy the exclusive distribution rights to a podcast and make it available only on Spotify, the world hates you a little more. Please stop it.

Interoperability

I recently learned about three types of interoperability from an article written by Cory Doctorow.

There is indifferent interoperability. Such as the cigarette lighter in your car. It doesn't care what kind of device plugs into it. It doesn't force you to only light cigarettes with it. It welcomes any and all who fit the basic standard. What's more is that there's an industry standard that not any one entity has control over.

There is cooperative interoperability where the makers encourage people to use their product or service by extending the functionality. Like creating an API to allow people to use the service without having to be on the website or in the app.

But then there's adversarial interoperability which is where the makers of the thing actively discourage and fight anyone who tries to use their product without paying a royalty, or being a registered user of their product. It's a closed network.

To give an example, the headphone jack has been a universal standard for decades. It has an indifferent interoperability, because almost any old headphones can be plugged into any old device that has a headphone jack. It doesn't matter what country you buy headphones from or what company you buy a stereo from the two will probably work together. But when Apple decided to remove the headphone jack on the iPhone and replace it with a new "lightning" jack that Apple has the patent on, this was a move from indifferent interoperability to adversarial interoperability. It was not done for the user's convenience or in the name of making something better or more compatible with the world. It was done only so Apple could make more money off a proprietary headphone jack. Now you had to buy a special dongle or pair of headphones with the Apple lightning plug to play music through a wired connection on an iPhone. And even if you buy a 3rd party dongle, that company still had to pay royalties to Apple to make that product. We saw that Apple isn't there to satisfy customers, it's there to take more money from customers. Which I call greed, but Apple calls it courage.

When companies close their doors and lock users into using their system or tools, it creates a lot of frustration with the users.

Podcasting has traditionally been indifferent interoperability. It uses a standard RSS format to deliver the show. There's no central business that owns the RSS format, and there's no central place like YouTube which is where you go to listen to podcasts. Podcast feeds are open for anyone to listen to on any app they choose, and that's the magic of it. That's why it's so amazing and awesome. Because it's a glimpse of the pure internet without any gatekeepers getting in the way of creators, and it's beautiful.

When Spotify purchases the rights to podcasts such as Joe Budden, Gimlet, Parcast, Last Podcast on the Left, or Joe Rogan, and makes those shows exclusive to Spotify, it breaks this indifferent interoperability of podcasts and shifts it to adversarial interoperability. Forcing users to use Spotify to play those podcasts. This is not the Spotify way. This is not the way anyone wants it to be.

Spotify was built on the open internet. One huge reason it's so successful is because it was built on the internet which has indifferent interoperability. Spotify thrived because of indifferent and cooperative interoperability. They were able to compete with all the other music players and stand out because they were the best and most innovative. But now that they've become so big they are able close it, and they are trying to. And when companies close the interoperability and force the users to be locked into a specific app or service, this leads to the most hated companies in our culture.

When networks are open it allows for resiliency and efficiency and innovation. But in closed networks, users are locked in, and growth and innovation becomes stagnate for that company or service. I get it though, networks are powerful. To get a user all dialed into Spotify for both podcasts and music is great for Spotify because once a user gets settled in and subscribed to all their favorite shows, they have a hard time getting the energy to switch to another service once they've joined a network like this. This is the network effect. And Spotify can take advantage of this.

To top it off, Spotify's podcast player is not great. It's confusing and hard to navigate. And it doesn't support some basic features like adding your own RSS feed to the Spotify player. Like when Patreon supporters get a custom RSS feed for their exclusive content, they can't add that feed to Spotify. And what I fear is that Spotify will no longer feel the need to improve their player. They can sort of strong arm people into using the app because in order to listen to their favorite shows they must use the app and it doesn't matter if the app is good or bad, so why innovate? Audiences don't benefit from Spotify buying exclusive rights to shows.

Let's look at how Spotify's popularity in podcasts has grown over time. Libsyn, one of the larger hosting providers, publishes stats of which podcast players listeners use the most. They can see this data since they can see where downloads for their hosted shows are coming from. Starting from 2017 where Spotify first started playing podcasts, this is the chart over time.

Since 2018, Spotify has been hovering around 8-11% of the total market share for all podcasts being downloaded/played. What we've seen historically is that Apple Podcasts usually has 60% of the market share, and everyone else below it has less than 3% of the market share. But over time we've seen Spotify rise up to double digits in the podcast market share. That's pretty significant, that is no easy task, but is that worth spending hundreds of millions of dollars to get there?

I don't think Spotify would have rose to 11% market share with the player they currently have. This rise is because they are forcing users to use their app if they want to listen to their favorite shows. Which is not a very nice way to grow your popularity.

Spotify Has Not Really Helped Audiences

So far Spotify has spent hundreds of millions of dollars buying up podcast companies, podcast networks, and exclusive rights to podcasts. But none of these things have made the podcast landscape better for listeners. None! It creates more frustration and we get stuck with a player that isn't advancing.

If Spotify was somehow using their weight and money to improve the podcast landscape then I might let some other things slide, knowing that there's some good in here. But so far I have not seen anything they've done to help podcast listeners. And as a lover of podcasts, this really annoys me. They haven't made podcasts better, reduced ads on podcasts, or built a great podcast player, or given us great content. Because let's face it, if you're a podcast that only exists on Spotify, you're not a podcast. If you don't exist on any podcast player in the world except for Spotify, then you're not a podcast, you're an exclusive audio show on Spotify.

