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Welcome to the latest episode of Talking Trends from Music Business Worldwide (MBW). Here, we take a deep dive behind the news headlines that impact the entertainment industry. Talking Trends is powered by Voly Music.
Why is Spotify pursuing a new design that borrows so much from time-wasting short-form video services like TikTok?
that’s the question in my head global music business Founder Tim Ingham Discusses MBW Updates hot trend Podcast (listen above).
As Ingham explains, Spotify’s much-discussed new home feed (and new AI-powered DJs) doesn’t seem to be motivated solely by helping artists.
Instead, he suggests, Spotify made the move knowing that the power of its leading USP (algorithmic endorsement) from an investor’s perspective has declined in recent years.
You can read the recap transcript of this episode of MBW. hot trend Listen below and/or here:
If you’re listening to this, you probably work in the music business, so you’ve already seen what’s going on with Spotify’s homepage.
Spotify’s home feed now displays a series of swipeable animated visual content.
You can think of it as a vertical array of card-shaped moving graphics that automatically play previews of songs, playlists, podcasts, and audiobooks that Spotify’s algorithms think you’ll like.
This visual feed also shows ads (I don’t want to be distracted, so I’ll leave this topic for another Talking Trend).
In another announcement, Spotify confirmed that it will allow artists to upload 30-second TikTok-style video clips to their artist pages.
I wouldn’t be surprised if these 30-second videos start showing up on Spotify’s new homepage in the future.
Spotify seems to think this TikTok-style visual on the homepage or home feed is very important.
Daniel Ek at the Stream On event talks about how important it is in Spotify’s 15-year history.
“This is the biggest change Spotify has experienced since we launched mobile ten years ago. It helps me draw in my own words.”
Daniel Ek speaking at Stream On March 8
As you can see, much of the rhetoric of Daniel Ek and his colleagues at Stream On is aimed at Spotify’s millions of artists, and the benefits of these new changes will bring them greater discoverability. .
(Live-streamed Stream On physical events actually take place in front of a live audience of artists, podcasters, and other creators telling their own stories.)
But I’m not particularly interested in debating what these product changes might tell us about what Spotify offers artists.
What am i morning It’s the other side of the equation that interests me: What is the commercial rationale for Spotify deciding to bombard users with algorithmic recommendations in such a way in its home feed?
Beyond the “we are all artists” minutiae, what benefits does Spotify’s business benefit from this enhanced profile of algorithmic discovery?
I believe the answers to these questions lie in a survey conducted last year by the UK’s Competition and Markets Authority. The study explored the balance of power in the UK streaming music industry.
The CMA is a serious competition watchdog. He previously fined Facebook £50 million ($60 million) and is currently under investigation into Microsoft’s proposed takeover of gaming giant Activision Blizzard. (Experts say the CMA could even try to force Microsoft to sell the entire multi-billion dollar Call Of Duty franchise to close the deal.)
So if the CMA asks for something, it’s better to assume that big companies tend to oblige.
And last year, the CMA asked major music streaming platforms for data on how listeners play music on their platforms. they obliged.
The CMA then published this data in its final report on the music market and showed something rather surprising. The report concludes:
- just 10-20% Playing on Spotify in the UK in 2021 was the song CMA called “algorithm” playlist.In other words, to cite the CMA, the track pushed by the recommendations of the “based on what” algorithm [services] Know the tastes of different listeners”;
- in contrast, over 50% All plays on Spotify came from user-created playlists.and another 10-20% It wasn’t from a playlist. i.e. users looking for music manually via search etc.
Let’s pause for a moment and consider what this means. 60% and 80% Among all music played on Spotify in the UK in 2021, the company’s editorial and algorithmic recommendations were not applied.
Remember, this is from the data Spotify provided to the CMA.
Or, to get to the heart of my point, 1/5 of all music plays on Spotify are actually recommended by Spotify.
This is a clear danger to Spotify and its investors. Because the service’s uniqueness in the music streaming market is based almost entirely on its own algorithmic recommendation engine.
Spotify has the same 100 million tracks as YouTube Music, Apple Music, Amazon Music, etc. Their catalogs are identical. And as we all know, these companies have far more marketing dollars than Spotify.
“The bottom line is that only one-fifth of the music that is actually played on Spotify is actually recommended by Spotify.”
