What Spotify and YouTube’s Billions Playlists Tell Us About Streaming

Share on facebook
Share on twitter
Share on linkedin
Share on email
Share on whatsapp

Dan Runcie

Every week, Trapital's free memo will give you insights on the latest moves in music, media, and culture. Join 19K+ readers who stay ahead of the trends:

Powered by RedCircle

This week’s Trapital podcast memo is brought to you by trac.

Monetize your career like never before with trac

trac provides hundreds of thousands of artists with new ways to turn their music into money. Their mission is to accelerate the growth and maximize the success of every artist.

trac can get your music on every streaming and social platform. With a personalized artist profile, your fans will easily be able to find your music, merch, NFTs and more to build your brand. trac can also help you track your impact with robust analytics to get your music to the people who need to hear it.

trac will help you get 100% of what you make through:

–  Distribution – get your music heard around the world with the most powerful services available

–  NFTs – Step into the future of monetization by offering your fans unique ownership opportunities.

–  Wallet – Be confident knowing your earnings are paid out to you safely and securely

Visit trac to learn more.

What Spotify and YouTube’s Billions Playlists Tell Us About Streaming

Spotify still is the music industry’s leading source of revenue, but YouTube wants that title. If you read any posts from YouTube’s Global Head of Music Lyor Cohen, the message is loud and clear. Since both companies generate most of that revenue from their biggest hits, their “billions” lists are great indicators of what success looks like on each platform.

Spotify’s billion streams playlist and YouTube’s billions views club have plenty of overlap among their 300+ songs. Some songs are hits on any platform, but the differences are a rearview look at their strategies so far.

Spotify: more English-speaking, more passive

Spotify’s paid service grew first in the U.S. and U.K., and it shows. Songs like Goo Goo Dolls’ “Iris,” Red Hot Chili Pepper’s “Under The Bridge,” and Future’s “Mask Off” have nearly twice as many Spotify streams as their music videos have YouTube views. These songs were huge U.S. radio hits, which overlaps more with Spotify listening. As MIDiA Research points out, listening to music is often a background activity compared to watching music videos, which is more active.

If YouTube reflects more active consumption, then an easy takeaway is that the video platform is a better indicator of what people actually want to listen to. But it’s not that simple. Music is passive and flexible by nature. A song that can play at the club, on the radio, at a coffee shop, or during your workout is the dream. That’s a five-tool song right there. Spotify can check more boxes than YouTube can. Plus, not every hit single has a music video. Beyonce has made us patiently wait for Renaissance music videos that may not come for all we know.

For many English-speaking songs, a song that does much better on Spotify than on YouTube may be a reflection of the music video itself.

YouTube has fewer songs from the 70s and 80s on its list than Spotify. Pre-MTV music videos didn’t get multi-million dollar Hype Williams-level budgets as they did at the height of the CD era. And songs like “Iris,” “Under The Bridge,” and “Mask Off” don’t have memorable videos.

But where Spotify plays reflect its large English-speaking customer base, YouTube makes up for in global presence.

YouTube: more global, more niche, more memes

J Balvin has 11 music videos on YouTube’s list (tied with Justin Bieber for the most), but only has four on Spotify’s list. The first-ever YouTube music video to top one billion streams was the K-pop viral sensation, “Gangnam Style,” which isn’t close to a billion on Spotify. YouTube is more global. It’s a free platform that initially pushed reach and access over paid subscriptions. YouTube’s video mix is where Spotify wants to get to.

YouTube is also more closely tied to memes. Remember all the videos from the “Black Beatles” mannequin challenge? That can’t happen on Spotify. Also, a song like Nelly and Kelly Rowland’s “Dilemma” can hit one billion YouTube views solely because of that moment where Kelly uses a flip phone to send a text on… Microsoft Excel! An unforgettable moment, truly.

On our podcast episode, Tati made a great point about audience building on both platforms:

“Spotify is a place where you can monetize scale, but you can’t monetize niche. YouTube is an ecosystem where you can monetize both.”

Look at NBA YoungBoy. He releases his music first as YouTube videos. He uses algorithms to find his niche and serve his most loyal fans. It’s one of the reasons why he’s the second-most streamed artist of 2022, but if you’re someone who reads Trapital regularly, I doubt you could name two songs by him. That’s by design. He monetizes niche first on YouTube, then monetizes scale on all platforms.

Streams aren’t that correlated with concert ticket sales

One of the standouts from the list is Justin Bieber. He has 11 YouTube music videos and 10 Spotify songs on the billions lists. That’s more combined than any other artist.

Not gonna lie, if you asked me to guess the artist who has the most on both lists, I would have guessed at least five names before I said Bieber. Especially since he downsized his last planned tour from stadiums to arenas due to low ticket sales. But it’s another reminder that streams and tickets aren’t that correlated.

Tati brought up a good point about Justin’s early days on YouTube. He posted all those cover songs as a teenager, which attracted many young fans. Bieber’s songs dominate on streaming and social, more than almost anyone. But I bet that the average Belieber has less willingness and ability to pay hundreds of dollars for a concert. Especially compared to an artist like Lady Gaga, whose recent album sales don’t touch Bieber, but Gaga just concluded a tour herself.

On the episode, Tati and I talked even more about Spotify vs YouTube and what to expect. I also talked to Billboard’s Glenn Peoples about his new Global Music Index and the state of music stocks overall.

Listen to the episode here:

0:52 Immediate takeaways from each Billions Club playlists

3:57 How “meme traffic” impacted both platforms

8:57 Passive consumption vs. active consumption

11:47 International differences between Spotify and YouTube

13:45 Few surprises on Spotify Billions Club playlist

14:49 The Justin Bieber conundrum 

20:35 How Spotify and YouTube enable fragmentation of fandom

22:18 Gym-going and seasonality’s impact on streaming numbers

27:40 Short form videos eventual effect on YouTube streaming

29:41 YouTube vs. Spotify competition intensifying 

38:31 MIDiA’s upcoming predictions report




[00:00:00] Tatiana Cirisano: Spotify’s list is more of an accurate reflection of what the passive majority listens to, whereas YouTube is more of a reflection of what people are actively fans of and actively engaging, which is interesting because that was a question that we asked in our last episode where we were like, how do we measure, like, what are new ways to measure consumption? And I said, well, it’d be interesting if we could actually measure, you know, active consumption versus passive. And now here I’m looking at these two lists, I was like, oh, this is actually potentially an example of that.

[00:00:37] Dan Runcie: Hey, welcome to The Trapital podcast. I’m your host and the founder of Trapital, Dan Runcie. This podcast is your place to gain insights from executives in music, media, entertainment, and more, who are taking hip-hop culture to the next level. 

[00:00:57] Dan Runcie: Today’s episode is a two-parter. We normally don’t do two-parters, but these topics were so closely linked, it made perfect sense, so we had to do it. The first part of this episode is a conversation I had with Tati Cirisano from MIDiA Research, and we talked about the Billions Clubs. Spotify and YouTube both have their respective playlists that have over a billion streams and views respectively. So we talked about what can we learn from both of these playlists together. What does it tell us about the most popular songs that do well on streaming, but also what can it tell us about these two platforms individually? What are the differences between the two playlists? Are there certain songs that perform better on others versus that and why? And what that means more broadly for the sector, Just given how big these companies are. Second part of the conversation, I talked to Glen Peoples who works for Billboard, and he recently released this Global Music Index, which is a value-based index that takes the publicly traded stocks from many of the biggest companies in music, combines them, and gives us an overall picture of how we can look at the performance of the music industry, at least in the publicly traded companies. Hint, it’s been a down year for stocks overall, so nothing too surprising there. But we talk specifically about Spotify, who stock is noticeably in a tougher place, at least from, where it was year to date compared to some of the other companies. So we talked about why that is, what to expect, and more. Really great conversations. Let’s start things off with Tati. Hope you enjoy it. 

[00:02:31] Dan Runcie: All right. Today we have Tati Cirisano back with us from MIDiA Research and we’re going to dive into the Billions playlists that are both from Spotify and YouTube. What a fascinating list that’s like a tripped-out memory lane, telling you what songs are popular, but also how these lists are different. I feel like they both have somewhere between like 3 to 400 songs, but there’s a whole bunch of different trends here. I know that we both have a bunch of notes here, but Tati, I’ll start with you. What stuck out to you most when you were looking through these lists? 

