19 August 2019

The Baffler: “Big Mood Machine”

In Spotify’s world, listening data has become the oil that fuels a monetizable metrics machine, pumping the numbers that lure advertisers to the platform. In a data-driven listening environment, the commodity is no longer music. The commodity is listening. The commodity is users and their moods. The commodity is listening habits as behavioral data. Indeed, what Spotify calls “streaming intelligence” should be understood as surveillance of its users to fuel its own growth and ability to sell mood-and-moment data to brands.

Liz Pelly

This article goes out of its way to make Spotify’s collection of data about listening habits sound nefarious (notice the heavy use of emphasis to signify her outrage), in the same way that Facebook’s data collection sparked numerous scandals, starting with Cambridge Analytica. There are two major issues with this narrative, and unsurprisingly the author never stops to address any of them.

First of all, Spotify’s business model is significantly different that Facebook’s. Spotify makes most of its revenues from recurring subscriptions, around 90%, compared to about 10% from advertising – that ratio is reversed in Facebook’s case, which relies heavily on advertising. As such, ad targeting is not a high priority for Spotify, where the free tier is used rather to incentivize people to sign up for premium, not as primary revenue generator. As a personal anecdote, I have rarely heard any third-party advertising, targeted or otherwise, on Spotify in the months I used their free service. Most of the clips were simply inviting me to sign up for the paid service. This may be because Spotify has too small a presence in Romania to attract large advertisement deals, but it doesn’t lend any credence to the fear-mongering in the article above.

Spotify's revenues, by segment
Spotify’s revenues from 2012 to 2018, by segment (in million euros)

The other aspect the author is overlooking is privacy regulation, specifically GDPR. What she describes here would most likely breach GDPR, and since a large section of Spotify’s customers are based in the EU, the company would be open to investigation and possibly significant fines if such practices would be uncovered. Why would Spotify take high risks for a questionable increase in advertising revenue, which isn’t even its main source of income?!

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