15 February 2022

Protocol: “Blame cheap music for Joe Rogan being on Spotify”

Written by at 23:25

Left unsaid during the leaked town hall was another aspect of this relationship: Spotify is in bed with Joe Rogan because streaming music is too damn cheap.

Music services have long struggled to pay those huge royalty checks their contracts with the music rights holders are calling for. Some have even argued that the deck is fundamentally stacked against the streaming media industry, and that music subscription services can never be profitable.

  • Spotify has indeed lost billions of dollars over the years, a streak that continued in 2021: For the full year, the company booked net losses of $38.8 million on $11 billion in revenue, according to its latest earnings report released yesterday.
Janko Roettgers

I have been trying to abstain from commenting on this Joe Rogan dispute because people were throwing around the most ridiculous and biased arguments they could find. For the record, I don’t listen either to Joe Rogan’s podcast or to Neil Young’s music, but I am a Spotify premium subscriber, and have no intention to change that. This article discusses the business reasons for the situation; I would go a bit further and say that the underlying issue is the increasing lack of competition on this market.

One of the accusations that immediately pops up whenever someone has any sort of criticism about Spotify is that their artists’ payouts are too small – and sure enough, that’s what most people got worked up about this time as well. It’s a common misconception, and quite ironic to criticize Spotify for Rogan’s misinformation by invoking another unrelated piece of misinformation. Actually, Spotify doesn’t pay artists at all, because Spotify doesn’t sign artists directly; Spotify’s royalty payments are sent to record labels, who then decide how much and when to pay artists, after deducting artist advances and other costs. All other streaming services work on the same principle, and their payout rates are mostly comparable to Spotify’s, with the exception of Tidal, who charges a higher monthly subscription.

So, if you want someone to blame for meager checks to artists, you should start with music labels. The market has largely consolidated around three major companies (Sony, Universal and Warner), meaning that they hold a lot of negotiating power both when dealing with individual artists and with streaming providers. As no one can realistically operate a music service without all three major labels on board, they can negotiate as a single entity, imposing their preferred terms as a monopoly would. It’s quite fascinating how people fixated on blaming Spotify in this context; I suspect artists started bashing Spotify because they either didn’t understand how the business works, or because they didn’t dare to speak out against music labels, who are their actual contractual partners and main source of income.

And since per stream payouts are collectively negotiated with music labels, most streaming services land on similar subscription prices because the lack of differentiation. If you raise prices, you risk people switching to rival providers – keep in mind that artists still wouldn’t receive a better cut, since that is decided by their labels. If you lower prices to attract more customers, you would soon end up with negative margins and go bankrupt. Notably, Spotify’s biggest competitors are Big Tech companies, who could easily afford to run a deficit on this business line, but probably won’t because it would invite scrutiny around price dumping – also Apple is too greedy to do that.

Squeezed between the bargaining bloc of music labels and much bigger competitors what could drive the company out of the market, Spotify has few good options. They tried in the past to sign artists directly, without a music label intermediary, but naturally the labels intervened and forced them to abandon this project to protect their own market dominance. Their new strategy are these podcasts exclusives, which eliminate the middleman and should offer the company better margins and a differentiating factor against other streaming services – you might say Spotify intends to become the label for podcasts.

A broadcast microphone surrounded by vaccines
Getty; The Atlantic

Unfortunately, this plan isn’t going terribly well. Many of the celebrities that Spotify approached and paid hefty advances to for exclusives podcasts have delivered only few episodes – some are even using this controversy as an excuse for delays releasing content. Maybe podcasts are not the big future of audio that many predicted – after all, people apparently prefer to listen to the same popular shows, a sign of a saturated, stable market. The rapidly fading popularity of Clubhouse points in the same direction.

The distinction between platform and publisher that many brought up in this context is not especially relevant in my view. For one thing, a typical consumer wouldn’t know or care about it; as long as Joe Rogan is on Spotify, his listeners follow him there, if he leaves, they will go along. As people pointed out, Steve Bannon has a podcast available on Apple Podcasts; that still provides Bannon with distribution and a steady audience, even if Apple doesn’t finance Bannon directly. And I would say Bannon as an ideologue is much more dangerous in this position that a radio show host interviewing random experts.

Rogan had an impressive audience well before signing the deal with Spotify – which was in fact the main reason Spotify approached him for an exclusive, to bring this audience along and potentially convert them to paying subscribers. It’s not like Rogan was a nobody before and Spotify built his entire brand, which he now uses to ‘spread misinformation’.

People who clamor for Spotify to remove him seem to conveniently forget a comparable situation played out with Donald Trump not too long ago: throughout his term in office, people constantly wanted him banned from Twitter and Facebook. After he was eventually removed from social media, he still retains a huge influence in American political life. Removing a channel does not stop the message, nor does it magically disperse the audience that resonated with it. Here, the problem is more with the people listening and believing, because of their lack of education and critical thinking. That’s not a trivial issue that can be fixed with content moderation.