[00:03:03] Tatiana Cirisano: Oh my gosh. So there’s so many things. I guess I’ll start with the things that stuck out to me that don’t have to do with differences, but just stuck out to me in terms of just looking at both. And one was that I felt like there was definitely a dominance of songs and artists from the last decade and maybe even just the last five years, which was interesting to me because there’s been such a debate recently about is old music or what we call catalog, which is often not actually old music. But is it sort of cannibalizing new music? Does new music have more to compete with? And that whole argument. So it was interesting to see that there actually weren’t that many or weren’t relatively as many older songs. I believe the YouTube Billion Views Club had, like, one song from the 70s. It makes more sense with YouTube. And I think YouTube had even more dominance with more recent songs. And that kind of makes sense because if it’s visual-based, maybe some of these songs we don’t have the music videos, or maybe they’re not as good. But I thought that that was interesting just off the bat from both ways. 

[00:04:03] Dan Runcie: Yeah, I would agree. I think that YouTube’s list did trend much younger, and there’s a whole MTV effect of just what music videos look like then and now. But I also feel like what’s important is with both Spotify and YouTube, that when these platforms accelerated in growth, a lot of the artists that were releasing music around those times accelerated and growth too. And I feel like I saw some trends there. If I think about YouTube and its rapid growth phase more so in the early 2010s. There were a few songs there that I saw, whether it was like a party rock anthem or songs like that, that streamed really well on YouTube. Still nowhere near a billion streams on Spotify. And I think on the flip side of that, on Spotify, there were a few songs that were in that late 2010s era when Spotify was in its rapid growth phase that weren’t on YouTube’s playlist. So that was one of those interesting things. Like, for example, I think Drake’s song Nice for What, a billion streams on Spotify. It’s in the Billions Club, but it wasn’t on YouTube’s list. And I remember that music video, I think it’s at the skating rink and he has, like, Issa Rae and all these people in it. So there was definitely some influence of the platforms too. 

[00:05:15] Tatiana Cirisano: Yeah. And that reminds me, too, of with the influence of platforms, it felt like, there were, so okay on both platforms. I felt like there were a lot of songs that were driven by, like, a viral hit or a novelty, which kind of just goes to show how embedded music has become in, like, meme culture and social media and just like online culture in general. But it also, like, looking at the differences within that, it felt like, this is like, I mean, you’d need to do more of a real, like, study and look at the actual numbers on this, but just from scrolling over the list, it seemed like, more of the TikTok traffic is going to Spotify. Like, there were a lot of songs that had a billion streams that I just remember being moments on TikTok, like Dreams and the Roses, Imanbek remix, like those songs and many others had passed a billion streams on Spotify, but had not cracked the YouTube list. And then on the flip side, YouTube had a lot of stuff that was more, like, just these, memes about, I’m trying to think of an example, like the Dame tu Cosita song and video, like that. There were actually an abundance of songs on the Billion Views Club for YouTube that were linked to these videos, including Crazy Frog. 

[00:06:24] Dan Runcie: I saw that. 

[00:06:25] Tatiana Cirisano: It like that was just, like, that was a moment in time in meme culture that kind of preceded TikTok humor. I don’t know, like you can almost track meme culture’s impact based on these two platforms lists as well with TikTok driving more traffic to Spotify and sort of the old, almost like Vine humor going more to YouTube. 

[00:06:45] Dan Runcie: That point makes me think of two things I also saw as well. So I believe the first YouTube video that hit a billion streams was Psy’s Gangnam Style. I don’t think that song has a billion streams or anywhere close to that on Spotify’s list, which I think speaks to your point about just the visual nature of that. And that of course is a pre-TikTok era. The other song I think that lines up with this a bit, and this is because of memes within the music video itself is Nelly and Kelly Rowland’s Dilemma music video. That is the most popular YouTube video that Nelly has, and I’m pretty sure that Kelly Rowland likely has too. And it’s because of this one scene in the music video where Kelly is texting on this 2002’s phone and she has Microsoft Excel open, and that’s what she’s actually using to text. So they’re both, you know, generating money. And Kelly was even talking about an interview semi-recently talking about, I didn’t even know what Microsoft Excel was. They just told me to type. But over time, and now we obviously have a different relationship with texting. That type of event can blow up on YouTube in a way that not necessarily going to Spotify. 

[00:07:54] Tatiana Cirisano: Right. Like, there’s an inherent difference in just what you’re going to do on these platforms. Like, there’s a number of reasons why you might look up a music video on YouTube. Maybe you like the song, maybe there’s a celebrity cameo, maybe somebody told you that. It’s a crazy, wild video and you’re just curious. Like, there’s a lot more reasons I think than there are reasons why you would stream a song. So that just by definition kind of opens up a lot of differences in these lists. 

[00:08:18] Dan Runcie: The other thing, too, that you mentioned earlier was the decades and how YouTube’s list only had one song that I think that was before 1980 and there was only a handful even from the 80s and the 90s as well. And while Spotify had a bit more, I still think it was quite less. Last time I looked at Spotify’s list, it was less than 10% of the 300-plus songs that were more than 20 years old. And I have to assume YouTube may be even closer to 94-96%. Part of that, I think, as you mentioned, is music videos, but I also wonder is part of it with Spotify having a bit more of a close link to radio play and just things that were popular on the radio at the time. Like for instance, a song like Goo Goo Doll’s, Iris, that was on Spotify’s list is not on YouTube’s list. I don’t necessarily think the song had like a memorable music video necessarily, but I think it’s the audio of it, it makes people think of, you know, what was that movie that it was in? I’m trying to remember the movie that it was in. It’ll come to me, but there was some 90s movie that was in, I’m drawing a blank on it right now. Oh, City of Angels. So it was in that, and then, but I just don’t think that people, like, recognized the music video they would like, it wasn’t necessarily this big, like TRL hit the way that like a boy band song was. 

[00:09:37] Tatiana Cirisano: I noticed the same thing where looking over Spotify’s list, it felt very much like just a list of every radio hit of the past 10 or 20 years that it was really, really tied to that. And I wonder, like, this kind of brings me to another thing that I wanted to talk to you about with this, which is how my sort of theory with another reason that these are different is that Spotify’s list is more of an accurate reflection of what the passive majority listens to, whereas YouTube is more of a reflection of what people are actively fans of and actively engaging, which is interesting because that was a question that we asked in our last episode where we were like, how do we measure, like, what are new ways to measure consumption? And I said, well, it’d be interesting if we could actually measure, you know, active consumption versus passive. And now here I’m looking at these two lists, I was like, oh, this is actually potentially an example of that. And the other reason that came to me is because at MIDiA, we’ve recently done a report on looking at different types of entertainment and how much of consumption is in the background of another activity versus focused. And YouTube, like, people that watch music videos on YouTube are much more likely to be doing that as a focused activity in the foreground rather than something in the background, which makes sense because it’s visual, there’s, you know, social features to it, et cetera whereas they’re a lot more likely to just put on their Spotify music in the background of something else. So I wonder if that’s also part of the reason that Spotify seems to have more of a tie to radio and those songs that were just kind of popular for everyone whereas YouTube is more what are the songs and artists and videos that people are like engaging with.

[00:11:09] Dan Runcie: That’s a good point. It makes me think, well, on the YouTube side, I’m much more likely to listen to a YouTube playlist run, right? Like, I normally don’t do that when I’m watching YouTube. I know YouTube has playlist, but I’m more likely to put a Spotify playlist on, which speaks to that. And I know some of the stuff that you’ve researched and the team has researched on MIDiA as well, is just this whole nature of probably a bit more on the digital stream provider side, but how to measure active versus passive engagement of, or actually listening to a song. And maybe this is a closer way to get a gauge for that because, you know, especially when these artists have these big week sales that’ll come out and we’ll see the numbers come through, it would be great to know, okay, how many people said yes, I want to listen to this Taylor Swift song from the Midnights album as opposed to people being like, oh, it just happened to be what’s dominating today’s top hits or if I’m listening to, you know, the number 50 or the top 50 songs in the US. These are the ones that happen to play. 

[00:12:11] Tatiana Cirisano: Yeah, yeah. That makes total sense. And I think the other reason why Spotify’s list probably is more tied to radio is because it’s a lot more, like the user base is less international than YouTube ’cause that was the biggest difference, looking at the two lists was just how few internet, like non-Western artists there were on Spotify’s Billions Club versus YouTube’s. 

