Spotify CEO Daniel Ek

Transcript from https://podmenti.com/t/c006375b82319045

It is impossible to flawlessly execute a podcast of this style. Yeah.
And that's the beauty of it.
You come up with a bunch of stuff you want to talk about and then
You end up
having a real organic conversation and then it turns into a product and that product is totally different than what you envisioned in your head.
But can still be great. But I think the amazing thing is
Unlike
You talking to a journalist, et cetera, is
It's truly a conversation one. And the second part is
There's enough time to actually elaborate on the thought and the idea.
Whereas you have to be so succinct in how you express your idea and truly get it across in thirty seconds, or like you lose the moment and the journalists want to move on and
Brian Cheske is an example, he's like the master on it, and he just switches it on and he's like so good.
For some reason he and I always end up getting on the same panels and I'm like, it's game over even before it started. You're gonna have all the great stuff. Who got the truth?
Is it you, is it you, is it you Who got
No.
Is it you, is it you, is it you?
Me down
Straight!
Another story on the way
Welcome to this episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts.
This episode we sit down with Daniel Eck.
The man who saved the music industry after Napster and the piracy era killed the CD business.
Some of the stats are mind boggling.
Spotify has paid forty billion dollars to artists over their lifetime.
They're now the single largest source of revenue for the entire music industry.
That's crazy. Spotify also has over 500 million.
monthly active listeners, over 200 million of which are paid subscribers. Both of those numbers are
Bonkers.
And in today's conversation, we're talking about one how Spotify managed to get to this five hundred million number by stacking all these different expansion strategies on top of each other over the years.
And two
We're gonna dive into the current moment that Spotify is in. They've entered podcasting in a huge way that is not
only changed the experience for consumers.
But
Spotify's business and their future as a company, which is of course very interesting to David and I as Acquired's growth has really exploded on Spotify. Totally. As I think we referenced early on in our conversation with Daniel, over sixty percent of Acquired's audience is now on Spotify, which is up from basically zero four years ago.
It's wild.
In fact, we were so interested in having this conversation that when Spotify asked if we wanted to fly to Stockholm and record in person with Daniel in the Spotify studio.
We jumped at the chance.
Daniel also foreshadowed some of what's to come with the cousin of podcasting audiobooks.
We can't wait to hear what you think. Come discuss it after you listen to this episode in the acquired Slack, acquired.fm slash slack.
You should subscribe to our interview show, our second show, ACQ two.
You can find it in any podcast player, and we've had some killer back to back discussions with the CEOs of Retool and Angelist, both about AI.
Now without further ado
This show is not investment advice. David, myself, and our guest may have investments or many shares in the companies that we discuss.
And this show is for informational and entertainment purposes only.
Now on to our conversation with Daniel Eck.
We wanted to start with like something kinda incredible has happened in podcasting. If you look at January first, twenty nineteen, we had less than a thousand listeners on Spotify. Yeah.
Crazy.
And now it's
By far the majority are.
Listeners.
And unless you're us and you're looking at the data all the time or other podcasters.
I think it's easy to underestimate how
seismic of a shift has happened in the podcasting ecosystem since you guys
Dove in
And I just wanted to
sort of acquired style, go to a moment in time and say,
How did that happen and how did you guys decide to become an audio company instead of a music company?
I like to say that there was probably this genius insight at some
point in moment, but that's
Certainly not in the case of Spotify true. Uh it is often quite serendipitous. And for a long time, you know, I was kind of fighting the urge on this, but
We were oftentimes trying to
not think of ourselves as the users and customers because once you got through kind of a hundred million users, you're kind of like, well
obviously I shouldn't be the target demo. I need to kind of listen to what the actual users are telling me.
And there there's some part that's true with that, but then
Uh more and more what I've
I've realized uh is also that actually internally we probably have the best
Sounding board.
of a quite representative Spotified user and what they might like.
And so
Uh, one of my favorite topics is how often people game our platforms. For instance, in Germany,
unbeknownst to us, but one of the the sort of crazy things that ended up happening was just people started uploading audiobooks because it turns out that um these music labels actually own a bunch of audiobook rights. Mm-hmm. And so as the platform was
taking off, they realized what else can we put on this platform that gives us a leg up and creates more revenue for us, and they realized that
They have this catalogue of audiobooks sitting on there.