I can’t speak too much about the concrete misinformation Rogan is being accused of since I haven’t listened to any of his episodes. But from the meta conversation, a significant point of contention is that he is talking to experts from one field who offer opinions about an entirely different field, where they have no relevant expertise, and that Rogan is accepting their claims at face value without sufficient fact checks and pushback. But mainstream media is doing that all the time, especially on complex and divisive subjects (for Americans at least) such as the pandemic and global warming. There are numerous examples I could give where journalists either interview experts and misstate their arguments, or bring forward economists to discuss public health, or invite fringe voices to create the illusion of ‘balance’, or promote experts who have been proven wrong multiple times before, or manufacture a false sense of security, as it’s happening now with the Omicron variant. I cannot take anyone seriously who complains about Joe Rogan’s handful of episodes while ignoring the same behavior in media.

But does it change behavior? I mean to say: Is all of this nonsense not just dumb but deadly? People are dying because of COVID misinformation that Spotify packages as glib podcast fodder, a Washington Post column said over the weekend. This all started when a group of health-care workers and scientists accused Spotify, the sole distributor of Rogan’s podcast, of creating “mass-misinformation events” with “extraordinarily dangerous ramifications” for millions of listeners. Soon others joined the chorus claiming that Rogan’s show provides a platform for anti-vaxxers and is costing human lives. (The scandal has since expanded to Rogan’s history of using racial slurs and other past affronts.)

Vaccine refusal, in its broadest sense, has taken a catastrophic toll in the United States, on the order of hundreds of thousands of preventable deaths. But the claim that pandemic falsehoods aired on Rogan’s show are substantially responsible ignores the sticky facts of our predicament. Surveys now suggest that roughly one in six American adults says they won’t get vaccinated for COVID-19. That’s roughly what the surveys showed over the summer; it’s also roughly what the surveys showed in the summer of 2020, when the pandemic was still young. One in six adults, some 45 million Americans in all, is seemingly immune to any change of context or information. One in six adults—a solid tumor on our public health that doesn’t grow or shrink.

Daniel Engber

Which brings me to the musician who started this scandal, Neil Young. Overtly he removed his music from Spotify because of Joe Rogan, to protest vaccine misinformation. I mean… has he just crawled up from under a rock? Vaccine misinformation has been around for years before the pandemic, and it took him this long to notice? He may have strong principles around vaccines but pulling his catalog from Spotify is rather a branding move serving his business interests, as he’s likely making more profit from selling physical media than from streaming. I’m sure this much-publicized quarrel had nothing to do with Young’s latest album, released on… December 10, 2021! Many of the artists who joined him ‘out of solidarity’ also belong to the same record label… this smells to me of an overeager marketer who came up with this tactic to generate publicity around the artists and their new releases. This was as much about principles as Apple fashioning itself as the privacy defender while stealing Facebook’s ad business.

That being said, Spotify should obviously treat misinformation more seriously, revise their content standards and enforce them more consistently – especially when it comes to popular acts like Rogan’s. There are some signs they are moving in the right direction, as they started cleaning up his previous catalogue of racist terms. But moderating vaccine and coronavirus information will remain a thorny subject because the scientific data is also evolving at a fast pace. Maybe listeners should think twice about taking medical advice from a general-purpose podcast…

Perhaps another helpful measure would be to split the music streaming and podcast player into separate apps, thereby breaking the association between these content types that artists now object to. That’s something that many users asked for as well, and it would probably make technical sense to iterate the apps independently. Or offer a separate premium tier for podcast exclusives, maybe relinquishing podcast ads on this subscription. From a business perspective those moves would be counterproductive though, since Spotify is relying on exclusives to drive sign-ups and hardware partnerships.

On a deeper level, the controversy reflects once again the poor state of social media, where people get outraged at the first sign of trouble and react emotionally for the lowest forms of virtue signaling. There is no place for measured discussion, for examining the slightest complexity and nuance in a situation. It seems people are committed to doing the absolute minimum, but expecting that their hasty and mostly rhetorical contribution be praised as the ultimate achievement. Have any of the people who proudly announced that they’re leaving Spotify considered the alternatives? How Apple is fleecing developers and creators with their App Store commissions, how Amazon is exploiting employees and YouTube spreading misinformation as well? How they are feeding hungry monopolists who would gladly swallow up every bit of artists’ revenues for a minute increase in their stock performance? Ironically people can leave so easily because Spotify is not a giant conglomerate controlling vast swaths of the online experience. Not saying Spotify’s some sort of saint here, but people keep acting as if choices they make in a heat of the moment are perfectly moral and should apply unquestionably to everyone else…

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