[00:12:36] Dan Runcie: That stuck out too. And I think YouTube as well also had a list of artists that had the most Billion Views Club songs were and artists like Ozuna were high up on that list. I want to say he had at least 10 videos on YouTube that hit a billion. But on Spotify, it’s far less. I think J Balvin was another one too, where there was a big discrepancy there. And yeah, I think the fact that YouTube has had much more of a market share and in general listenership in these regions outside of, you know, US and Western Europe as opposed to YouTube. So maybe part of that, where it’s a signal of like, okay, this is where Spotify’s clearly trying to grow and has been trying to get more share in. So, like, if Spotify achieved its goal, then it likely would have more of that and vice versa.

[00:13:28] Tatiana Cirisano: Right. And then it is YouTube’s sort of a more accurate representation of, like, what the music landscape of the future looks like in that way where it will be less dominated probably by Western artists. As you know, streaming sort of infiltrates all these other places. And that is so interesting for, like, the fragmentation conversation that we’ve been having because it means things are just further fractured and, you know, there’s going to be lots of artists and songs on these lists that we’ve probably never heard of. Like, it was so interesting to me because part of the, like, excitement that I had to do this little project of, like, opening the two and comparing them was, I was excited to be surprised. I was like, I want to see what things are on the list that I’m like, I have never heard of that. Or what is that? How did that end up here? And I did not have that moment once looking at Spotify’s playlist. But looking at YouTube’s, there were so many videos and so many artists that I just had never heard of, and that was exciting to me. So I wonder how much that’s a product of YouTube specifically versus that being what will happen inevitably when streaming is more widespread.

[00:14:34] Dan Runcie: And were most of the surprises that you had, were most of them from an international perspective, or were there any Western-based music surprises? 

[00:14:43] Tatiana Cirisano: That’s a good question. There were definitely a handful of Western ones that I can’t think of right now, but the majority were probably just artists I’d never heard of or songs, yeah, artists I didn’t know anything about that had billions and billions of views. Yeah, I don’t know. Let me think about that. 

[00:14:57] Dan Runcie: Yeah. While you’re thinking about that, one thing that stuck out to me was there were certain artists that I think surprised me both in a way of, oh, I thought there would’ve been more here, or there were actually a bit less here. One artist is Justin Bieber. So I know that Justin Bieber is very popular, but if you would’ve asked me who were the biggest artists of the 2010s, I probably would name four names, maybe even five names before I named his name. But if you look at, even if you’re just looking at Western artists, the artist that is the one with the most songs on Spotify and the one that I believe has the most songs on YouTube as well, Justin Bieber is in the top three of both of those lists. I believe it’s at least nine songs on Spotify and at least maybe 10 or so on YouTube. And there’s something about that fandom that I didn’t necessarily, I mean, I knew that he was huge. I knew that there were so many songs that were quite popular, especially the album that had, like, Sorry, and Love Yourself. Like, that one was huge, but I thought that there were other artists, like for instance, an artist like Beyoncé or even someone like Taylor Swift, who, I don’t believe that Beyoncé had a song on the YouTube list at all, or a song that’s really close to that. And at least up to now, I don’t think that Taylor Swift has a song on Spotify’s Billions List. I think that Blank Space will probably get there eventually, but I don’t think she has a song this moment that’s on that list. So to see the two of them who I think a lot of people largely think are two of the largest musicians in of the past decade, but to see someone like Bieber just have hit after hit on both of these lists, I was like, wow.

[00:16:36] Tatiana Cirisano: That’s so interesting, the Justin Bieber conundrum of all of this. Okay, I have a couple of thoughts on that. I think, so he was sort of Made on YouTube, right? That’s where he started posting clips. That’s where he was discovered. And I think something else that this ties into that I wanted to bring up is how, with YouTube, the artists that reach these Billion Views Club, I think probably are more likely to have sort of built a community on YouTube which Justin Bieber did, and that was kind of like the roots of his fandom. So when I was reading YouTube’s, like, blog about the Billion Views Club, and there were a bunch of artists’ quotes, and a lot of them had to do with the artist saying, you know, like, YouTube was a place to build a community. And Alan Walker was one of the artists who said that. And he was someone who, he’s an electronic music artist who when I was looking at the YouTube Billions Views Club, he came up again and again and I was like, it seemed random to me because he’s a great artist. He has a big community of fans, but I just didn’t think that he would have billions of views. But he seems to credit the community aspect for that. So I think that could be part of it. But then as soon as you said, oh but he’s also one of the top artists on Spotify, I’m like, okay, but that’s a completely different story because there’s no community building on Spotify. So is it just that the fans are, that obsessed with the music that they’re, you know, maybe migrating over and streaming there as well, or are we just misremembering, you know, how big of an impact Justin Bieber had? And then that brought me to thinking about how, I mean I think this relates to Taylor as well, but they both built their fan bases at a time when things were just kind of a lot less congested. So I think it was in many ways, easier to get a billion views or billion streams on something a couple of years ago than it is now, now that people’s tastes are so fragmented. So maybe that’s also part of the reason why, like, I wonder how many of those streams came from, you know, pre-2015 or something versus from then on. I wonder when they were accumulated. So yeah, that’s sort of my rant of thoughts. 

[00:18:41] Dan Runcie: That one about Bieber is a good one because I didn’t think about that, but I think it’s absolutely right. He was doing all those cover songs of all these other artists when he’s like a teenager. He’s growing the base there. And to the point that you had brought up in an article a couple of months ago, we talked about the last time we’re on the podcast, he is in a different category than someone like a Beyoncé or Taylor Swift. Like, when Taylor made Teardrops On My G uitar. I don’t even like, that was probably around the same time that YouTube started. Like in some ways her fandom predated so much of what people know as music. And of course, Beyonce became a solo artist from Destiny’s Child well before YouTube even started. So I think that’s a good point there with some of it. The Spotify thing though is interesting, yeah. I mean, I think those songs did get a lot of radio play as well. Like everything off of that album, that Bieber’s album that Sorry came on as well. Like, they got a ton of radio plays. So that ties into the Spotify piece of it, too, and maybe a little bit of misremembering of certain things of, well, and you know, like I’m a little bit older than the custom Bieber demo, so there could be some of it there where they may not hit me in the same circles that, the same way that, you know, someone did with Beyoncé for instance.

[00:19:53] Tatiana Cirisano: Yeah. I have another thought related to this that I feel like I’m struggling to articulate, but I’m going to try, which is that on the Spotify list and the YouTube list, I thought there was more overlap when it came to which older artists were on the list than there was when it comes to newer artists. And I wonder if that is also sort of further proof of this fragmentation that’s happening because it would make sense that if a decade ago, two decades ago, people kind of had less to choose from to listen to. Everybody kind of has the same favorite artists from those decades that they’ve listened to enough to reach a billion streams. Yet now that people have more choice and things are fragmented more, their favorite artists and songs today are more varied. 

[00:20:39] Dan Runcie: Yeah. Yeah, no, I think there’s something there because if you think about it, the lists are quite similar. And I think even if you look at YouTube’s list, which I think even though YouTube’s list is less reliant on radio, the biggest songs they have from the 80s and 90s are still the same songs that people have heard in bars and in stadiums and in TV commercials for decades now. So there’s consistency there. Things do start to get a bit segmented to your point of where things are right now. So both of these platforms, in many ways enable the fragmentation of fandom. Their algorithms made it easy for people to have their own circles. So I do think that that piece of it is true. So I think that’s a good point. 

[00:21:18] Tatiana Cirisano: Yeah. Okay. I’m glad I could put that into words ’cause it was one of those things where I had this thought and was like, does this make sense? 

[00:21:24] Dan Runcie: Yeah. Oh, yeah. 

[00:21:25] Tatiana Cirisano: Yeah. Fascinating.

[00:21:26] Dan Runcie: Another thing too, that stuck out, this stuck out a bit more on Spotify’s playlist than others, but how certain songs have shifted from when radio, for instance, was more playing songs that I think people more often wanted to hear in their cars. But Spotify, it’s on-demand, it’s everywhere. I think, for instance, workout music is something that we’ve seen a pretty large uptick on with Spotify. A song like Eminem’s Till I Collapse, which is in the billions playlist for Spotify, I don’t think I heard that song once on the radio. Maybe I’m misremembering things just relative to how big Eminem’s hits were in the early 2000s. But that song is one of his most played songs. And I think it’s because it’s a song that a lot of guys listen to when they want to work out. Maybe it’s something that they also will play, like, I don’t think they to like LA Fitness necessarily like on the speakers, but I think it’s more so of like a, no, let me go listen to this while I try to, you know, set PR on the bench press or whatever. So I feel like there’s things like that, also seasonal music, right? Of course, just Mariah Carey and some of the records and accolades that All I Want For Christmas Is You has continued to reach and all of the remixes and versions she’s done of that song, like that doesn’t happen without streaming, right?

