Spotify’s new royalty system chooses the winners

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Happy Thanksgiving week! Tomorrow I’m going out and making double baked potatoes, packing up the kids’ holiday clothes (many of my little work clothes will be worn!!), and trying to drive at night to Long Island without running into South State traffic or pissing off the kids. That means there won’t be Hot pod From the inside This week and I will be back next Tuesday. But if you want to be able to say “yeah, I heard about that” at your bipartisan Thanksgiving gathering, I had an insider’s article last week diving into the Ben Shapiro and Candace Owens feud that’s taking the conservative podcast space by storm. Enjoy (?)!

Got a bunch of Spotify news today, including confirmation of its new ownership model and a report that it’s shopping for a new ad agency. Additionally, Pushkin Industries is uniting after a busy year.

Spotify makes it official with ownership changes

A few weeks ago, Music acts around the world I reported the news Spotify is revamping its revenue model, which includes de-monetizing less-played tracks on the platform. Spotify has largely confirmed these plans In a blog post Published today.

Starting early next year, Spotify will implement the following changes: It will begin charging brands and distributors when “blatant” streaming fraud is detected on their accounts; “Noise” tracks, which consist entirely of non-musical sound such as static, airplane sounds, and other forms of white/pink/green/any type of noise, will only be monetized after 2 minutes of listening, instead of 30 seconds for a song. ; The company will only monetize tracks that have accumulated 1,000 plays in the past 12 months.

“While each of these issues only impacts a small percentage of total streams, addressing them now means we can drive nearly an additional $1 billion in revenue toward emerging and established artists over the next five years,” the company’s blog post said. “.

The first two of these changes passed without much of a fight. Streaming fraud distorts the revenue pool, and it makes perfect sense for labels and distributors to bear some responsibility for reporting tracks where such fraud is evident. And if there’s anyone who truly believes that the creator of a 31-second clip of a washing machine deserves the same pay as a music artist, I haven’t met them yet (maybe it’s you! #justice4washingmachinenoisecreatorz).

But the third change, the minimum payout for songs, has generated a lot of negative feedback from long-serving creators Those who know their place In industry.

Spotify says returning these revenues — amounting to $40 million annually — to the group for distribution to higher-earning artists is a practical necessity. The company says that tracks played between once and 1,000 times per year generate an average of $0.03 per month. At the higher end of this scale, based on an industry understanding that funnels earn a conservative $0.003 per run, funnels bring in roughly $0.25 per month. But either amount is often too low for artists to obtain from distributors.

Last month, I spoke with industry experts about what this change means. In specific terms, not much: $3 a year doesn’t make much of a financial difference to independent creators, and frankly, neither does the $40 million portion that major labels will get. But it signals a shift in how Spotify operates and who it works for. It’s long been understood that it’s the most creator-friendly of the big streaming companies, with a lower barrier to entry than Apple or Amazon. Instead, they are now drawing a line.

“They decide who is a professional and who is not,” said Michael Hope, CEO of SoundExchange. Hot pod“Those who reach the level where they deserve to jump and swim in the Royal Pool.”

Report: Spotify shops for new ad agency

Just as Spotify is adjusting its music model, Interested in trade Reports The company is reportedly looking for a new advertising agency as the company pulls back on marketing spend. The streamer has been with UM since 2017 and is considering other agencies, including Publicis.

“Today, UM is Spotify’s agency of record,” said Spotify spokesperson Erin Styles Hot pod. “Spotify is constantly evaluating its marketing goals and larger picture media trends.”

Spotify’s low marketing spend was a topic that came up several times during its latest investor call. CEO Daniel Ek pointed to this budget cut as an example of the company’s new efficiency and insisted that this austerity will continue into next year. “We’re starting to see the top line holding up and even accelerating at a lower marketing cost. We’ve seen this trend play out now for a few quarters. Initially, I was skeptical about whether this would be able to continue. But with recent lessons, it seems very possible that this will be the case.” And we’re simply increasing our learning rate at a significant pace across the marketing team and I think that’s a very positive sign going into 2024.

How does this affect podcasting? Podcast marketing is notoriously difficult, and marketing has been a major point of contention with the Gimlet and Parcast syndicates. They argued that in addition to being exclusive to the platform, their offerings did not receive enough marketing support to increase or maintain download numbers. I’ll be curious to see how much marketing Spotify puts into the remaining originals and whether the strategy is noticeably different than before. That is, of course, if the company does end up hiring a new agency after all.

Pushkin Industries employees join unions after repeated layoffs

Last week, a group of 10 producers, editors and engineers from Pushkin Industries announced… Unions With the Writers Guild of America, East (Disclosure: Vox Media, which owns the edge And Hot pod, also unionized with WGAE). Pushkin, who co-founded it Revisionist history Host Malcolm Gladwell, voluntarily acknowledged the union.

The move comes after the one-time industry darling struggled to adapt to the new economics of podcasting, resulting in three rounds of layoffs this year alone and a major shift in leadership. Last month, Pushkin co-founder Jacob Weisberg stepped down as CEO, and Transmitter founder Greta Cohn, who sold her studio to Pushkin last year, became the new president.

I recommend going out This piece By Lachlan Cartwright in The daily monsterwhich delves into the uncomfortable discussions that took place at a staff meeting over the summer regarding Weisberg’s business decisions, Gladwell’s editorial direction (or lack thereof), and the company’s diversity goals.

That’s all for now! Happy Thanksgiving, and see you next week.