Sunday, September 27, 2020

(The Big Disrupt) Spotify: Why Spotify’s podcasting play is in deep trouble

 


Our last article about Spotify’s podcasting play was pointing to the tension caused by Spotify’s inability to value podcasts properly which has led them to use different content acquisition models and the confusion it was causing among podcast creators and owners looking to value their creations with a particular focus on podcaster Joe Budden who stated his intention, after an epic rant, to leave the Sweden based company. 


However, this week in lieu of the recent controversy surrounding its Joe Rogan Experience (JRE) exclusive licensing deal, we’ll focus on how quickly Spotify’s play is quickly falling apart as its long-term play is running head first into headwinds Spotify is demonstrating it cannot mitigate whatsoever.  


September has been a rough month for Spotify and if Spotify remains as flat footed as it has been for much of it, the company could find itself having to negotiate an internal rebellion and not just staff on its payroll. 





With Rogan’s guests (particularly right-wing figures), unfiltered and off the cuff style making Spotify’s staff uncomfortable enough to strike for editorial control of his podcast, Spotify now have a real problem as while they invested heavily to acquire Rogan’s podcasts, it doesn’t own it outright which means they can’t edit  the JRE content at least without Rogan’s consent which is unlikely as much of the reason why Rogan is so popular is his uncompromising style regardless of the political leanings and controversial viewpoints of his guests. 






What this reveals about Spotify is that it cannot read its own employees, it hasn’t done its due diligence licensing content it spent heavily to acquire and has run into the age-old problem of value which goes some way to explain why its other large ticket podcast acquisitions Gimlet and Parcast have unionized. In an attempt to mitigate its crippling music licensing costs, Spotify sought to move into podcasting heavily and made sizable acquisitions including the JRE and The Ringer podcast network but are now coming into problems as Spotify and, more importantly, podcast creators/owners are now finding out that the market for podcasts is bigger than they both thought. 



In our last article, we noted that one of Budden’s biggest gripes was the company’s inability to value his podcast properly which the former rapper saw as an attempt to devalue his content as well as himself in the open market. Mistakes like these are easy to make in a relatively new market like podcasting but Spotify are making these mistakes publicly at 9 figure prices which puts pressure on the company to make their big bets come good. However, Spotify plan to profit off podcasts is falling apart at the seams because of one key reason, it doesn’t own the audience.  





All companies have ambitions to dominate markets and while Spotify won’t admit it, its vying to dominate the market for podcasting from production to distribution. However, there’s one of big problem: it has no real leverage to determine value and with Amazon stating its intention to enter the podcast market and Apple already in a dominant position in the marketplace, Spotify may see its podcast acquisition costs go through the roof. What should concern Spotify is that both companies have greater reach and penetration into our lives than Spotify ever will through their hardware (iphoneMacbook, Siri, Alexa, Prime) and thanks to their dominant position in other markets, they don’t have bet the ranch on every play. 





The coming weeks and months are going to be interesting as the Joe Budden Network (previously known as the Joe Budden Podcast) hits the open market as other podcast creators/owners took note that one Spotify’s first exclusive content partners couldn’t find a deal that matched their value and if they managed to secure a large exclusive licensing deal or even get picked up by OTT streaming provider, Spotify are in real trouble as it might set the market price for other creators at a clip that Spotify, a loss-making company, can’t match. 


Outside of that, podcast creators/owners (particularly those with larger audiences) can exist and thrive outside Spotify’s walled garden even without exclusive deals as they can secure their own ad and sponsorship deals that may even dwarf what Spotify is offering in splits, rates and in some cases, exclusive deals.  


Why the recent controversy surrounding Rogan is a problem at least to Spotify isn’t only its employees taking a stand but that other podcast creators/owners are watching what Spotify does and if they cave to their own employees, other podcast creators/owners will take note or even choose a competitor over their editorial potentially being compromised.  

 

However, what may keep Spotify executives up at night is the very real possibility of Rogan leaving the platform in lieu of Spotify attempts to censor some of his content. Rogan is currently now playing defense thanks to his controversial takes in past episodes but when the noise subsides, Rogan won’t forget that Spotify is excluding episodes from its platform or its employees want to control his content they don’t own or have the right to. Come time to renew his deal, Spotify are going to have pay through the nose keep him should he outperform projections, the market continues its rapid growth and more players with larger pockets, reach and audience than Spotify enter the market asking Rogan to name his price (all of which are possible). 






