So now you know who Daniel Ek is? Spotify’s decline explained
I have been reporting on Spotify’s bad business practices for years. I recently did an article about their new opt-in policy where artists can get paid even less than fractions of pennies in exchange for an algorithmic boost as they call it. The new policy basically incentivizes artists to get paid nothing for the promise of more attention and exposure. This absolute travesty of an “incentive” is just the tip of the iceberg of poor business decisions that the leaders at Spotify have made over the years.
I know you want me to talk about the Joe Rogan medical misinformation situation going on. I will. First, hear me out about how I think we ended up here. This decline in Spotify’s stock may be sharper in decline right now, but it’s nothing new. Their market shares have been decreasing for years. Most of it can be easily explained, especially from a person who understands how the entertainment/music business operates.
Spotify like any other corporation has shareholders. This part is nothing new under the sun. What’s unique about their shareholders is the fact that they’re all competing. Most of the shareholders have competing interests. The majority of shares are held by major record labels. For context, there are only three major record labels left. For some time now, there has been decent in the board rooms in this regard. Major record labels have competing interests. Each one wants their artists and their brand to get the most attention and have the most exposure on the platform. Of course though, right? This brings me to my larger point.
This is speculation on my part. However, there's been metaphorical smoke over there at Spotify for quite some time now. I firmly believe there’s also metaphorical fire to go along with the smoke. The model they built was never going to be sustainable. They knew a growing number of people wanted instant access to streaming music and content. They filled that void. However, none of the people responsible for getting the streaming service up and running had a working knowledge or understanding of the music/content business they were getting themselves into. They thought getting competing major label record execs involved as shareholders could help fill the gap of the lack of understanding they had about the business. It was a rushed and absolute moronic approach to supply the identified demand.
Do not misunderstand me, the leadership at Spotify is not stupid. They fully understand money and how it works. They’re just inept when it comes to operating the service they currently provide. Rushed and poor business decisions led them to this point. They had a microwave mentality approach to their service. Longevity along with success was never going to be in the cards unless they made/make major changes to how they operate.
Artists no longer have physical copies to distribute. Those days are long gone. The competing shareholders are all fighting for the algorithmic boost for their own artists and interests in the service they invested in. This left Spotify no room to even try to help independent artists and creators. For a while, they had a way for independent artists to upload their music independent of a third-party service but quickly scrapped that idea. Most independent artists these days are ignorant of the business in large part. They were uploading songs with samples that weren’t cleared yet. This was triggering the bots/algorithms Spotify uses to catch people using uncleared samples. Then the shareholders (the major labels) then had to act because the uncleared samples being used by the indie artists were from music the major labels owned.
Indie artists can use third-party sites like DistroKid to help them get distribution on Spotify and other streaming services, but how sustainable is that option? Even doing things that way, artists were only making fractions of pennies per stream. Add Spotify’s new “opt-in” for more exposure to get paid less policy, and you have a perfect storm of complete and utter avoidable nonsense hurting the service’s bottom line, as well as hurting artists and their very own shareholders.
I say all that to say this. Yes, Joe Rogan garnered recent public scrutiny for medical misinformation. As a result, people in mass started looking up Spotify’s stock watching the sharp decline and pointing only at the Joe Rogan situation as the cause. Believe it or not, this helped Spotify. Now the public perception is Spotify’s decline is due to Joe Rogan’s nonsense as opposed to just bad business being done for many years by wealthy men who all should have known better.
Public perception is always key in the entertainment business. At any point, Spotify could cut their losses and cancel the contract they have with Rogan. They’ve lost more money than they gave him at this point. It’s routine in this business to payout a contract, give a little extra, then slap an NDA on all parties and keep it moving. They’re not taking this option on purpose. I speculate the reason is, now they have a real excuse for the business failing. They can take advantage of the public’s general ignorance of how the entertainment business works. Saying “we have a deal we have to honor” with Joe Rogan gives them an out.
In my opinion, this helps the leadership at Spotify and Joe Rogan. More people are saying their names out loud than ever before. Daniel Ek released a statement saying there will be “medical misinfo” warnings on content now. You simply do not understand this business if you think the execs at Spotify thought that would quell the “woke mob” from attacking them. Everything they’re doing is quite calculated. They have board rooms and focus groups, they know what this generation wants to hear. They’re not saying it right now because this fiasco has actually taken the focus off the actual problems that have plagued that company for years. The stock and market decline for Spotify has been steady for many years now. It all depends on where you start looking at the numbers. If you start right at the Rogan situation, it would appear that was the cause. It’s just one of many blunders these executives over there have decided to plant their flag in.
If Rogan and Spotify do eventually part ways it will look something like this. Spotify releases a statement saying how much the outpouring of comments influenced them to part ways and they apologize for any harm it’s caused. They’ll promise to be more mindful in the future, yadda yadda. Joe Rogan will have the ability to speak to his base about how “he fought the system, but the split was amicable.” He’ll thank Spotify for the opportunity but just say “in the end, we weren’t a good fit.” Rogan’s base will be happy. Spotify would have bought enough time to either sell their company or make an attempt to fix the issues they’ve had brewing for many years.
In conclusion, more people know who Daniel Ek is now. Good or bad, it’s always a good thing. He can join the bad billionaire club with public profiles like his peers. Characters like Elon Musk, Bill Gates, and Jeff Bezos for instance bounce back and forth in public perception from evil to being part of jovial social media memes. The hard part is getting the public to even care about you when you’re that wealthy. Any attention that boosts that public profile helps any future endeavors someone like Daniel Ek may have. Sorry to tell you all, no the outrage is not hurting Daniel Ek. Unfortunately.
Until next time, I said my piece! — Divine Thought
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