So I think that was kind of one realization where we kind of realized, hey, this platform, it doesn't seem to matter all that much what we're putting on it.
People just like consuming content.
And then
I and others at Spotify, we were big podcast listeners ourselves.
And we love that. Uh, but we hate the fact that we had the switch app, uh, from our our normal one. We hate the fact that we couldn't get the recommendations working, we hate the fact that we couldn't
get this to work on my car speaker or my home speaker and all these things that we
Spent literally a decade um
building for the music industry.
So it kinda dawned upon us that
Podcasters have sort of the same problems that the music creators have.
And we should be able to play a pretty big role. And all the
primitives that we built for music uh should work really well in terms of discoverability, in terms of
uh ubiquity that we call which is sort of our ability to play on on any device.
And of course our freemium model where the ad supported and eventually paid models as well should be able to
All work together.
And so
The craziest thing in in the beginning was probably when when uh we started talking about it as building it in the same map.
That was what the biggest resistance was.
Because the common wisdom at the time was obviously well, podcasting has to be a distinct
Own thing.
I mean this was like the you've talked about this before, the constellation of apps was now, you know, all the like all the rage. Facebook's got all these different apps and Apple has all these different apps.
And unless I'm a person who
already defines myself as into podcasting.
I'm never gonna click a podcast app to try and get into podcasting. You can't expand the TAM if they're all in separate app still is a super nerdy thing.
Even merchandising, podcasting is a very different problem than music. It is actually one of the things that we're still working on trying to crack the code on.
But that was probably the most contrarian, both inside and outside. But to us it was probably the most obvious one.
because we had already seen the behavior happening uh in Germany.
Um and
uh once we had tried uh onloading it for ourselves so that we could play around with the product, it was kind of obvious that this
Would be a great experience.
And it's probably been the most interesting one for me where
Uh and what I often tell other entrepreneurs is like
Well, um the fact that people doubt you in the beginning, you kinda need to pay attention to that um and hear what valid concerns they may have.
But a bunch of that is just
Like they're not used to the concept, uh, and it's going to change. But by the time it changes
it it will have already passed over, not that you were right, but actually well, of course. This is kind of obvious, right?
So my favorite one obviously streaming music, where when we we began doing it
I always got this sort of pushback of like, why would I want to rent my music? I want to own my music. And the phrase streaming did not exist.
Yeah, uh people were not talking about it and and people
actually conceptualized more around sort of renting.
Things and w why is that good for me? This is horrible.
Um and you know, that means that technically
What happens uh if you guys don't want to um have that song anymore, the song disappears and people just like so much about their music, like their identity, like I wanna own this, I want my you know, record collection. Yeah. Exactly. And we were fighting uh against it where it was so obvious to us that um because I grew up with piracy that
No, actually all you want is
access.

And it was such a hard notion for people to get conceptually because we've been spending
thirty years just getting people into that. And I feel like most of the tech industry had spent
a decade plus uh learning about having separate apps and we kind of said no no no it's doesn't really matter.
Uh, we can put it in the same map and actually people will love it even more because we're solving the same sort of user needs. Where did that insight come from? Was it
You as a user? Was it
Elsewhere in the company.
Well it was really
A lot more of a first principles kind of
thinking around it. It didn't really make sense if you looked that sort of like
What are we trying to solve for?
And was it truly so different in terms of a consumer experience? No, it was the same.
Playing view, uh slightly different sort of modalities, but
Totally possible.
And if you thought about it as a discovery, okay, well that's a similar problem. Ubiquity being able to play it on all these speakers.
Made a lot of sense of having the same thing.
search, uh all of these things were basically shared infrastructure that we could utilize. And
Um again, if you're searching for content, why
um you don't really care all that much about it on YouTube. Uh and on one end you're listening to music on one side, you had all these other short form videos and sports and so on. You don't think that those are distinctly different behaviors. So why do you think about it that way?
