It’s that time of the year again! Turkeys are pitching the merits of venison as an alternative lunch-meat. The boss of Spotify Wrapped is five days into a mammoth lie-in. And Music Ally is continuing our series of end-of-year roundup posts.
Talking of Spotify, today’s article focuses on the big moments of 2022 for that streaming service, Apple, Joe Rogan, tips economics, audiobooks and much more.
It’s not a ranking of importance: more a flow through the key narrative points of Spotify’s year. Read on, and browse our other 2022 roundup posts here.
01 Keeping up the anti-competition pressure on Apple
Spotify has been agitating about perceived anticompetitive behaviour from Apple for years, in public and behind closed doors alike. That continued in 2022, with CEO Daniel Ek making clear his frustration that regulators and legislators aren’t cracking down on Apple’s platform policies as fast and hard as he’d like them to. With audiobooks the latest front in this battle, Ek ended the year with a tweetstorm accusing Apple of being a “threat to the future of the internet”. He (and allies like Epic Games) will be keeping up the pressure in 2023.
02 Guinea-pigging ‘user-choice billing’ with Google
Spotify and Google have traditionally had a warmer relationship than Spotify and Apple – for example with partnerships around Google’s smart speakers. The latter company’s ‘user-choice billing’, with Spotify as the first guinea pig testing it out, was directly relevant to the Apple battle. It’s about Android apps distributed through the Google Play store being able to use their own billing systems, alongside Google’s. Exactly what Spotify would like Apple to do, so Google taking the leap could up the pressure on that front too.
03 Opening up about its content moderation policies
There was a firestorm of criticism of Spotify in January around podcaster Joe Rogan and some of the guests and discussion on his (expensively-bankrolled by Spotify) show. That led to an important moment for the company: publishing its ‘Platform Rules’ governing content (both music and podcasts) and revealing that it had already removed more than 20,000 podcast episodes relating to Covid-19. That’s just one topic: white-supremacist music was another controversy later in the year. Spotify’s acquisition of startup Kinzen in October showed that content moderation is a priority on the tech side, but the company knows moderation also remains a challenging human task.
04 Sticking to its guns (so far) with Discovery Mode
Announced two years ago, Discovery Mode is the feature where artists and labels can choose certain tracks to be promoted in Spotify’s autoplay and radio modes, in return for a ‘promotional’ (i.e. lower) royalty rate on streams. It’s controversial, compared to radio payola by its critics. That got some US politicians interested in 2022, but for now Spotify is sticking to its guns and defending the feature. In April three members of Congress pressed Spotify for more details, and later said its response made them think “they can do better to abide by the clear rules of the road for online disclosures”. But with Spotify saying that Discovery Mode has increased participating artists’ listenership by an average of 40%, it remains committed to the feature.
05 Ramping up its exploration of tips economics
Spotify’s ‘Artist Fundraising Pick’ feature launched in 2020 as a support measure during the early months of the Covid-19 pandemic. It was a baby-step into the area of tips economics: enabling fans to pay artists money (relatively) directly. In 2022, it graduated into something more permanent: rebranded as ‘Fan Support’ with more than 200,000 artists using it, and more than 50m clicks/taps on those links by fans. This raises hackles for some artists, who want higher royalties rather than a digital tips jar. Here’s the thing: it may not be an either/or thing: tips should be a layer of superfan support that complements streaming royalties. What Spotify does next with Fan Support could be positive.
06 Stepping up its efforts around merch and tickets
This follows on from the last point. Merch and tickets have been part of streaming services for years now, but it’s debatable how meaningful most integrations have been. Nice to have, but evidence of meaningful sales for artists has been tough to come by. Again, there were clear signs of Spotify stepping up its efforts in 2022. It added merch to its Blend playlists feature in July, and for the second year running made it a key part of its end-of-year Wrapped campaign too. Meanwhile, it replaced its existing concerts hub with a new live events feed, and then in August moved cautiously into selling tickets directly, rather than simply linking listeners through to external sites.
07 Entering (then exiting) the consumer hardware market
Was Spotify’s first hardware product a success? Let’s politely call it a successful learning experience. In-car speaker Car Thing had been out in the wild since 2021 in the US, but its full commercial launch in February 2022 was followed just five months later by its canning due to “product demand and supply chain issues”. Hardware continues to play a vital role in Spotify’s business, but the challenge remains that it’s hardware made by other companies – some of whom are also key rivals in music streaming. Whether Car Thing’s lessons help to hone future Spotify gadgets, or convince it to stick to services, remains to be seen.
08 Holding off on hi-res music
In February 2021, Spotify announced plans to launch a higher-quality-audio tier called Spotify HiFi later that year. It’s now the end of 2022, and there’s still no sign of it (caveat: Sod’s Law may dictate that it’s launched hours after this article goes live…) HiFi does still appear to be on Spotify’s agenda though: in October a customer survey hinted at plans for a $19.99-a-month ‘Platinum’ subscription including “HiFi” and “Studio Sound” features. With rival services from Apple and Amazon offering hi-res quality for no extra cost, Spotify was probably right to take the time to consider its strategy.