[00:22:41] Tatiana Cirisano: I was going to say September was also on there, which, you know, every September everybody starts to sing. That is a seasonal song. So, yeah, no, I totally agree with you. And I also noticed that both lists had a lot of, like, upbeat music, like what you’re saying, like stuff that people work out to. And I feel like it’s for different reasons. Like I’m Spotify, maybe those types of songs dominate because like you’re saying, they’re the things that people put on in the background of something. Whereas on YouTube, the reason might be because those tend to have more vibrant videos. Like, I feel like more people are likely to watch videos for, you know, an upbeat reggaeton song than like some acoustic, I don’t know, Taylor Swift song, even though she’s a massive star. Like, overall, you know? And on that note, I don’t know if this is just my, you know, anecdotal takeaway, you’d have to, again, like actually go through all the songs and do some data crunching. But I felt like Spotify had actually more varied in terms of like upbeat songs were on there. But also a lot of, Coldplay, a lot of like earlier Ed Sheeran, like, those more like, not so upbeat, more acoustic songs, whereas YouTube barely had any of those because again, I think there may be less likely to be something people watch the video of. I don’t know. But that was interesting just how uptempo the two lists were. 

[00:23:59] Dan Runcie: Yeah. I would need to go back and check to see if like a song like Coldplay’s Yellow. Is that on YouTube’s list? 

[00:24:08] Tatiana Cirisano: It’s on Spotify’s, but I don’t think it’s on Youtube’s.

[00:24:10] Dan Runcie: And that would speak to that, right? It’s a more somber video. I’m pretty sure Chris Martin’s head is laying like sideways on the pavement in that video, right, or on the bed, if I remember correctly. So yeah, it’s just not going to be as, I think, yes. Like, if you have five minutes, like, this is the thing that I want to be able to get to. So yeah, it’s such a fascinating distinction. And I think with it, it’s clear that with both of these platforms, the two of them are really trying to compete more and more with each other, with both Spotify trying to get more and more international, YouTube trying to have more and more influence just in terms of the overall revenue that they generate for the industry. So I do want to talk about the two of them as companies distinctly, but before we get there, I think that the international piece and just how revenue is generated for each of these streams or each of these views will be an interesting distinction over time because, especially with Spotify, these streams that the artists are generating don’t necessarily get weighted the same in terms of the pro rata and the pools that they get put into and then getting separated. So if one artist has a bunch of streams from a bunch of their fans, but a lot of their fans are in places where the subscriptions cost $2 per month to subscribe to Spotify, or there’s a over index of free accounts versus paid, like these numbers don’t necessarily reflect that, which is fine. I think we’re just trying to get a gauge for what listening looks like. But the revenue may actually look very different for, let’s say, thinking about like one of these, you know, 80s or 90s radio hits. The person that’s listening to that account may be more likely to be paying 10 or maybe soon $11 a month for Spotify subscription if I’m just thinking about what that consumer may be like and therefore essentially getting more revenue per stream than some of the newer artists that may have a younger aboard international fan base. So that was another point that I thought was interesting. We won’t have that data, but just based on inference, I feel like that’s a trend in terms of where it’s going. 

[00:26:14] Tatiana Cirisano: Yeah, that makes sense. And I also wonder, like, if short form video becomes the more dominant form of consuming video, and the people that are watching music videos on YouTube shift to watching 32nd videos that use music on shorts, like, what will that do to the revenue mix? And it’ll also depend on if the way that UGC platforms payout to the music industry changes where it’s no longer this, you know, blanket payment for uses and is more per use. I think there’s a lot that could get shifted around there. And I wonder if, like, does that mean YouTube is sort of cannibalizing its own, one of its own sources where people that are watching music videos are now going to shorts instead? Or is there an opportunity? Like, I think there’s an opportunity for both. But I guess these are just questions that come up in my mind when I think about it. 

[00:27:02] Dan Runcie: Yeah, it’s like in some ways it’s similar to when Instagram adds stories, right? You’re trying to get a sense, is this additive or is this going to take away, And I think YouTube’s goal is that would be additive, but you’re bringing up, I think, a valid thing where it’s a little different with music and how you’re registering streams. And I do think that there’s a certain number of people that the better and better that shorts get, there’s going to be less desire to go check out the actual video. And if these songs aren’t registering, I think at least for a stream or a view, it’s 30 seconds of listening needs to be registered, at least to be counted as a stream. Then if that doesn’t happen on a short end, you’re just getting these clips, then how does that impact the actual artist themselves, right? 

[00:27:47] Tatiana Cirisano: No, you put it really well. Like, the better that shorts gets, the more it might actually threaten people going to YouTube to watch the video.

[00:27:55] Dan Runcie: Yeah. So many interesting, I think, things to just dive into with this. But I think it’s a good point to just talk more broadly about Spotify and YouTube in general, just in terms of where they are, how both of them want the other one. And I think based on these blog posts and based on a number of the letters that, the emails that you’ll see from Lyor Cohen when he’s describing where things are with YouTube. There’s clearly a goal to, you know, establish itself as the leader in the market. And I think the growth has been pretty strong, but of course Spotify, I think still with nearly 200 million paid subscribers is definitely, you know, I think leading on that front. But where do you see this play out in terms of whether or not the trends and clearly what these playlists tell us about the tendencies of these two companies and also where things are going and who we think will be more or less dominant, let’s say five years from now? Let’s not say 10 years. I think that’s a bit too far out, but let’s say five years from now. 

[00:28:51] Tatiana Cirisano: Yeah. Well, I’ve written about this, I’ve written a couple of blogs about this, but I think that YouTube does have a lot of advantages, especially for just where the music landscape is going. So one is that, in the streaming world, there’s so little differentiation, right? All the DSPs kind of offer the same experience, the same catalog, the same price. But YouTube actually has a differentiating factor in that it’s an audio-visual platform, and that they also have shorts, and they kind of have this ecosystem of apps that feed into each other. And that’s sort of the second advantage, is that ecosystem aspect where, you know, based on our data, new generations of fans are really looking for more ways to actively participate in fandom and, you know, not just listen to a song, but create content around it. And YouTube has that it has this, you know, creator proposition. In many ways, YouTube was the first, arguably the first, you know, creator platform. The first place that you could post video content online and build a career around it. So, fans want this, but also artists need more ways to directly engage with their fans and monetize and actually not just be discovered, but sustain fandom and build communities. And that’s the thing that I think so many social platforms lack, is they can help artists get discovered, but it’s still really hard for them to connect the dots. So when you have YouTube, if you think about like the journey of, a fan through the ecosystem, you know, maybe they discover a song on shorts, and they can actually just click it and go straight, you know, go straight to the artist’s YouTube page where maybe they watch the video that just came out and then they can go to YouTube music and stream the song, and it kind of creates this more frictionless experience. So I think we’re already seeing a lot of consumers spend more of their music time on platforms that let them play around with the music, like the TikToks of the world and the shorts of the world. So if you have an ecosystem that combines that with streaming and the ability to just go seamlessly from one to the other, I think that’s really powerful. And that’s also why, you know, ByteDance launching a streaming service could really change the game. I think ByteDance and YouTube have a lot of the same advantages in that space. So I think YouTube is well positioned for the current era and what both artists are looking for and what fans are looking for, I guess is how I would frame that.

[00:31:22] Dan Runcie: Yeah. I think that YouTube’s biggest advantage with this is that A, it still is under a much larger company that prints money from search, which is Google, right? So the fact that it in itself is the second largest search engine, largely because of Google, I think that piece of it will serve well. And I think secondly, the fact that when there’s so many more things competing for your attention, whatever can make that have less friction, it can make it easier for people to access that platform as we’ve seen based on the rise of TikTok, I think those platforms do tend to win out in this area where you’re ultimately trying to either capture or monetize attention. And the way that streaming is going, even though I know it can be lucrative for artists that own their assets or have favorable terms, it is a bit more of a measure of capturing attention for a lot of artists and being able to essentially market and position themselves out there to share what they have so that they can monetize elsewhere. And I do think that, I know I’ve talked about this previously, but just Spotify may be in a little bit more of a difficult position just given the fact that its ultimate goal is still to try to get more monetization from its non-music audio, whether it’s your podcast or your audiobooks and stuff like that.

