Spotify’s latest update to its mobile app includes a new TikTok-like home page for music and podcast discovery. This feature allows users to quickly discover new content by browsing through short clips of songs and podcasts, similar to TikTok's "For You."
This is most similar to Netflix’s “Fast Laughs” feed which serves as an excellent mode for discovery for consumers and great organic reach creators. In one of our recent newsletters, we wrote about this increased prevalence of the “For You” page.
They also announced several creator-focused news:
🔗 Clips: Short-form “story”-like videos artists can share with fans.
🎵 Discovery Mode: Prioritize specific songs signaling to Spotify’s algorithm to amplify that song in listener recommendations.
⭐️ Showcase: A marketing tool that allows artists to display a card on users’ Spotify home screen.
🗓 Countdown Pages: A page with a timer encouraging fans to pre-save music before the release.
🤝 Patreon Partnership: Podcasters can now publish Patreon-exclusive podcasts directly to Spotify.
📺 Spotify Originals: Announced new exclusive podcasts and originals with Markiplier, Hasan Minhaj, and Julia Fox.
🎙 Spotify for Podcasters: A new, free platform to host, create, edit, and monetize your podcasts.
This is the most recent example of how Spotify leads audio innovation. From its algorithmic playlists to its original podcast content, Spotify continues to push the boundaries of what's possible in the audio world. In this issue, we'll explore Spotify’s historical impact on the creator economy, and how it’s strikingly similar to YouTube.
They Changed Creator Monetization 👇
Spotify is a pioneer in audio streaming, dating back to 2006, when music piracy peaked. Since then, they have paid over $40,000,000,000+ to rights holders and were early adopters of the royalty split model we see today, paying out 70% of every dollar back to rights holders.
They have also introduced several monetization tools for artists and podcasters, including merchandise, ticketing, fundraising, and live audio, making the possibility of a music career more viable.
🤯 The number of artists making $1M+ and $10,000+ on Spotify has doubled in the past 5 years.
💸 10,000+ artists generated $100,000+ on Spotify in 2022.
“These figures represent revenue generated from Spotify alone. When taking into account earnings from other services and recorded revenue streams, these artists likely generated 4x this revenue from recorded music sources overall, plus additional revenue from concert tickets and merch.“
While YouTube is often credited for revolutionizing how creators monetize their content today, it's surprising to note that Spotify was launched the same year as YouTube's first ad product. Before these two platforms, there was no established precedent for how monetization through streaming would work.
They Were Early to “Buy Talent” 💰
Spotify signed creators to exclusive deals before it was popular. Other streaming and social media platforms, including YouTube and Twitch, have adopted this trend in recent years.
Spotify's $100 million exclusive agreement with Joe Rogan in 2019 granted the company exclusive rights to his popular podcast "The Joe Rogan Experience" and set a precedent for what was possible in the creator economy.
They have since continued to sign other high-profile podcast creators to exclusive deals, such as Emma Chamberlin, Michelle Obama, and Kim Kardashian.
💡 Spotify has four of the top five biggest podcasts worldwide.
By buying talent and signing them to exclusive deals, Spotify has attracted and retained top creators, helping the platform to differentiate itself from its competitors. When popular creators produce content exclusively for Spotify, their followers are incentivized to come to the podium to access that content.
Video Podcasts Have Taken Off 📈
With over 70,000+ video creators on Spotify (surprising, I know), they plan to increase the number of video podcasts on their platform. The company launched video podcasts in July 2020, and the format has taken off in recent years primarily due to the rise of short-form clips of video podcasts.
This move puts Spotify in closer competition with YouTube, which has been offering video podcasts for some time. With this expansion, video podcasters can use Spotify’s tools to reach an audience of 489 million monthly listeners.
Spotify's expansion into video podcasting is part of a more significant trend in the creator economy as more platforms seek to offer this format to users. YouTube just recently announced they would make podcasts available on YouTube Music.
The Ultimate “Free-nium” Model 💸
The freemium model has become a popular strategy for companies looking to attract a broad user base while generating revenue through paid subscriptions and ads. Spotify offers free and paid subscription options to provide a low barrier of entry for users while still monetizing the platform.
🤑 This model has been successful for Spotify, with 295 million ad-supported (free) users and 205 premium users.
📈 In 2022, monthly active users increased by 20% year-over-year, and premium subscribers grew 14%!
Other companies across various industries have also adopted the freemium model. Headspace, Duolingo, and Evernote are examples of companies adopting this same approach. By providing users with a low-risk entry point, these companies have attracted a broad user base while still generating revenue through paid subscriptions or other means.
Keep in mind Spotify has been offering this free-nium since 2008. 😅
Algorithmic Curation 🤖
Spotify has fundamentally transformed how we consume music by leveraging advanced algorithms to curate personalized user recommendations. From its early days, Spotify recognized that providing a rich and diverse selection of music was not enough to satisfy individual listeners' unique tastes and preferences.
🎵 Discover Weekly: A personalized playlist of 30 songs updated every Monday based on the user's listening history and preferences.
📀 Daily Mix: Up to six playlists that are updated daily, which are tailored to the user's listening history and preferences.
📻 Radio Stations: Customized stations based on specific songs, artists, or genres generated by Spotify's algorithms.
🔁 Smart Shuffle: A feature that plays new songs in a playlist based on the songs already included, helping keep the playlist fresh and diverse.
💡 Recommended Adds: Provides suggestions for what songs to add to a playlist based on the user's listening history and the context of the playlist.
By combining these algorithms with human curation, Spotify has created an unparalleled listening experience that seamlessly integrates the discovery of new music into the daily lives of its users.
Spotify Co-founders (Martin Lorentzon and Daniel Ek)
Spotify has been pushing the boundaries of what a music streaming service can offer with a range of new features and initiatives that point to an ambitious future for the company.
🎥 Video: Spotify looks to offer more than just audio to its users. The company has introduced video content from exclusive music performances to original programming. By expanding into video, Spotify hopes to provide its users with a more comprehensive entertainment experience.
🪄 Personalization: The company is introducing features like an AI-powered “Spotify DJ” automatically playing and curating songs based on your listening history. User personalization is also evident with the introduction of custom-tailored playlists like Time Capsule, Blend, and Spotify Wrapped, which provide custom playlists and personalized year-end summaries of users' listening habits.
🎙Podcasting: They have acquired several production companies and launched exclusive podcasts. The company sees podcasting as a significant growth opportunity and has invested heavily in developing new shows and bringing exclusive content to its platform.
🎵 All-in-One Audio Platform: Spotify is also looking to be the audio platform of choice for users, with initiatives like Spotify Live, a live audio broadcast app that allows you to listen in on live discussions.
Overall, the future looks bright for Spotify, with the company continuing to innovate and expand its offerings to provide a comprehensive entertainment experience for users. Spotify has been poised to lead the audio entertainment industry for years.
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