In sum, Spotify podcasting play could be in tatters already as it finds out it has no leverage over its content partners in either music or podcasting where one can dictate value (Record Labels) and another can find their value elsewhere at a multiple if they don’t buy them outright (podcast creators/ owners). Once again, Europe biggest tech success story finds itself in an unfavorable bargaining position and if Spotify don’t find a way to add value beyond distribution and audience, the Swedish based company will be toast before it knows it. 

 

 

 

Tuesday, September 8, 2020

(The Big Disrupt) The Age of Mass Surveillance: Examining the use of Facial Recognition



A few decades ago, facial recognition technology only existed in science fiction. However, rapid advances in technology have fuelled the proliferation of facial recognition technology in recent years. The technology measures and analyzes people’s faces and compares it to images in their database. 

Today, the technology is prevalent in a wide range of commercial contexts and is rapidly expanding into new areas of our private and public lives. At this rate, facial detection technology will soon be a common aspect of our daily lives. 

Facial recognition has a myriad of use cases in a wide range of settings. In business, face detection tech is proving useful in identifying the unique characteristics of customers in retail marketing and advertising. In law enforcement, government agencies in different parts of the world are leveraging the power of facial recognition technology to aid their efforts in combating crime and terrorism. But despite its benefits, face analysis tech carries a certain degree of risk. 


The Good


At its core, facial recognition is a technology used to analyze faces for the purpose of identification or verification. Due to its potential benefits, facial recognition tech has become an area of significant interest for governments and private entities. Here are the considerable benefits of facial recognition technology. 


  • Security. In terms of security, facial recognition technology can help police identify criminal elements, ensure safety in public spaces, and general maintenance of law and order. Face detection tech also helps police prevent human trafficking and find missing children. 


  • Medicine. Facial recognition technology can be used to identify genetic disorders with a facial scan. This is possible because some genetic disorders come with a facial trait. For instance, facial recognition tech has been shown to detect DiGeorge syndrome with a 96.6 percent success rate. 


  • Marketing. Marketing firms often consider factors such as ethnicity, age, and gender when creating products or services for their customers. Marketers can use facial recognition technology to define their audiences with a high level of accuracy. 


The Bad


As stated earlier, facial recognition technology has a dark side. Facial recognition technology protests focus on the following concerns. 


  • Violation of Freedom and Privacy. Facial recognition tech gives government agencies the power to single out individuals in public spaces and track them. Our movements are no longer private. This is tantamount to the violation of our basic freedoms. In fact, privacy is one of the major concerns of people protesting against the use of facial recognition


  • Safety. This technology also has the potential of being misused in stalking and online harassment. It gives perpetrators the ability to use a picture of their victim to find out every little detail about them, including their home address or place of work. This threatens our personal privacy as well as safety. 


  • Mistaken Identity. Facial recognition systems are not 100% accurate. In fact, they are far from it. Studies have shown that facial recognition algorithms tend to misidentify racial minorities. In law enforcement, mistaken identity can easily lead to a wrongful conviction.


Facial recognition technology can be dangerous. With retailers, social media platforms, smartphone manufacturers, and federal authorities employing the technology, facial recognition has become more pervasive and even more concerning. The good news is that there are steps you can take to protect yourself from this intrusion. 


How to Protect Yourself


Nobody is safe from facial recognition technology. Since we can’t hide in our houses forever, we can wear anti-facial recognition glasses and masks to conceal our faces partially. But the threat of surveillance exists online on social media sites such as Facebook. You can stop the social media giant from tracking you by opting out of its facial recognition system. You can also use a VPN to protect your privacy online. A Virtual Private Network (VPN) will encrypt your connection, making it impossible for someone to spy on your online activities. 


The positive side of facial recognition technology is indisputable. However, we cannot ignore the potential drawbacks. For starters, the surveillance capabilities of facial recognition technology allow the government to identify and track people in public, often without their knowledge or consent. The accuracy of facial recognition systems is also questionable and puts lives in danger, especially when facial recognition technology is used in law enforcement. 




Saturday, September 5, 2020

(The Big Disrupt) Spotify: Pod Prices – Why Spotify’s are risking their podcast play falling apart







In writing this article, I’ve got to admit a bias: I love Spotify. I think it’s a good company with a great service I personally use and despite the issues we’ll note later in this piece, I think it has a great future but looking at the company recent ambitions to own the booming podcasting marketspace, it may end up ruffling feathers it can’t afford to. 