There are some things that come close that Spotify has done good. They have produced some original shows and then released those to the open public. Shows like Mogul and the Amy Schumer Presents show (which Spotify paid Amy Schumer $1 million to make that podcast and is now available everywhere). But I have a feeling those shows would have found another way to come into existence if Spotify didn't produce them. So I'm not sure how much to thank Spotify for producing them. Then you have the argument that Spotify is introducing new audiences to podcasts who weren't listening to podcasts before. Yeah I believe some of that is true. But it probably mostly benefits Spotify owned shows most of all. My podcast, for instance, hasn't noticed any flood of new-to-podcasts listeners from Spotify.

Oh and Spotify isn't available worldwide! There are many countries that you can't get Spotify in. So you're taking a podcast that's available worldwide and playable on any podcast app, and making it not only exclusive to one app, but also exclusive to select countries. That's wretched.

The main people who have benefited from Spotify buying up podcasts or getting exclusive podcasts are Spotify themselves and the creators of those show who have received millions in licensing deals to be exclusive. And I'm still not sure the podcasters benefit as much as they expected. But that's the club, and we're not part if it.

Spotify Knows This is Bad

In 2017, Variety interviewed Troy Carter, the global head of creator services at Spotify. In the interview they asked:

You’ve probably heard this question more than any other, but what’s your stance on exclusives?
Exclusive audio content, specifically with albums, is not within our playbook. I think people have learned over the last six months that it’s bad for the music industry, it’s not that great for artists because they can’t reach the widest possible audience, and it’s terrible for consumers. If you wake up in the morning and your favorite artist isn’t on the service that you’re paying ten dollars a month for, sooner or later you lose faith in the subscription model.

You see that!? Spotify themselves knows that exclusive content is bad for both the artist and consumer!

It's Bad For The Podcasts That Get Bought

Joe Budden was one of the first Spotify exclusive deals. The contract was up this year and Joe has decided not to renew the contract. Saying that Spotify was pillaging his listeners. Even after Spotify offered a significant amount more to stay Joe still refused. It'll be interesting to see when other contracts are up if podcasters will be renewing or leaving Spotify.

As Troy Carter put it above, going exclusive means you will have a much harder time finding a wider audience. Sure Spotify can try to promote its exclusive shows to its users more, and that is working to an extent, but it's still not nearly the size it could be if it was open for anyone to listen to.

When a show moves from being playable anywhere to being exclusive to Spotify it will lose a large amount of listeners. Since podcasts report anywhere from 5% to 50% of their audience being from Spotify and if a show goes exclusive to Spotify then that means they're going to lose 50% to 95% of their audience. Sure you'll see a percentage of people joining Spotify just to keep listening to their favorite show, but I don't think a lot will. Probably somewhere between 1-10% of the existing audience will follow a show over to Spotify. Because I don't know if you've ever tried to get a mass amount of people to subscribe to your podcast, but it's really hard, and it's extra hard to get them to do it when they have to use a specific app to do it with.

Other Apps

The same goes for any other exclusive podcast app, like Luminary! They have also spent millions to acquire exclusive distribution rights of some podcasts and those shows are only available on Luminary. But despite the large amount of seed money they are blowing, Luminary is so small that it's not really able to really compete with any of the other top podcast apps. But again, nobody likes the idea of having 10 different podcast apps to listen to all the different exclusive shows we like. This is not helping audiences!

There are podcast networks which are producing shows but not making them exclusive. Earwolf has payed millions to make the shows Office Ladies, and Conan O'Brian Needs a Friend. We know that Earwolf paid Conan a mid-seven figure amount to make the podcast. And Conan has since renewed the contract with Earwolf for additional seasons and additional salary and even additional Conan spin off podcasts. But has Earwolf made their show exclusive? Not at all. They are able to be profitable without having to do that. And keep in mind Stitcher owns Earwolf. So they could easily make their shows Stitcher exclusives. Stitcher does have an exclusive library but it's more for bonus content or archived content. Which I'm not entirely against putting bonus content behind a paywall, because why not offer extra things for super fans willing to pay for more content, but I don't like that I can only access the bonus content on Stitcher.

Then there's iHeart Radio who have been partnering and bringing shows into their network. For example they bought HowStuffWorks for $55 million, which made iHeart the most popular network. But even though iHeart is producing original content and has a huge network and huge music player that also plays podcasts, they have not made any of their shows exclusive as far as I can tell. So good on ya for that iHeart! You could be screwing this place up too but you're not and I'm proud of you for that.

Summary

To sum up. When Spotify adopts adversarial interoperability and forces users to use their app to listen to their favorite shows it's bad for the internet. Copyright regimes grow larger, and the public domain becomes eroded. We end up with systems that are frustrating and that don't advance. Innovation thrives when things are open and someone who really cares to make things better can do it. When a company has a monopoly over content, it impedes the ability for people to come along and make things better. And Spotify at its core is a company that took advantage of this open interoperability of the internet to make things better, but is now trying to close the door behind them. The more we allow systems and networks to be open, the better things can become, especially in the podcast landscape.

Thanks to Seth Godin's podcast Akimbo, and Podnews for providing inspiration, information, and sources.