[00:32:41] Dan Runcie: And I think that is a little bit of a tougher bet relative to YouTube, China. going with shorts and essentially try to compete more directly with TikTok or just other things in general that are making it easier. That said, I still think that Spotify is more strong from a product perspective of actually being able to, you know, ease of use of listening, being able to find and skip to the song, and being able to listen to a song on my phone you know, turning off the screen and then putting it in my pocket. And I know that YouTube does now allow you essentially to do that if you pay for subscription, but I think the friction, at least in the consumer’s mind, is a little different than it is with doing that with Spotify, even because you do that with Spotify for free account especially. So I do think that there are some pros and cons there, but to your point, I do think that because YouTube is moving more in the direction of creating less friction for people to use its product and just the fact that it’s visual, it’s engaged, and to your other point, it’s a bit more directly connected to fans being able to actively choose what they want to listen to, like the data and all those things are going to be more impactful and insightful there.

[00:33:48] Tatiana Cirisano: Right, Right. So I think artists will kind of go to wherever the fans and the remuneration opportunities are, and I think YouTube is right now, providing more of that than Spotify is. Like, Spotify is a place where you can monetize scale, but you can’t monetize niche. And YouTube is an ecosystem where you can monetize both. And I think there’s no reason why streaming services in general shouldn’t be a place where you can monetize both. But we haven’t really seen that happen yet, and I think YouTube is moving in that direction. So I guess I come at this question because of the work that I do from such a perspective of what do the artists and the fans want. But of course, that doesn’t necessarily mean that alone isn’t going to, you know, make YouTube overtake Spotify. So I guess I’m a little bit biased just based on the work that I do. 

[00:34:38] Dan Runcie: Yeah, I could see that. Because there’s just so many other, there’s just so many factors at play here. It’s such a dominant position and at the end of the day, nearly 200 million people in the world are paying for the service and that is much higher than a lot of these other services. It’ll be interesting to see how this plays out though. I feel like to some of the points you brought up earlier. Just going back to the Billions Club, if we had this conversation two years from now, I’d be interested to see, one, which old songs creep back up and which songs that have come up recently end up rising up and hitting those places, and does it line up with a lot of the points that we brought up here? So I’m excited to see what that looks like. 

[00:35:15] Tatiana Cirisano: No, me too. And also what the pace will be like? Will there be just way more songs that have hit a billion streams in a shorter amount of time, or will the opposite trend happen because of fragmentation? Like, I’m not, I’m not really sure. So yeah, as always, excited to see definitely what comes next. 

[00:35:30] Dan Runcie: Well, Tati, this is great. Thanks for coming to share these insights. And I think now I got to go back and count how many Crazy Frog videos there were on YouTube’s list because when I saw that, I’m glad you brought that up. I was just like, my goodness, I forgot all about this trend. 

[00:35:45] Tatiana Cirisano: Yeah, at least in that ratio, you know, we have confirmed YouTube wins. 

[00:35:49] Dan Runcie: All right. Before we let you go, what do you have coming down the pipeline? Are there any upcoming research or any recent things that you’ve put out that listeners should keep an eye out for?

[00:35:58] Tatiana Cirisano: Yeah, I would say coming up one of my favorite things that we do at MIDiA Research is our predictions report where every year, at the end of the year, we put out predictions for the coming year. And we also rate ourselves in terms of how much we got right from the past year. I believe our success rate is somewhere above 80%.

[00:36:16] Dan Runcie: That’s legit. 

[00:36:17] Tatiana Cirisano: That’s great. But yeah, so we always do I believe we always do a free webinar on that. It was free last year. So look out for that because it’s a great chance to interact with us even if you’re not a client. And it’s a lot of fun. 

[00:36:30] Dan Runcie: Awesome, we’ll look out for that and, yeah.

[00:36:33] Tatiana Cirisano: Yeah.

[00:36:33] Dan Runcie: We’ll have to see. I’m curious about what the hit rate will be this year. So definitely let us know what the success rate is…

[00:36:39] Tatiana Cirisano: We will.

[00:36:40] Dan Runcie: from the ones you made last year, heading into this year. 

[00:36:42] Tatiana Cirisano: Awesome. Thanks, Dan. 

[00:36:43] Dan Runcie: Awesome. Well, thank you. This is great. 

[00:36:45] Dan Runcie: All right. Hope you enjoyed that first part with Tati breaking down the Billions Clubs. Here’s my chat with Glenn Peoples.

[00:36:53] Dan Runcie: All right. Today we have Glenn Peoples with us who is from Billboard, and he just released this Global Music Index, which has stated that music stocks are down 44% this year, twice as much as the market. And Glenn, it’d be great to start here. What’s going on? Why are socks down in the music industry?

[00:37:13] Glenn Peoples: Hey, thanks for having me. Well, stocks are down in general. So it’s not that just music that’s having a tough time at the stock market. You know, a big component of the Global Music Index, which I created for Billboard is Spotify. And Spotify has had a tough year, just like Netflix has had a tough year. There’s, I think, enthusiasm for streaming stocks was high at the beginning of the pandemic and dropped quite a bit since then. And investors are not looking at growth so much as looking at margins, looking at profits, and so they’re expecting a lot more from streaming services right now. So it’s a tough time to be a streaming service, whether you’re Netflix, whether you’re Spotify. You could say, well, the investors got carried away. They were overvalued. Yeah, maybe so. It’s just been a tough year for streaming services and when Spotify is that big of a component of the index, it’s down, well, as of yesterday, it’s down 60% for the year. And so that’s a lot of market cap that’s gone and that’s dragging down the index. And that’s the short version. 

[00:38:17] Dan Runcie: Right. So of course, it’s a value-based index. Market cap is what defines it. And just so listeners know, how big of a factor is Spotify? Like, how much is their stock and their market cap weighted in terms of the overall index?

[00:38:33] Glenn Peoples: I would say it’s probably, again, this is just ballpark. It’s probably about 15% of the value of the index. It was a lot more obviously. I would say right now at its current price, it’s 10 to 15%. Universal Music Group is the biggest component of the index, and there’s some other companies just a handful that really stand out above everybody else. Live Nation, Warner Music Group, Sirius XM are some of the big ones. 

[00:39:02] Dan Runcie: The thing that stuck out to me about it is that, of course, Spotify stock is a huge piece of it, but even if you were to take out Spotify, the non-Spotify stocks in that index still are down more than the overall market has been this past year. So it also makes me think that there may be something going on that’s a bit deeper than just streaming. 

[00:39:23] Glenn Peoples: Yeah, it’s not just streaming. You know, a lot of music companies had a great 2021 and I think that they just had further to fall. So there were some really high valuations and it just sets these companies up for a pretty big fall when investor sentiment turns and the market turns. And ever since the Fed announced in, I believe, December, that it was going to start raising interest rates. You know, stocks have started to fall and Spotify definitely started to fall then. And it’s been a long, what is that, roughly 10 months since then. Things have calmed down a bit, but stocks are, boy, they’re really having a tough time. It’s really volatile a lot there. I think there’s two ways to look at it. One is what’s the value of the stock? What’s the value of the company as valued by investors? And what’s the potential of the company based on the company itself and the intellectual property it has? And those two don’t always line up. You know, Spotify I still think is a very good company. I think it has a lot of work to do, but it’s growing at a good clip and I think they have good people there. But when you are a streaming stock and you’re facing really a once-in-a-generation kind of environment with very bad inflation you know, crazy, I was about to say unemployment, but unemployment is not that bad. It’s just a very strange time in the market and a very strange macroeconomic climate. And you’re seeing good companies have very difficult times with their stock prices. You know, Universal Music Group is down. But the market is down overall and Universal’s not going to escape the just general downturn of the market. That’s saying something because Universal is the biggest music company out there holding up market share very well has a big share of the top 10, any given time, big artists. But you can’t correlate stock market performance with company performance just perfectly. It’s a very strange time in the macroeconomic climate right now. 

