Live
audio experiences will be adopted by every major platform just like Stories have
been, Spotify CEO Daniel Ek told investors on Wednesday’s earnings call. The
streaming service recently acquired a
live audio app, Locker Room, whose technology it expects to use to power a
range of new live audio conversations centered around sports, culture and, of
course, music.
Investors were curious how exactly Locker Room would fit in with
Spotify’s current offerings, given the streamer today is focused on delivering
recorded content — music and podcasts — and not some sort of live social
networking experience.
Ek, mirroring what many in the industry have already been thinking, said
he sees live audio as a new set of capabilities that will be broadly adopted by
all. He basically dubbed it the next “Stories” — a feature popularized by
Snapchat, but that eventually made its way to every platform.
“It’s really no different than how you think about Stories,” Ek said,
explaining his thoughts on live audio. “Stories today exist on a format on a
number of platforms, including Spotify, including, of course, Instagram, Snap
and many others. So, I do look at [live audio] as a compelling feature set, and
I think creators will engage in the places where they have the best sort of
creator-to-fan affinity for the type of interactions that they’re looking for.
And I think this is very similar to say how Stories played out historically.”
In other words, each platform may attract a certain kind of live audio
creator, and Spotify sees its own potential in the realm of music and culture —
the latter thanks to its existing and expansive investments in podcasts.
The interest in live audio emerged in the middle of a pandemic that
trapped people at home and shut down traditional networking and large events,
like conferences. But that doesn’t mean there’s no future for the format when
the world opens back up.
Of
course, Clubhouse gets credit for the interest in the live audio space as its exclusive
invite-only status attracted a crowd of determined networkers (and
clout-chasers) looking to participate in the next big thing. But as the app
grew more popular, snagging big-name celeb guests — like Tesla founder Elon
Musk, Facebook CEO Mark Zuckerberg, actor-turned-investor Ashton Kutcher,
Drake, Oprah, and more — other tech companies began to take notice. Soon,
everyone was building a Clubhouse clone.
Today, Facebook, Instagram, Reddit, Twitter, Discord, Telegram and even
LinkedIn have plans for live audio in various stages of development or
availability.
Instead of starting from scratch, however, Spotify made an acquisition.
Thanks to Locker Room, originally a place to discuss sports, Spotify said it
would soon open up live audio to more professional athletes, writers,
musicians, songwriters, podcasters and “other global voices” who want to host
real-time conversations. The Locker Room service will be rebranded as “Spotify
Greenroom,” Ek noted, via a company podcast.
In its first earnings call since the deal was announced, investors asked
whether Spotify believed linear consumption of spoken word audio was more
interesting than music streaming.
Ek explained how spoken word content may only be the beginning of what’s
to come as the format evolves.
“As more people start engaging with a feature in a medium, you start
seeing more and more professional creators jump on board. So I think it’s
probably going to start out with spoken word content,” he said. “But
specifically as it relates to Spotify, I think that there will be a lot of
musicians that want to engage in everything from speaking to their fans to
having listening parties and all other things because it’s so clear to them
that on the Spotify platform, that engagement drives meaningful conversion to
monetization opportunities just on the basis of our revenue model.”
Spotify said that the biggest request it gets from its over 8 million
creators are to have more ways for them to connect with fans. Live audio, by
its nature, would give them a very direct way to do just that, given Spotify’s
reach of more than 350 million users.
In other words, live audio does not present some either/or scenario with
regard to music streaming, as the investor’s question suggested. It’s more of a
loop where one thing feeds the other. And “live,” apparently, could also mean
music, not just chat.
For
example, Ek hinted, when an artist has an album to promote, “you as the fan,
may be able to experience that earlier than other consumers can.” Oh really?
Artists could also use live audio to talk about their thinking around
writing a song, similar to what the Genius
integration “Behind the Lyrics” today provides.
“I think it really comes down to the quality of the content,” said Ek.
“And I think when I look at our 8 million creators, we have some of the world’s
best storytellers on the platform, and that’s ultimately what people will tune
into, and that’s what matters.”
But one area that could be difficult is moderation of live content. Live
audio presents a whole new range of challenges for any company, as
conversations can go off the rails quickly. And Spotify’s position on drawing
the line between free speech and policing misinformation or other inappropriate
content is still somewhat murky. Its top podcaster, Joe Rogan, recently advised
listeners to not get the COVID vaccine, if they were young and
healthy, for example. Spotify declined to
weigh in on this particular controversy. But it has removed some 40-plus
episodes from the same podcast in the past — some for seemingly
lesser violations, like an episode about Bulletproof Coffee and its health
claims, for instance.
Before Spotify wades into live audio, it may want to first solidify its
own values around creator content. It will need a careful, worst-case scenario
plan for what happens when a live session goes out of bounds, too.
Despite Ek’s optimism around live audio, Spotify’s stock
tumbled after earnings, as there were signs of slowing growth on the
horizon, thanks to increased pressure from rivals, like Apple and Amazon. The
company added 3 million paid subscribers in the quarter, but missed on
expectations of monthly active users and lowered its full-year guidance.
Revenues were up €2.1 billion ($2.6 billion) in the quarter, a 16% increase
from the same period last year but down 1% from Q4 2020, raising concerns. But
live audio could give fans a reason to tune back in more often in the future,
if the Spotify can make the integration work.
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