Podcasting isn’t new but with its recent rise to prominence, plenty of companies have piled into the space spending heavily with Spotify alone ploughing over $700 million into the market through exclusives and acquisitions. However, in its haste to become a podcast hub it has run into issues it will have a difficult time solving in the near future at least. 

However, arguably the biggest issue we think could unravel Spotify’s podcast strategy is how exactly do you value a podcast? The simple answer would be whatever someone is willing to pay for it but that brings up another question of what would you actually be paying for? Neither of these questions have easy answers and it’ll be interesting seeing how Spotify deals with these questions down the line but the early signs aren’t encouraging to say the least. 

Spotify look set to lose the Joe Budden Podcast (JBP) after Joe Budden, the host and founder of the highly popular podcast (must admit bias here: big fan of Joe Budden the podcaster and rapper. WAAIITT A MINUTE!!!!), spoke for nearly two hours about his dealings with Spotify and how the whole experience left him with the sense that the Swedish based company undervalued him and the podcast duly announcing that the five-year-old podcast will be leaving their platform. 


Joe Budden (middle) with co-hosts Mal (left) and Rory (right)


I listened to every minute of that podcast and made a mental note of every gripe and was left with the strong impression that Spotify had no idea how to value his podcast and in doing so managed to offend one of its most popular titles in trying to address its initial mistake. However, looking at Spotify’s history, it’s alleged folly in valuing the JBP isn’t surprising as one of the main reasons Spotify has been so bullish about podcasting is it gives an edge that hasn’t had since its founding: pricing power. I could argue Spotify would be well on its way to becoming a FAANG stock if it had pricing power but unfortunately for its shareholders and executive team, Spotify has been a glorified bust out for music rightsholders (predominantly labels) with music licensing costs accounting for just over 70% of Spotify’s revenues. This is only possible as Spotify’s business model only works at scale and the music industry is dominated by three players which means labels can set exorbitant prices for their large and prestigious catalogues and Spotify, with no real leverage, has to accept them.   

This isn’t exactly Spotify’s fault as the music industry learned from its bruising encounters with Apple and its legendary Founder and CEO Steve Jobs that letting a digital distributor dictate the pricing and, ultimately, the value of your product is a bad idea. Since then, Labels have realized much of the value in the music business doesn’t lie in streams (a running theme on the JBP and in the recent “View from The Spot” episode) or even sales but in catalogue and has preceded to focus on its music licensing business which has seen music revenues and labels make a resurgence in recent years.    

Now a public company, under pressure to grow and unable to negotiate prices for content, Spotify has made ambitious moves into podcasting where it’s in a better position to negotiate prices with podcast creators but in doing so it finds itself in a position to determine something else, value. Spotify has made some notable deals with podcast creators mixing outright acquisitions (buying “The Ringer” from Bill Simmons) with content licensing (paying Joe Rogan £100 million) but Spotify through mixing completely different content acquisition models to bolster its content library brings up the issue of just how much a podcast is worth. In any case, it's clear Spotify has no idea as its conflicting content acquisition strategy is confusing content creators, Budden especially. 

With Spotify spending big on its podcast library, Budden who signed an exclusive licensing deal with the company, is looking at Spotify throwing money at fellow podcast creators and with his deal soon to expire, was looking forward to favorable negotiations taking into account the podcast (according to Budden) beating projections and the growth of marketplace increasing their value. However, with Spotify clearly unable to value podcasts (largely to their aforementioned two-pronged content acquisition strategy requiring two completely different pricing models) or only taking on platform performance into account (which is arguably worse), the value of the JBP hasn’t been taking into account because Spotify, quite simply, don’t know what they’re buying. 

Budden, clearly offended by how Spotify has handled him and his podcast, looks set to be on the market and they’ll be a growing number of suitors namely Apple who have been sitting on a billion-dollar industry for the best part of two decades and look set to secure a foothold in a market they’ve dominated but never really developed beyond distribution. 

However, despite the public embarrassment of one of its creators publicly shedding light on its weaknesses, Spotify can fix this by paying Budden then choosing one content acquisition model which will make it easier to value podcasts going forward but with Spotify’s recent track record, one can only hope that Swedish based company learns that using two different models to guide your acquisition strategy  of product or service while neglecting value (unless you're getting paid on both sides) is a bad idea. 

In sum, all companies make mistakes but Spotify’s mistake could leave its podcast ambitions in tatters without changes. 

LinkWithin

Related Posts Plugin for WordPress, Blogger...