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Happy Thanksgiving week! I’ll be out tomorrow making baked potatoes twice, putting together Christmas outfits for babies (lots of little overalls being worn!!), and taking an overnight drive to Long Island without running into Southern traffic or incurring the babies’ rage. That said, there will be no Hot Pod Insider this week and I’ll be back next Tuesday. But if you want to be able to say, “Yeah, I’ve heard of that,” at your own bipartisan Thanksgiving gathering, I wrote an article for Insider last week that delves into the feud between Ben Shapiro and Candace Owens , shaking up the conservative podcast space. Enjoy (?)!
I received a bunch of Spotify news today, including confirmation of its new licensing model and a report that the company is looking for a new advertising agency. Additionally, Pushkin Industries is unionizing after a busy year.
Spotify is making it official with its royalty changes
A few weeks ago, Music Business Worldwide broke the news that Spotify was overhauling its revenue model, which included demonetizing the least played tracks on the platform. Spotify largely confirmed these plans in a blog post published today.
Starting early next year, Spotify will implement the following changes: It will charge labels and distributors a fee if “flagrant” streaming fraud is detected on their accounts; “Noise” tracks, which consist entirely of non-music audio such as hiss, airplane noises, and other forms of white, pink, green, or whatever noise, are only monetized after two minutes of listening, rather than 30 seconds for one Song ; and the company will only monetize titles that have been played 1,000 times in the last 12 months.
“While each of these issues only affects a small percentage of total streams, fixing these issues means we can generate approximately $1 billion in additional revenue for emerging and professional artists over the next five years,” the blog post said corporate.
The first two of these changes were implemented without much struggle. Streaming fraud distorts the profit pool, and it makes sense that labels and distributors must take some responsibility for labeling tracks where such fraud is apparent. And if there’s anyone who truly believes that the creator of a 31-second clip of a washing machine deserves the same compensation as a music artist, then I haven’t met them yet (maybe it’s you! #justice4washingmachinenoisecreatorz).
But the third change, the song payout threshold, has drawn major opposition from long-tail creators and those recognizing their place in the industry.
Spotify argues that it is a practical necessity to put those royalties – which amount to $40 million a year – back into the pool to distribute to higher-earning artists. The company says that titles played between one and 1,000 times per year generate an average of $0.03 per month. At the higher end of that scale, based on the industry understanding that titles conservatively earn $0.003 per play, titles earn closer to $0.25 per month. But both payments are often too low for artists to demand from their distributors.
Last month, I spoke with industry experts about what such a change means. In concrete terms, not much: $3 a year hardly makes much of a financial difference for independent creators, and frankly, neither does the fraction of $40 million that the major labels get. But it signals a shift in how Spotify works and who it works for. It has long been considered the most creator-friendly of the major streamers, with a lower barrier to entry than Apple or Amazon. Instead, they are now drawing a line in the sand.
“You decide who is professional and who is not,” SoundExchange CEO Michael Huppe told Hot Pod, “who reaches a level where they deserve to come in and swim in the Royal pool.”
Report: Spotify is looking for a new advertising agency
Just as Spotify tinkers with its music model, Business Insider reports that the company is reportedly looking for a new advertising agency as the company scales back its marketing spending. The streamer has been with UM since 2017 and is considering other agencies, including Publicis.
“Today, UM is the official agency of Spotify,” Spotify spokesperson Erin Styles told Hot Pod. “Spotify is constantly evaluating its marketing goals and larger media trends.”
Spotify’s reduced marketing spend was a topic that came up several times during the last investor call. CEO Daniel Ek called this budget cut an example of the company’s newfound efficiency and insisted that these austerity measures will continue next year. “We noticed that sales remained stable and even increased with lower marketing costs. And we have seen this trend continue for several quarters now. At first I was a bit skeptical as to whether this would continue. But given recent evidence, it seems very likely that this is the case and that we are simply increasing our learning rate across the marketing team at a great pace, and that I think is a very positive sign for 2024,” he said.
How does this affect podcasts? Podcast marketing is notoriously difficult, and marketing has been a major point of contention with the Gimlet and Parcast unions. They argued that not only were their shows exclusive to the platform, but they also did not receive enough marketing support to increase or maintain download numbers. I’m curious to see how much marketing Spotify puts into the remaining originals and whether the strategy will end up being significantly different than before. Of course, this only applies if the company ends up hiring a new agency.
Pushkin Industries employees unionize after repeated layoffs
Last week, a group of 10 producers, editors and engineers from Pushkin Industries announced they were merging with the Writers Guild of America, East (Disclosure: Vox Media, which owns The Verge and Hot Pod, is also merging with the WGAE) . Pushkin, co-founded by revisionist history presenter Malcolm Gladwell, voluntarily recognized the union.
The move comes after the one-time industry darling struggled to adapt to the new economics of podcasting, leading to three rounds of layoffs and a major leadership change this year alone. Last month, Pushkin co-founder Jacob Weisberg stepped down as CEO and station founder Gretta Cohn, who sold her studio to Pushkin last year, became the new president.
I recommend checking out this article by Lachlan Cartwright at The Daily Beast, which delves into the uncomfortable discussions that took place at a summer staff meeting about Weisberg’s business decisions, Gladwell’s editorial guidelines (or lack thereof), and the company’s diversity goals.
That’s all for now! Happy Thanksgiving and see you next week.