[00:41:23] Dan Runcie: Yeah. The interesting thing with the major record label stocks, and even some of these other companies that, yeah, even though they may not be streaming services themselves, when streaming makes up such a high percentage of the overall revenue for this entire industry, then Spotify’s stock is in many ways going to be at least somewhat correlated to what we see with Universal given the fact that these companies have equity in each other, they’re so dependent on each other, so a lot of that is given. You mentioned Live Nation earlier, and I think that their stock is interesting, too, because even though it isn’t directly tied to streaming, that stock had hit record highs in the middle of the pandemic when there were no shows going on. So that just spoke to how much of a disconnect there was if you looked at how the company was actually doing in 2020 and even in 2021 when there were nowhere near as many shows as they had had in 2019, but they now are actually being able to realize more of that revenue. But the stock has adjusted in a lot of ways since. So there is a bit of this disconnect. I think there was just a good amount of excitement as well about what’s happening in music as an investment class. Specifically, you looked at all of the catalog sales and the booms that happen thanks to the low-interest rates, and they’re no longer low anymore. So you’re also seeing that play a factor in, and you’ve also heard some of the acquirers of those catalogs expressing a bit of disappointment that the returns aren’t quite what they thought the returns were going to be as well. So some of those things, I think, Brought some of the temperament and a lot of the companies that are in your index down to, I don’t want to say necessarily down to earth, because I think there’s still plenty of room for growth for a lot of them, but it’s clear that we’ve moved past that era of the pandemic when things were just high for the pure speculation of where it could be in a few years.

[00:43:15] Glenn Peoples: Yeah, I think the honeymoon is over for a lot of music stocks. You know, music as an asset class was really attractive. And, you know, look, just the fact that Universal is public and Warner is public once again, and there are numerous streaming services from Tencent Music and Cloud Music in China to Anghami and Spotify and Deezer. There’s a lot of music companies that are publicly traded right now and that says a lot about music as an asset, as a segment, set aside the problems it’s had in the last year. So music companies had a great 2020 and 2021, and it’s been downhill since then. But the fact that there are a lot of publicly traded music companies right now, and so much investor interest in music catalogs like you mentioned, I think says a lot about music as an asset class, music as an investment in general. Look, five years ago, how many publicly traded music companies were there? I mean, Spotify has been public for about five years. Pandora was before it was bought by Sirius. You know, but you didn’t have Tencent, you didn’t have Cloud Music, you didn’t have Anghami, you didn’t have Deezer, you didn’t have Reservoir Media, or Believe. Warner was private. Universal was private. So the fact that Wall Street has taken a liking to music, I think says a lot despite what the stock prices say right now. 

[00:44:40] Dan Runcie: Yeah, I agree. The fact that this wasn’t even possible, just shows what’s happened. And a lot of companies, even outside of music, are starting to have money at least level back off now that the pandemic is over, now that the quarantine highs for a lot of these stocks are over. I’m interested to see where did things go from here, because I still believe that there’s a ton of potential in each of these companies if the expectations and if the investors expectations of the market are where they need to be. I still think that music is a hot and a popular asset class, especially for investors. But is it 30 x value? Is it 30 x multiples for some of these catalogs that just bring ’em to certain valuations, or does it need to be more level? Because I do think that there’s still plenty of value if those multiples and a lot of those things are where they should be. And even thinking about whether it’s live entertainment or streaming in general, I think there’s still plenty of room for growth. There’s still a lot of opportunities there, but it’s just being able to get a clear idea on, what is the actual TAM? What is the actual total addressable market for these areas? And I think if anything, you saw that challenge happen with a lot of the discourse around Netflix and what the future is there, you started to saw things drop right around they had, you know, around 220 million subscribers. I think Spotify was likely asking similar questions, too, and I still think there’s growth, you know, for the right price there’s always going to be something, but what that price would be and how many people are willing to pay for it, knowing that, of course, if it’s a paid product, you’re not going to hit all 8 billion people in the world. But there is some actual number out there. So I think the more clarity that there is on that, and of course that’s part of the game to figure that out, but the closer that you can get to what that actually is, the more that investors can make sound decisions. 

[00:46:25] Glenn Peoples: Yeah. You know, as we’re talking now, there’s a lot going on. We’re a couple of hours away from Spotify releasing third-quarter earnings, which will, I’m not sure how much that’ll say, look, that’s backward-looking, but the company will take the opportunity to talk about a lot of things investors and analysts are curious about. Yesterday Apple announced it was raising prices for Apple Music and Apple TV Plus, and the Apple bundle. And YouTube premium prices went up as well, I believe, for the family plan only. And what do we see today? What we see Universal shares went up almost 12% and closed. They’re trading the Netherlands, so that’s already closed. In the middle of the day, Warner Music was up 7% to 8% at its best. Believe was up. Hipgnosis shares were up about, and those closed, that trades in London. That closed up about 8% I think. So investors, I think, get the news that they’ve really been waiting for, that prices are finally going to go up. You know, Netflix has raised prices. Pricing in streaming video on demand is a lot more flexible than it is for music and music prices have barely budged in over a decade, and executives have been saying for months and for years that prices will go up. But they haven’t. 

[00:47:45] Dan Runcie: Why do think it took this long? 

[00:47:47] Glenn Peoples: Well, I think, companies were much more concerned about growing the market than maximizing revenue per customer. Is it more important to get the customer in the door or to charge more per customers is the question, and I think that they’ve been much more concerned about building the customer base and building relationships. And then at some point, it’s a timing issue. When do you raise price? When can you do it without turning people off? And I think what we see these days with inflation is what it is, is companies might feel a little more emboldened to just raise price and think they can get away with it. Name one price that’s not up in the last year. Except music streaming, it seems like everything else is up. And so somebody had to be, you know, first to do it and YouTube and Apple did it, which could embolden Spotify to do it finally. And I think my impression of Universal’s shares going up almost 12% is that they think Spotify’s going to raise prices as well. That doesn’t seem like a bump just from Apple. That seems like a bump from broad price increases across the board.

[00:48:51] Dan Runcie: Yeah, I would agree. I think that it’s going to happen and the reason why I think it probably hasn’t happened until this point I was talking to Will Page about this, who is a former chief economist at Spotify. And his perspective on it was that the difference, and it was mine as well, the difference between why a company like Netflix would continue to increase prices but Spotify hasn’t a bit in line with the type of content that you’re getting. In a lot of ways, Spotify and Apple are offering a lot of the same thing. Sure. I know Spotify has its podcasting, Apple has its podcasting and non-music audio, and we’ll talk about that in a second. But I think when they’re all offering the same thing, then there’s a bit more pressure to try to offer price discounts and bundles and stuff like that as opposed to Netflix or some of those companies offering differentiated content. So you’re more buying into something that you’re going to get on Netflix that you can’t get on Hulu or on Disney Plus, or on HBO Max or one of the other services. So I feel like there’s a factor of it there. And I remember a few years ago there was some tests about it and some discussions where in Europe they were exploring what. 12.99 would look like, or maybe it was 13.99. But I didn’t hear anything necessarily come definitive from that. Maybe it was 11.99, but there was some price increase that they were exploring in Europe. So it feels like it’s inevitable that Spotify will join in and yeah, if your price is going to increase 10%, then your stock price will likely increase around 10% as well.

[00:50:22] Glenn Peoples: Yeah, that makes sense. Most people look at how much revenue a company takes in every month. ARPU, average revenue per user, Spotify considers a metric lifetime value. And so it’s not focused solely on price. Price plays into lifetime value, but so does churn rate, and the family plan is something that is reduced churn rate. As churn goes down, lifetime value goes up. I mean, for a subscription business, what you don’t want are people coming in and out and churning in and churning out and taking time off or just leaving the subscription service for good. So if you cut down churn rate, the value goes up, and that’s more value to creators. That’s more value to publishers, to record labels, and to Spotify without raising price. If you can work on lifetime value without having to raise price, that might be the low-hanging fruit that you do in the meantime before you consider raising prices. And now it appears like everybody’s to the point where they say, okay, now we can raise prices.

[00:51:22] Dan Runcie: Right. Yeah. I think the fact that we’re here says a lot. So we’ll continue to see, and I’m sure that the next price increase after this probably won’t take this long if this is the one that got us here. The thing with Spotify though, is I’m sure we’ll see what investors feel more broadly about the company’s strategy because non-music, audio and podcasting specifically has been part of its big bet on how it can have better margins, how it can just essentially make more money and have something that they can continue to grow. But there’s been a lot of pushback. There’s been a lot of canceled shows and studios, and some of that’s standard for the industry. But some of it also feels like there’s more and more question marks on, okay, they’ve spent billions on this. Is this going to work? Is this going to take off the way that they expect it to? What’s your current take on the future outlook for Spotify’s non-music audio strategy? 