Since buying the Echo Nest for around $65 million in 2015, Spotify has maintained that its “recommendation engine” is the most sophisticated and customer-aware. Spotify claims that no other music streaming platform can match it.
This makes the real-world impact of Spotify’s algorithmic recommendations an important part of the argument that Spotify can maintain its position as the world’s market-leading audio subscription platform.
But if less than a fifth of the plays on Spotify today are actually affected by the algorithm, as shown by the CMA, all of that doesn’t really matter.
If four-fifths of the plays on Spotify were chosen entirely by human users and/or influenced by off-platform third parties, Spotify would be essentially powerless.
Weak against both the superior spending capabilities and superior tech stacks of FAANG’s competitors. But it’s powerless against the difficult premise of the debate, “Are there any real, meaningful differences between the top three music streaming platforms?”
The major role TikTok plays in music discovery today: making Spotify’s exploration of algorithmic influence even more difficult.
According to statistics released by TikTok in 2021, 63% of TikTok users say they’ve heard new music on the ByteDance platform they’ve never heard before.
The same study revealed that 67% of TikTok users say, “I listened to songs on TikTok [third-party] music streaming platform”.
Meanwhile, in stark contrast to CMA stats about Spotify, TikTok has said in the past: 80% The number of views of content on that platform is driven by that algorithm.
On TikTok, the majority of users surf algorithms and remember recommendations.
On Spotify, it’s largely ignored, according to CMA data.
So how does Spotify counteract the diminishing influence of its own playlist algorithm while mirroring some of the influence enjoyed by TikTok’s algo-surfing “For You” feed?
Answer: By mass copying elements of TikTok’s “For You” feed, you are not copying its intent.
This was addressed by Gustav Soderströmco-president of Spotify at Stream On.
Söderström said that unlike TikTok (he didn’t actually mention TikTok, but that was pretty obvious), Spotify’s intent with the new home feed is to allow users to unconsciously scroll through short-form content. I pointed out that I should not continue to do so.
Instead, it aims to grab the user’s attention and trigger them to play or save the recommended longer track, album, or artist.
Interestingly, Söderström also nodded at Stream On’s waning cultural clout of Spotify’s playlist ecosystem. Here’s what he said:
“Over eight years ago we introduced editorial and algorithmic playlists, an innovation that changed the way people listened to music…but let’s face it, today is old news. It’s time to innovate listening again.”
Gustav Söderström to speak at Spotify’s Stream On on March 8
This is Spotify’s co-president, who says stories of game-changing influences unleashed by Spotify playlists like Rap Caviar, Today’s Top Hits and Viva Latino are now “old news” in the post-TikTok world. suggesting.
Bottom line, Spotify is trying to mirror the stickiest feature element of TikTok’s “For You” feed. We do this to turbocharge the rate of play on our platform driven by our algorithm’s recommendations.
Also assisting in that mission (which Gustav Söderström referred to in the words “innovation in music listening”) will be Spotify’s new AI-powered “DJ”.
It’s also very explicitly designed to bring users back to the algorithmically channeled listening experience on Spotify.
If these initiatives succeed, it would be a great story for Spotify’s investors, and wouldn’t hurt Daniel Ek’s constant tug-of-war of licensing deals with major record companies.
“If more than 50% or even a majority of plays are triggered by algorithmic recommendations, we cannot call Spotify powerless. The more plays we control, the more market and industry leverage we get.” I can.”
If more than 50% or even a majority of Spotify plays are triggered by algorithmic recommendations, Spotify cannot be called impotent. The more plays you control, the more market and industry leverage you have.
How dangerous is Spotify with its new design?
It’s a far cry from Spotify’s experience, which has attracted more than 200 million paying customers to date, and it’s not mild.
Gen Z may not want a TikTok-like experience where their phones are crowded alongside Instagram reels, YouTube shorts, and TikTok itself.
Generation X may completely ignore Spotify’s new home feed.
Also, older generation music listeners may choose to simply shy away from all visual noise.
MBW’s podcasts are supported by Voly Music. Voly’s platform enables music industry professionals from all sectors to manage touring budgets, forecast, track expenses, approve invoices and make payments 24/7. Visit VolyMusic.com for more information and to sign up for a free trial of the platform.
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