And it's because you really think podcasting is a different format.
But actually.
It's audio.
I mean if you go back to the radio days.
Talk radio and music and sports, they were all on the same device.
Yeah, I mean that's the thing with audiobooks too, right? Like what's the difference between an audiobook and a podcast thing?
Well, you would say chaptering and some of those stuff. Uh we think of ourselves as like right on that line between a audio book and a podcast. Actually we we'd love your help trying to solve this for ourselves. So we uh have recently realized that acquired is
The canonical episode, uh NVIDIA episode or T SM C or
Taylor Swift. Yeah. These are more like
conversational audiobooks between David and I than they are podcasts. Yeah, they're four hours long. They drop infrequently.
How does that kind of
fit into
Uh
what you imagine is the job to be done by audio and is it an audio book? Is it a podcast?
My view, I guess, is the boundaries are
from a format side is definitely being blurred uh quite a lot and and for right reasons.
But the better way to think about it.
Audio books.
And podcasting is it's it's really around a business model, mostly.
So one way to frame it instead would be
Podcasting is ad supported audio and audiobooks is paid audio.
Mm.
So
for you guys, I mean, I also happen to know you spend so much time and effort on the research of that side.
You could imagine that in the future.
You have the um ad supported side of your podcast be
certain types of episodes and and you'd have for s your subscribers, um
The unlock where they get access to, um, you know, these kind of deep dives.
et cetera. And obviously the subscription thing could be as simple as like hey
You're part of our other network and it doesn't cost money. Or you could
pay gate it's uh all the way through.
But I think it's more of a business model that's the big format differentiation.
Because as as we said, like the quality, the mics we're using relative to an audiobook, there there's no difference here. You're using like high quality camera equipment.
Um, also very similar to more professional style than sort of do it yourself kind of equipment.
Editing all these things. It's getting more and more blurry. Yeah. Which is so interesting. Like
T.
Oh, so like we've lived this over the past
Eight years like
What podcasting is unlocked.
And now with Spotify bringing so many more people to the medium that weren't consuming before
Is like
A mass audience for
niche products. Like if we were authors and we wrote a book.
And we get pitched all the time on writing a book. Like
the business model for us does not make sense anymore given the audience that we have and a particular type of audience.
We monetize so much better with the ad supported content. But like to make that unlock happen.
It needed to become a mass medium.
Yep.
It's interesting to think about would that change if
Audio books.
can access a mass audience in the same way.
Yeah, and and obviously our our view is we eventually think audiobooks should be much, much larger on than what it is today.
hundreds of millions of people who are actually listening to audiobooks because the content is great rather than today what's tens of millions of people. Is that the market size today of Yeah we believe it's like tens of millions. It's one of the fastest growing categories, uh which makes it interesting. But um
It's it's again, uh fundamentally it's both a business model problem. It's um you know again a discovery problem and all those um other things.
For a one off purchase. Yep.
Or you need to
have a pretty expensive subscription to a service that you may or may not use that and get value out of. It reminds me of music in two thousand eight. Exactly.
You guys are exactly right and and there probably needs to exist a a different business model for all these things. But you could even in your case, I mean, you guys have
Probably right now, um
Pretty defined audience, I would guess.
And and probably a very high value audience, which makes um add supported monetization
probably better than the average creator for you guys just given uh the type of audience that people wanna wanna get to. But you could even contemplate like some of your deep dives. Like I've
I've heard of
uh like actual hedge fund investors.
Literally.
have that as the sole input to their entire process. Yeah. Well not investment advice. Yeah, exactly.
But I mean, you know, it is one of the areas that I'm I'm kind of
um the most intrigued about. I think Ben Thomson had this piece very recently. I think he called it like the unified content business model um piece.
I don't necessarily agree with everything he said, but but I think uh his main takeaway is obviously that all media models ought to move to freemium. It's as someone who's
been saying that for for fifteen years. Uh
I obviously agree with him there.
But I think that's true in all formats, right? Like as I said, I think, you know, what's the difference between
audio books and podcasting, there are definitely differences, but but the formats
Or blurring.