[00:52:16] Glenn Peoples: I think it’s a good strategy. You build up a platform starting with music. You attract hundreds of thousands of users and then you turn it into an audio platform that’s not just music and you introduce spoken word content. I think it’s going to take quite a few years. So I think expecting changes, you know, we’re only two years into some of their acquisitions for podcast studios and for platforms such as Megaphone. I know investors might not want to wait five years, but it’s going to take a while. And, you know, long-term Spotify thinks that they can get some pretty good margins out of podcasts, margins that exceed what they get from music. They think that they can get the math when I look at audiobook margins, they bought an audiobook distributor called Findaway. And I think as retailer and distributor, Spotify gets about 60% of sales. Audiobook download margins are pretty good and that’s about double what they’re going to get for music. How much business is out there for audiobooks? Yeah, I mean, right now probably not that much, but over time I’m sure they can build it into something much more considerable. And, you know, if it’s 60% gross margin, that’s really good. You’re not going to get that in music. You can build a platform based on music, but then eventually you got to go looking elsewhere for margins. And so I think it can work out for Spotify, it’s just going to take a while and some people might not have much patience. I get that. But it’s going to take a while. 

[00:53:41] Dan Runcie: It’s something I’ve thought a lot about because I understand that podcasting itself is something where the audience takes time to build. You want to be able to see these shows grow over time. But I also think that so much of their biggest growth has come from acquiring shows that are already popular. And I know they’ve made big acquisitions, whether as with Gimlet or with The Ringer, or they have the exclusive deal with, or the licensing deal with Joe Rogan. But how many others of those are out there that they haven’t necessarily had? Are there going to be more in-house ones that can build up? Because I feel like one of the challenges I’ve seen with the strategy is that they’ve had a lot of money spent on getting these big-name celebrities to then have shows where they have other big-name celebrities as guests and things like that. And a lot of that is antithetical to what’s made so much of podcasting be effective for a lot of folks. And sometimes it works well, but a lot of times it doesn’t. And it’s content. You do have to make some bets, but I’m interested to see how many more of those wins that are going to be out there for them, because that’s the piece that at least gives you some bump ’cause at least we’ve seen the numbers and successes from the popular acquisitions, the shows that they’ve had. It’s the in-house development where I think by nature there is a natural, whether it’s just the likelihood of success of you’re starting anything new, not everything is going to take off, but the real success metric will be, okay, two, three years from now, we’re there Spotify originals that are at the top of the charts and are creating and demanding that audience the same way that some of these other shows, whether it’s outside of the network or some of the ones that they’ve acquired are able to do?

[00:55:23] Glenn Peoples: Yeah, it looks to me like they have kind of a three-prong attack where they spend mightily for somebody like Joe Rogan and that’s not going to last forever. That licensing deal will be up, I don’t know, maybe next year. And what do they renew or do they go spend a lot of money on somebody else? I mean, Joe Rogan brings ’em a lot of a lot of listeners I’d wager. So they have a very small number of really big shows, and then they have a lot of in-house shows with Parcast, The Ringer, Gimlet, and they can go acquire some other ones. And then they have a lot of DIY stuff. And then you get into the long tail. And this is where I think there’s a lot of potential to monetize listening just like there would be in music. They bought a platform called Anchor. That’s a podcast creation and distribution. Megaphone rather, is more the distribution tool. And so they have the infrastructure in place to let people create shows, distribute shows, and now they can monetize those shows. Now, do advertisers want to monetize or advertise against, you know, podcasts nobody’s heard of. Not sure exactly how that’s going to work. You might be not getting good advertising dollars on some of the shows, but to the extent that you can monetize the long tail podcast, Spotify is building that. And if anybody can do it, it looks like they could. So it’s not about Joe Rogan. Joe Rogan might have been something just to get his podcast business off the ground, a very expensive way to get his podcast business off the ground and get it noticed by listeners and noticed by advertisers. And they might not, you know, have another Rogan after that deals up. But there’s a lot of stuff out there to acquire. You know, Spotify, you take a look at the top 50 or a hundred shows. Spotify is Rogan and Call Her Daddy and maybe one other one. But there’s a lot of stuff out there that they could go after. But again, this is kind of the long tail and maybe the midtier stuff that would be in-house productions. I think that really is the test of how they’re going to do in podcasting at scale how can they monetize the long tail of podcast? 

[00:57:20] Dan Runcie: Yeah. I think the other thing that’s an advantage for them is the advertising business and being able to not just offer, but sell better data to advertisers on who’s actually listening to podcasts because outside of Spotify, using podcasts downloads, or relying on some of these third-party tools to be able to tell you how well a show’s actually doing is not the best way to actually determine if people are listening. There’s so many shows out there that now have ghost downloads from people that we’re downloading and subscribing to these shows back in 2014, 2015, 2016, that are no longer listening to those shows, but because of the metric of downloads, It’s essentially an RSS feed. They don’t know if you and I are actually listening to a show versus it actually being downloaded. I’m talking about more from Apple Podcasts and from other places outside of Spotify itself. Spotify’s advantage is the fact that it can provide data just as precise is what it does in streaming, essentially. Are these people listening for at least 30 seconds? Are they going and listening to the middle? And I know some of this exists with Chartable and some of these other tools, but that’s the advantage that Spotify has. So if you can essentially have that, offer that to your advertisers and then say, hey, this is the better data to base it on, not self-reported podcast downloads, which is a very tough metric to use if you’re trying to base that purely on advertising. This is how you can ensure that you’re reaching the right people. And I do think if you have enough of a catalog there and you’re able to monetize enough, then in principle, you could then pull the advertisers yourself. And if you pull them, then I think that helps also attract the shows. And you can become not just the dominant platform, but the dominant platform that can monetize as well.

[00:59:08] Glenn Peoples: Yeah, well see. You have a lot of insight. You’re a podcaster, so you have a lot of insight into what Spotify’s doing. As a podcaster, how is the platform for you? Do you get a lot of listeners from Spotify? 

[00:59:18] Dan Runcie: There’s other platforms that I still get more listeners for. Like, I still get more from Apple Podcasts, I would say. But it’s up there though. It’s interesting because even though I get more listeners from Apple Podcast, if I put a link in my newsletter that has the Apple Podcast link or the Spotify link of where to listen, more people click on the Spotify link. So that also makes me think, okay, one of these is measuring what’s already been there, people that could have been listened to my podcast since 2019 to prove my point when I started it, versus what’s capturing things now. And I think as we’re just seeing Spotify continue to grow and we’re seeing more and more stats of how, I forget the exact metric, but them becoming one of the more popular places for listeners to listen to a podcast. The data that I’m seeing on my side, even though I haven’t precisely calculated it, more so a gut check of when I’m checking my newsletter analytics, I’m like, okay, I can see where this is trending.

[01:00:12] Glenn Peoples: I think it helps Spotify that they’re just an innovative company that is always improving the product, right? So, you know, who knows what they’ll end up doing with podcast. They could revolutionize how we listening to it. 

[01:00:24] Dan Runcie: Yeah. The other thing, too, that made me think of it, you mentioned audiobooks earlier, and I feel like there’s an opportunity for innovation there because audiobooks themselves, I think to date have in many ways just been looked at as another channel that’s a companion to people either buying a physical book or downloading something on a tablet to read. But how can the art of creating an audio podcast feel similar to these high-production podcasts that we hear that sound like they are, you know, made by multiple people in a studio show? I think Malcolm Gladwell did something like this with his most recent book the Think Like Strangers, I forget the exact name, but something like Strangers where it sounded like his podcast does. You know, it’s high produced, you can get a bit more variety. It’s not just some voice actor that they paid, you know, some flat fee for, and then that’s just what’s uploaded as the audiobook. So if you’re able to create that as its own unique experience, I think that there’s an opportunity there with audiobooks. So I’m interested to see if the art and the content itself around those will continue to improve.

[01:01:31] Glenn Peoples: I would love a company like Spotify to breathe some life into audiobooks. I used to do a lot more audiobooks than I used to. And you know, what’s changed? I think what’s changed is just the podcast platforms that are available that make it easier to listen to and find podcasts. I’m not much of an audiobook buyer anymore. But I would say that my audiobook listening has been cannibalized by podcast. 

[01:01:54] Dan Runcie: And I think some of that, too, like if it’s in the same app, it’s something that you’re already using. I feel like there’s an opportunity there because although it’s been a while since I’ve used the Audible app, I have to imagine that the Spotify app is much less friction to be able to be like, I want to listen to this. Boom, here, let me click and listen to the thing. And it’s a game of, yeah, how can you make it as easy as possible for the consumer. So yeah, it’d be interesting to see how that space develops. The last topic I want to chat about though before we end things is TikTok. I know you’ve written about this recently. TikTok has been trying to get into a number of areas, specifically streaming, and I’d be curious to hear your take on them, not just their potential in streaming, but what their strategy is overall in music and how you see them working, either not just alongside, but also competing with not just the streaming services, but other companies that are part of this, that are part of this chain of the, you know, music ecosystem.

