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Jan 23 2023

🔵 Spotify set to lay off 6% of its workforce. As tech climates change, is there a better model to adopt?

The latest news from the music and tech industries
Hi there -

I doubt anyone will be too surprised at the news Spotify is making around 6% of its workforce redundant today; in truth the exception for any large tech company would be if it wasn't conducting layoffs, given the current climate.

In his memo to staff, Daniel Ek admits that the company grew too quickly, for which it is now paying the price. Again though, I think amid the Covid boom in tech stocks, this was a natural response to please Wall St. Don't just grow: grow quickly. More more more!

I saw someone speculate recently that Microsoft has been making some savvy investments of late (including its deal with OpenAI, which a colleague commented looked rather like your average label deal). Equally, Microsoft has had a few unsuccessful runs at launching its own music streaming service. Could Spotify be a target?

I'm sure some might chalk such a comment up to salacious gossip, but I suppose my point is only that there are certainly companies for whom such an acquisition might make a lot of sense, and as Spotify continue to face down adverse conditions, such a deal would provide arguably more security. After all, Apple, Amazon and Google all have a raft of interests. Spotify only has the one.

Elsewhere, I really enjoyed Midia's article regarding possible new streaming models. This isn't the first mention we have seen of a possible new revenue system based around the type of audio being enjoyed on a streaming service; frankly to me that feels very logical. In general though I agree with the article's view that it is the user's actions that should be treated differently rather than the songs themselves.

If - as has been suggested both in this article and elsewhere - that might lead us to a greater appreciation and super-serving of those "1,000 true fans" then I am all for that. Much as I sound like a stuck record saying it, but I'm genuinely excited to see what new approaches may spring forth, and who works hardest to engage with them.

Have a great evening,

D.

🎶 written whilst listening to Dinosaur Jr's classic "You're Living All Over Me". I still laugh whenever the solo for "Kracked" kicks in, as it's the quintessence of J Mascis. The song breaks down, tempting a little lead into a solo, and then "SKRANNNNNGGGGWOARRRRRRGH" in comes the single most overblown work of demented fuzz and insanity I'd ever heard when I first clocked this. It's the sound of a man actively trying to shatter mountains with his guitar, with zero fucks given. Go check it to see what I mean; ithe juxtaposition of that solo with Mascis's perma-slackjawed delivery is just sublime. 
Stories from the Music Industry:
What comes next in the music streaming model makeover
A simple solution would be to have a higher royalty rate for lean-forward actions (like searching for a song or streaming Liked songs) and a lower rate for lean-back actions (like streaming radio stations and mood playlists). The hard part would be deciding what those actions, specifically, are. But this reset of the system would simply formalise a commercial model around where consumer behaviour has gone. It would also reward both scale and core fandom of the 1,000 true fans type. Finally, it would avoid moral dilemmas of what makes music worthy. Whether a consumer actively streams whale sounds or actively streams Taylor Swift, it is their actions that are treated differently, not the songs themselves.

👆🏻Hot take: if you want a great summary of ideas as to how streaming remuneration might evolve, look no further than this article from Midia. Recommended reading. 
The firm confirmed in an SEC filing that it is reducing its employee base by about 6% across the company. In the same filing, Spotify confirmed that Dawn Ostroff, Chief Content & Advertising Business Officer, is to leave the company. Ms. Ostroff will assume the role of a senior advisor to the Company to help facilitate this transition, said Spotify. Ostroff joined Spotify in 2018 as Chief Content Officer.

👆🏻Hot take: not a huge shock given the tech layoffs of late, and considerably better than almost all of the others (which are admittedly far larger). I still wonder what the future holds for Spotify though, as it's share price continues to drop. 
Launched by artist manager Andy Robinson and cross asset speculator Sean Stockdale, UK-based Interstellar describes itself as a music rights management company established for artists, songwriters and creators. The company claims that it focuses on maximising the value and income potential of music rights by taking a forensic, hands on and bespoke approach to metadata analysis, distribution, publishing administration, neighbouring rights and music licensing.

👆🏻Hot take: curious to see how Interstellar will fare, as the aspiration and staff hired all suggest a company that is not mucking around here. 
Sawyer called attention to the bigger picture, in comments that were mirrored elsewhere during NY:LON Connect. Its not just about how much goes to publishers and how you divvy up the pie, she said. The process we should focus on is where are those extra revenue streams going to come from so that all boats rise? She outlined fitness/health, social and gaming as the key categories of startups looking to license music from publishers and labels alike. The one thing that they all have in common, unlike previous phases of growth, is that they dont require full catalogue, she said. The Apples and Spotifys need the 100 million songs, but the new services that are coming through can operate on much smaller subsets of catalogue, said Sawyer.

👆🏻Hot take: plenty of food for thought in this report from the publishing panel at Music Ally's NY:LON conference. 
Stories from the Broader World of Tech:
TikToks Secret Heating Button Can Make Anyone Go Viral
The heating feature refers to boosting videos into the For You feed through operation intervention to achieve a certain number of video views, an internal TikTok document titled MINT Heating Playbook explains. The total video views of heated videos accounts for a large portion of the daily total video views, around 1-2%, which can have a significant impact on overall core metrics.

👆🏻Hot take: not a great revelation, and I suspect various people at major labels and other large record companies will be tripping over themselves to demand this. Urgh.... 
The advertising situation has not improved. It was reported last week that Twitters daily revenue has slumped by 40%. Its cashflow a proxy of its ability to meet debt payments is poor and in 2021 it generated negative free cashflow (spending more cash to run the business than it takes in) of $370.4m. Musk had warned that figure was heading towards $3bn this year but he now expects it to break even.

👆🏻Hot take: I still wonder if Twitter will go under and we will all reflect on this entire debacle as a moment where reality bit hard on the dreamworld of Silicon Valley. 
Failure will prove costly for TikTok if it settles into its new role as an incumbent. After all, in the digital entertainment world, the status quo is always transitory. Failure in planning to build resilience among creators and advertisers alike will mean planning to fail in the increasingly challenging entertainment landscape of 2023.

👆🏻Hot take: a gentle reminder - if one was needed - that TikTok is perhaps not on a runaway path to being the replacement to YouTube and other services. Plenty of challenges still exist. 
Other Reads I've Enjoyed Lately:
Disney controls all of pop culture, but it's just hurting itself
Disney's insatiable appetite for powerful franchises like Pixar, Star Wars, the MCU, and Avatar is all good—until it isn't

👆🏻Hot take: a thoughtful take on Disney's aggressive expansion of its IP. I agree with it all.

BioMonde supplies greenbottle larvae for treatment of non-squeamish patients across Europe

👆🏻Hot take: gross... and yet somehow extremely interesting at the same time. No, really! 
Why does your guitar sound that way? Is it your amp, your pickups, or your pedals? Jim Lill is trying to find out, one filmed A/B test at a time.

👆🏻Hot take: Oh I am ALL OVER this, heheh. This kind of thing is like catnip to me! 😆
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