Bobbi Flekman & Spotify

Money Talks and Bullshit Walks...

When Bobbi Flekman of Polymer Records got up in Ian Faith’s face and delivered this classic line, it was one of the greatest moments I’d seen in film to date. It soon became my mantra.

In business, investing, and everyday life it holds true. It is a Stella Polaris. Anyone engaging in the business of music should have it tattooed on their forearm. Anyone trying to figure out why the world works as it does needs to sit alone in the lotus position and chant it 10,000 times. Money talks and bullshit walks.

New Flash

Spotify is not a music company. Here’s over 600 million reasons why: Let’s start with $230 million to buy Gimlet Media, a podcast producer and network. Then let’s look at $200 million to buy Ringer, Bill Simmon’s podcast media company. Then $100 million spent on Anchor, a platform for podcast creators. Throw in another $100 million for exclusive rights to the “Joe Rogan Experience”.

Why is a “music streaming platform” spending all this money NOT on music? In Spotify’s own words, “Growing podcast listening on Spotify is an important strategy for driving top of funnel growth, increased user engagement, lower churn, faster revenue growth, and higher margins.” [2019 Earnings Report]. Catch that? “top of funnel growth”, and “higher margins”?

As music streams go, Spotify pays out over 70% of what it takes in to royalties. Despite the repeated postings of paltry royalty checks and rants from songwriters on social media, music is not a high margin business for Spotify.

On podcasts, however, Spotify is expected to increase its share of podcast ad-supported revenue from 15% in 2021 to 40% in 2025. Can you see where this is going?

Old Hippies

Next, you’ve undoubtedly seen the news. Along comes a bunch of old hippies to join forces with big government + big pharma. Somewhere along the way Joe Rogan’s brand of counter-culture dissension became… too dangerous?

Neil Young once claimed he didn't want gay people bagging his groceries and Joni Mitchell appears in blackface on one of her album covers. When it came to Spotify’s ethos, however, it wasn't the paltry royalty checks that set them to the door, it was the Ivermectin.

No Control

I suppose Young & Mitchell hope others will follow suit, but many artists with catalogs broad enough to ding the bottom line don’t even own their own music anymore - they’ve sold out. The likes of Bowie, Nicks, Dylan, Springstein, and Simon have no control. Hell even Neil Young sold 50% to Hipgnosis, which is tied to Blackstone. Care to start digging around the Blackstone hallways? Neil??? [great idea for a future blog - noted]

Back to Rogan. He draws 11 million listeners per episode, that is per episode. He commands $1 million minimum per ad per episode. Have you ever heard an ad in the middle of a song? He creates a margin for Spotify that was juicy enough to send them on a buying spree that may top $900 million for podcast media.

End Result

No wonder Spotify ushered Neil Young’s “Free World” with Joni’s coke-fueled-hook-free songs out to the alleyway. Rogan is exclusive. Young & Mitchell can be found anywhere. No one is switching platforms to catch “Don Juan’s Reckless Daughter” on safer airwaves.

Spotify didn't “give in” to Neil Young’s demands, they made a business decision.

Money talks and bullshit walks.

PS

Addendum I - I’ve seen a lot of memes posted about Spotify losing a lot of money via a precipitous fall in their stock price after jettisoning Young & Mitchell. It’s worth noting $SPOT was down about 40% off its Jan 2021 highs before this row began.

Addendum II - Songwriters, pay attention. Where is your leverage in this? Are you still #JusticeAtSpotify? What is your endgame? Pull your music at your own risk, because bookers, promoters, and labels who might be signing you will be looking at your Spotify numbers as a determination on what you may or may not command. What’s talkin’ and what’s walkin’? Post that pic on Twitter of your next Spotify check stub and we’ll see…

Cheers, and thanks for reading.