[01:02:53] Glenn Peoples: Yeah, I think TikTok is fascinating as far as TikTok launching a streaming service. I mean, that makes perfect sense. I mean, why would you not? TikTok sends a lot of traffic to streaming services. If you could keep people on the platform, or at least on an app from the same company, rather than sending them off to Apple Music or YouTube or Spotify after they see a video on TikTok, I think that’s probably a better, I would say, it’s a better listener experience. But you know, what we’ve seen over the years is people use the apps they want to use. You can’t force-feed people an app. You can stick it on a device. It doesn’t mean they’re going to use it. People will use what they want to use and TikTok would have to build a pretty amazing music streaming platform for people to use it. And I guess the question is could they grow the market rather than just take customers away from the Spotifys and Apple Musics in the YouTubes? Yeah, I guess so. There’s always that, but I always think of it as more of a zero-sum game that TikTok would be taking business away from others. On paper it makes perfect sense. You know, Billboard’s done a really good reporting, had some really good articles about the impact TikTok has had on the business. You know, most recently there was an article about how it’s just kind of, thrown A&R executives’ lives into disarray because it’s, it’s very hard to capitalize on TikTok success, which everybody wants. It’s much more random than sending something to streaming services or sending something to radio and promoting it. It’s much more grassroots and not so top-down. So it’s unpredictable on what’s going to hit. And that’s not a good way to promote music, not knowing what people are going to end up listening to, so it makes labels’ lives difficult in that aspect. On the other hand, I think labels are probably pretty happy that there’s an app out there that customers want to spend a lot of time with and potentially spend money on, and that they are licensing music too and they’ll get royalties from. So, you know, labels don’t build these platforms themselves. They have to count on other companies to do that. And I read articles every now and then that says that TikTok is going to be the death of labels. Now labels have to partner with these platforms. That’s what they do. They don’t build the platforms themselves. And TikTok has a great platform. And so it’s another one to work with. The question is, is it ultimately good for the labels? Yeah, maybe they honestly don’t have a choice. They have to work with TikTok. They have to go where the consumers are. But I think it’s ultimately probably a net win even though it’s, really thrown things into disarray and changed how people discover music, and it’s just not as simple a path as it used to be in promoting music and get people to listen to it.

[01:05:28] Dan Runcie: You brought up a few things that I want to circle back on because I think they’re important to highlight. One, if you look TikTok’s overall strategy, I agree this is something that they should naturally do. If you’re the person that has the top of the funnel, then you would want to identify ways that you could do it yourself instead of having another app that is relying on yours to capture that same traffic and to capture that same business opportunity. That said, does that mean that you will succeed? Not necessarily. I think as we both understand and see, it takes a lot to have a platform that gets to where Apple Music has gotten to, to get to where Spotify’s gotten to, even where Amazon Music and some of these other digital streaming providers have gotten to. It takes a considerable amount of time to get there. So being able to do that effectively and being able to necessarily grow the market and do that, I think it’s tough. Are there regions that TikTok is going to reach that Spotify and Apple have not already spent millions of dollars trying to reach? Probably not, which does turn it into a bit of a zero-sum game. And then are you going to be able to try to offer it at a different cost? Are you going to try to do any of these things that really make it stand out? Not necessarily. And I think one of the bigger challenges, too, is just the consumer behavior that someone has when they’re going into TikTok. It has grown as fast as it has because it’s an app that doesn’t require much active engagement. You can sit there and passively scroll through everything. It’s a very passive entertaining experience. Streaming is not that. You have to go and find who you want to listen to. Even if you want to go check out the latest album, you have to go type in that person’s name unless they’re the biggest star in the world, and they may happen to be on the app when you open it. You got to type in the person’s name to figure that out. So shifting that consumer mindset, I think is tough if that’s what they’re used to in your app. So I think that piece of it is going to be a bit of a challenge for them. And I think in general, we’re kind of seeing TikTok adopt a bit of that Facebook strategy, where Facebook is a company that has tried to do any and everything because they’re like, hey, we have billions of users. We are the biggest platform in the world. Let’s try to do all these things. And more likely than not, Facebook doesn’t succeed at a lot of these things. It’s more likely to succeed at the things that are naturally aligned with why someone would want to be on Facebook to begin with, and whether it’s Facebook’s dating services or any of these other things that just didn’t necessarily take off the way it could, I think that there could be, you know, some similar type of risk if you’re thinking about TikTok. Even though it is aligned with music, even though there’s a lot of these things, the mindset that a consumer has when they are going into a streaming service that requires on-demand activity is very different than a passive social media experience.

[01:08:13] Glenn Peoples: Yeah, I think those are really good points. There’s no guarantee that TikTok is going to make a winning music subscription service if that’s what it chose to do. It’s just not that easy. I mean, there are companies with big head starts who have built really good apps and have a lot of momentum. And you know, the thing that I’ve noticed over the years with subscription services and music streaming, in general, is that you have to have an excellent product. Having a pretty good product just doesn’t cut it anymore. And there are a lot of music services that have been pretty good that have just gone out of business ’cause pretty good doesn’t do it. With ByteDance and with TikTok, you have to assume that they could put together pretty good service. I would bet, better than average. And can they do better than that? Possibly. And what could they do differently that would transform it? And maybe that’s the question. Do they need to do a transformative subscription service? Or can they just do something that’s a little more traditional and not try to build a new mousetrap? Maybe that’s the better option. You know, I’m not sure, but I think, people shouldn’t expect that TikTok is just going to clean up the competition because they have a very popular short-form video app. That’s just a different experience than what they would be getting into. 

[01:09:22] Dan Runcie: Agreed. Streaming is a very different game. It’d be interesting to see how it plays out. But Glenn, before we wrap things up and let you go, how do you think the Global Music Index that you created, how do you think things will look at 2023? What’s your take on how you think certain things will play out in the index?

[01:09:39] Glenn Peoples: There’s so much negative forecast out there for 2023. There’s a lot of economic experts saying that there’s going to be a recession in 2023. You know, normally I would say, boy, probably pretty good. You know, the time to buy a stock is not when it’s high. It’s time to buy is when it’s low. So right now the index is starting from would be starting year at a pretty low place. It’s just that they’re pretty dark clouds on 2023. It’s really hard to say how it’s going to play out. There’s just a lot of really bad expectations for next year. So I think that as far as these stocks have fallen, they’re not out of the woods yet. And I don’t think we can assume that they’re going to turn around and start growing next year. But if you look at 2022 as kind of a correction to maybe some stocks that were overvalued, then they’re starting in a better place.

[01:10:27] Dan Runcie: That’s true. Maybe the overvaluation may have some, or the overvaluation of the overcorrection rather could lead things off to a good start. So it’ll be exciting to see for sure. And we’ll definitely be keeping an eye on the index itself. Once again, good job creating that. I think a lot of people were looking for a way to just capture everything that’s going in the industry. So it’ll be good to continue tracking it. And Glenn, thanks for coming on. It was great to touch base on so many important topics, and I’m sure we can have a similar conversation like this soon. 

[01:10:54] Glenn Peoples: Absolutely. Thanks so much for having me. 

[01:10:56] Dan Runcie: Thank you.

[01:10:59] Dan Runcie: If you enjoyed this podcast, go ahead and share it with a friend. Copy the link, text it to a friend, post it in your group chat, post it in your Slack groups, wherever you and your people talk, spread the word. That’s how Trapital continues to grow and continues to reach the right people. And while you’re at it, if you use Apple podcast, go ahead, rate the podcast. Give it a high rating and leave a review. Tell people why you liked the podcast. That helps more people discover the show. Thank you in advance. Talk to you next week.

Dan Runcie

Dan Runcie

Founder of Trapital

Like this essay? Share it!

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Want more? Trapital's free Monday Memo
gives you insights on the latest trends in the business of hip-hop:

"The stuff that Trapital puts out is fantastic. Really interesting insights into the industry, artists trends, and market trends."
Mike Weissman
CEO, SoundCloud
“You tell the true stories. Not just the end product, but how you get to the end product. Your point of view on it is dope.”
Steve Stoute
CEO, UnitedMasters and Translation