09 Continuing experimenting with AI music
Viewed through a certain lens, Spotify doing anything with AI-generated music could be the hottest of hot-potato issues. However, since hiring AI-music guru François Pachet in 2017, Spotify has kept its experiments a.) diplomatically quiet and b.) focused on creating tools for human artists to use, rather than systems that might compete with their music. It continued in that vein in 2022, from the tools used by musician Benoit Carré (another veteran of AI music) for his ‘Melancholia’ album to the ‘Basic Pitch’ audio-to-MIDI converter launched in September.
10 Shuffling the deck in its podcasts business
After rapid expansion inevitably come some degree of reorganisation, which isn’t always a painless process. That was part of Spotify’s podcasts story this year, which began with news that it was shutting down one of its internal studios, and continued later in the year with layoffs, show cancellations, and trenchant criticism from the unions of its Parcast and Gimlet subsidiaries. Yet outside production, Spotify has continued to splash cash on its podcasts business: buying data-focused companies Podsights and Chartable in a February double-swoop.
11 Setting its sights on audiobooks expansion
A year ago we’d have predicted that live audio would be the next big frontier for Spotify’s spoken-word expansion. However, Clubhouse-style services have lost their lustre a bit as lockdowns eased, and while Spotify still has its Greenroom service, it became clear in 2022 that audiobooks are its next big move beyond music. The company closed its acquisition of audiobooks firm Findaway in June, then launched a catalogue of 300k audiobooks in September, asking people to buy them a la carte from its website before they could listen in-app. That’s “complicated and confusing” on iOS (not our words: Spotify’s own, as it used the friction as its latest stick to beat Apple with) but the real 900lb gorilla to be taken on in this sector is Amazon’s Audible.
12 Testing a TikTok-style feed to keep up with The Kids
Talking of looming competitors: TikTok is spooking all the big music services right now. Not just because its parent company is expected to expand its own streaming service Resso – possibly under TikTok’s brand – but also because they worry that TikTok *is* culture for younger Gen-Z listeners, and they may look staid by comparison. So, no surprises to see Spotify continuing to test its TikTok-style music discovery feed this year, based on the Canvas videos artists upload to its platform.
13 Launching a Roblox island to keep up with The Kids
Talking of looming competitors… Well, Roblox isn’t a music service, but in an attention economy, Spotify and its rivals can’t really ignore the hold it has on younger people’s time. Spotify’s response was to get involved: launching its own island on Roblox and later updating it with new K-Pop and hip-hop zones. It still feels more of a branded space than a truly thriving organic Roblox game, but the inclusion of music-making features (courtesy of Spotify’s Soundtrap) was interesting.
14 Testing the waters in gaming by buying Heardle
Heardle was a ‘name that tune’ quiz that went viral in the wake of word-game Wordle’s success. Spotify’s swift acquisition of the property was opportunistic, although we wondered why it couldn’t build something similar (but different enough, legally!) in-house. Still, the bigger picture matters here. Netflix has launched a series of mobile games in the last year, recognising the popularity and importance of gaming, and the potential it might have to bolster its core business. Might those same dynamics work in music streaming? If so, Heardle could be just a first step towards more gaming content around or within Spotify.
15 Giving some love to external playlisters
Anyone can create a Spotify playlist, but since the early days of its in-house editorial team, Spotify’s focus has been firmly on building its own playlist brands rather than amplifying those of outsiders. So, it was intriguing to see a ‘Featured Curators’ pilot this year. “The curators we selected are music lovers with established followings and popular playlists on Spotify, or they’re users telling unique stories through playlists and creating authentic connections with other users,” it explained. Signs of an ambition to foster its own network of influencers beyond its own editors? Watch this space.
16 Football fever with FC Barcelona sponsorship
It’s not so long since Catalan football giant FC Barcelona refused to have sponsor logos on its shirts. Now not only is Spotify emblazoned across them: it has naming rights to the iconic Nou Camp stadium. Spotify is spending a LOT of money sponsoring Barcelona, and trying to head off criticism by promising to promote artists as part of it. Alas, the first big deal of this kind fell victim to The Curse Of Drake, when putting his OVO Sound logo on the shirt for an El Clásico match against Real Madrid saw the match lost.
17 Bowing to economic realities by slowing down hiring
Finally, a little warning for the year ahead. The global economic waters are decidedly choppy, to say the least, and alongside other big technology companies Spotify announced plans to slow down its hiring by 25%. Which wasn’t a full-on recruitment freeze, let alone (outside podcasts, at least) the kind of layoffs that we saw from Meta, Amazon and others towards the end of the year. But with rapid expansion in recent years, Spotify may be a bellwether for the wider music industry in 2023 if recession bites, and costs have to be cut.
While you’re here…
– January’s NY:LON Connect conference we co-run with Music Biz has sold out of in-person tickets, but virtual tickets are still available. Check the lineup here!
– The Knowledge is Music Ally’s free weekly newsletter, arriving in your inbox every Friday with news, analysis and marketing tips. Sign up for it here!
– In October we launched a series of five courses to help labels, managers and artists make the most of Amazon Music. The free courses each last 30-45 minutes. Find them here!
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