Selling Shovels in a Gold Rush
Spotify's Evolution from Music Streaming to Tech Giant
The Rundown↓
KNOW that Spotify is broadening its content offerings to stay competitive with other tech giants like Apple, Amazon, and Google.
REALIZE tech platforms seek the gold of our data and attention.
EXPLORE Liz Pelly’s “The Ghost in the Machine” article on ghost artists.
Details↓
Last week Spotify launched a partner program for podcast creators to monetize content on their platform. First offered in 2015 with news bulletins like NPR and the BBC, podcasts have since exploded on the platform following deals with popular shows like the Joe Rogan Experience.
Spotify also introduced audiobooks in 2022 adding hundreds of thousands of titles to its catalog. Factor in music videos and the moves further the company’s push beyond audio-only music streaming.
The platform’s transformation keeps it competitive with tech giants like Apple, Amazon, and Google, and it’s financially paying off. Since raising subscription prices and cutting 17% (1,500) of their employees, the company’s stock value has more than doubled in the last 12 months. The company has become profitable for the first time.
The shifts aren’t without controversy. Since adding 15 hours of included audiobook listening, Spotify changed the classification of its premium subscriptions last year to “bundles.” The designation is consistent with competitors like YouTube Premium, but the Mechanical Licensing Collective (MLC) filed a lawsuit because the new offering means Spotify allegedly pays less royalties ($150 million estimated by Billboard) to songwriters and publishers. That’s on top of recent claims by journalists of ghost artists, both real and AI, prioritized in playlists to avoid paying royalties.
Commentary↓
After Napster’s failure, Spotify was imagined as the legal way to stream music. When it arrived in the United States in 2011, it was hard to beat paying a subscription for such a ridiculously large catalog of music. The free account alone was enough to ditch buying physical CDs or digital albums on iTunes.
Spotify’s growth arc mirrors most successful tech platforms… humble beginnings juiced with investor cash to supersize scale and profitability. Platforms like Spotify, YouTube, TikTok and Meta are, as the old saying goes, “selling shovels in a gold rush.” They sell the tools (platforms, distribution, analytics) to content creators for a cut of the prize (our attention and data). While few content creators and artists truly strike it rich, the tool makers always walk away with a win.
Consider this. The net worth of Daniel Ek and Martin Lorentzon, the founders of Spotify, together is estimated between $14-17 billion. That’s more than Jay-Z, Taylor Swift, Rihanna, Dr. Dre, Bruce Springsteen and Madonna combined. In 2024 alone, they cashed out $1.2 billion of their shares. Ek also recently released a joint statement with Mark Zuckerberg imploring the EU to deregulate AI.
Advancements in AI follow the same model, But… in order to build their tools, companies first harvest data and intellectual property (IP) without compensating users, content creators, filmmakers, journalists, authors, or songwriters. Companies then turn around and sell AI tools… to users, content creators, filmmakers, journalists, authors, and songwriters. That’s what makes accusations of AI ghost artists on Spotify so ethically egregious.
Postscript↓
The wave of this tech gold rush can be overwhelming, but you can push against the current with our online course to limit tech’s attention-driven, data-hungry influence on our lives.