Today’s episode of the Future Ear podcast features Brett Bivens, Venture Capitalist at the firm TechNexus. I recently discovered Brett and his writing through Twitter and was really impressed with the piece he wrote on Spotify and what Brett defined as, “Business Model Leverage.” Since the burgeoning audio-internet has been something I’ve been writing about since February 2019 with my two-part, “Cambrian Explosion of Audio Content,” piece on Voicebot, I figured Brett would be an awesome guest to bring on and chat about Spotify and some of the new “ambient” opportunities it’s pursuing.
Much of the basis of our conversation stems from Spotify CEO Daniel Ek’s “Audio-First” blog post that he published directly after Spotify acquired Gimlet Media and Anchor, where he said the following:
To really understand, take the current value of the video industry. Consumers spend roughly the same amount of time on video as they do on audio. Video is about a trillion dollar market. And the music and radio industry is worth around a hundred billion dollars. I always come back to the same question: Are our eyes really worth 10 times more than our ears? I firmly believe this is not the case. For example, people still spend over two hours a day listening to radio — and we want to bring that radio listening to Spotify, where we can deepen engagement and create value in new ways. With the world focused on trying to reduce screen time, it opens up a massive audio opportunity.
Daniel Ek, “Audio-First”
Unlike most companies that enter the market with its best offering, Spotify may instead be focusing on growing its user base with an offering that’s not very lucrative for Spotify (music streaming), but very compelling for users. The rationale, as we discuss, may be due to Spotify’s belief that it will eventually have more profitable offerings that it can sell to its swelling user base.
As Brett describes to me, these new opportunities that Spotify may look to pursue might include other forms of ambient media, beyond music and podcasting, that could fill our “audio day.” This refers to those times when one might be walking the dog, washing the dishes, riding the train, catching a plane, exercising, driving to work, and all the other times throughout your day that’s not all that conducive to look at a screen.
It’s not entirely obvious what these new offerings would look like (we speculate), but as we point out, one of the most differentiated qualities about Spotify is its curation prowess. Premium Spotify users are given a wide variety of auto-generated playlists, allowing for the ability to discover new artists (i.e. Discover Weekly) and easily stream playlists designed off of the listener’s consumption habits. We’re beginning to see Spotify layer its curation engine onto the podcasts contained in the site, which may ultimately serve as its biggest point of differentiation in the podcast platform market too.
One of the ways that we discuss that Spotify’s curation engine could manifest in new offerings, would be to surface location-specific content. For example, I might be in St. Louis visiting the Arch and be pinged by Spotify through my AirPods to begin streaming some type of podcast or spoken audio that relates to the history of its development. One might imagine that this could almost be similar to Pokemon Go, with Spotify hosting a layer of augmented reality with all kinds of audio content geo-accessible based on where I’m standing.
We also examined the reports suggesting that Spotify is in talks to purchase Bill Simmons’ sports and pop culture media network, The Ringer. This type of acquisition would bring a content production team in-house with a deep understanding of ambient content and what resonates with their audience, allowing for the Ringer team itself to potentially even lead the curation efforts around sports and pop culture. In this scenario, it may be that I want to not only subscribe to Bill Simmons’ content (text articles, podcasts, audio blogs, etc), but I also may want to subscribe to Bill’s “playlist of content”, where I’m getting audio clips or full segments of the “best of” from Bill that week. Now apply that same logic to all the personalities within the Ringer.
We closed with Brett’s very speculative (and fun) tweet about a potential merger between Spotify and Snap. While Bret admitted that he didn’t really think this exact merger was all that plausible, it does get at the heart of something that I’ve held to be true for a while now, and that’s the idea that we’re going to see some type of social offering with a big emphasis on audio, or that we’re going to see a social layer be applied to many of the ambient offerings today. We may even be seeing the first real strong fusion with Bytedance and TikTok, which is becoming a music discovery service in and of itself, based on what’s going viral. Who knows how this particular intersection will evolve, but as Bret mentions in the podcast, “most categories of consumer technology aren’t really one until a social product takes off there.”
At the end of the day, the more things we can consume with our ears, the more reasons to wear our AirPods and the like for longer periods of time and more often. This, in essence, gives way to what I’ve described as the, “Aural Attention Economy.”
-Thanks for Reading-
Dave
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