But the main one is is the business model, as I said. So it it's just
it it it's talk audio, but with a paid or an ad supported business model. And I guess my advice to you guys would just be
I think you should kind of like
Explore both and see
to an extent what's possible.
Yeah.
All right.
Listeners.
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And just tell'em that Ben and David sent you.
Speaking of the podcasting business model.
There's the potential for podcasting to be a far better
business at scale than music streaming. Obviously with music streaming
you take thirty percent and you share seventy percent with the labels.
uh with podcasting, um, there's the potential for real operating leverage, especially if you own the content.
to uh build a fantastic ad network.
or, you know, however you want to monetize it, but you actually can take advantage of the scale of your audience.
in a way that it's sort of hard to outrun your costs in the music world.
I'm curious how early
in your sort of dreaming about
Becoming
a podcasting platform, did you start thinking about that?
Uh or was it purely product driven?
Well, I think it was a bit of both. Um and you have to to contemplate that if you're making moves like uh certainly of of our size because many of these investments that we're making are
multi year ones um
And pretty substantial from a signaling point of view too. And obviously public market investors wanna know, like, well is this ultimately a good business and why do you think that is? And
For me to have said, Well, we're we've bought a bunch of companies, but I don't really know what kind of business it'll be. It's probably not gonna be the right um answer. So
Uh, obviously we contemplated that and we we thought about that, but
the reality is uh there's a lot of the grass is greener on the other side when when you go too deep in that. So
Obviously on the one hand, if you deal with a lot of licensed content
And um, you know, in this case from some major labels and obviously a lot of indies um as well, but still relatively
supply constrain from from some big ones.
The natural
Tendencies for you to think, well, this is much better because all of a sudden you have this sort of much wider scope of different creators that matters. It's great. Um you
Yeah, you you can do the aggregation theory. That's that's all good and great.
We we don't really
contemplate all all that much. It's obviously
There's
Other challenges with that business ball, uh moderation all of a sudden becomes a massive thing.
um you have to build an actual ad network that probably then scales. So in theory, yes, you're right, uh you may have an opportunity to gain um
more mar uh margin over time uh in this model. But fundamentally you have to do many more steps along the way. Like we don't have to contemplate content moderation as much when it comes to music.
We certainly don't have to have these very elaborate systematic processes about what constitutes
speech and um you know uh violence
And we knew that because I'd seen enough of these obviously uh platforms, but
But it is important because if you think about it from a P L, so so on the on the surface of these this
These models are great, right? Uh because very high gross margins and and so on and so forth. Great at scale. Great at screens at small scale. Yes. Uh but even at scale, if you think about it, is the cost increasing or decreasing?
And if you think about um, you know, right now, obviously AI will come in and it will be massive, but I think at one point in time uh Facebook or now Meta
had over a hundred thousand content moderators.
Actually working for them. What a hundred thousand? I believe so. I don't know.
An insane amount of people.
So it it's tempting to believe that that's a fixed cost.
uh and that they're run running this like unbelievably high gross margin advertising business and they can outrun those fixed costs no problem. But in reality, what you're saying is
Actually they build up
a whole bunch of variable costs too that don't fit into this um
platonic form of ideal social media business model. Yeah, for sure. And and e and even today, if you think about it.
So all right, uh well maybe that's not a hundred thousand anymore because they've been able to automate some of that process.
But uh it's kinda mo mouse game as well.
So the other side is now using quite sophisticated AI. Yeah, exactly. To to to uh to do that. And that means that your AI models has to be a lot more uh you know, sophisticated
Uh and that still adds cost.
So I think the best case scenario I I was looking at this
Uh this is
very old data. But I ab but I believe at
the time of Facebook's IPO
It was something like
the cost for Facebook to onboard a user was like a dollar a user or something like that. In like hardware cost and all that stuff, uh basically to have lifetime value of a customer.
And so uh at that time obviously the monetization wasn't as advanced, so that was what was burning cash for quite a while and then eventually their growth rate probably slowed down enough where their monetization started
uh kicking in and kind of scale up enough where where those two effects kind of uh took out each other and they became uh very profitable.
But if you look at look at it now, uh I would I don't know what the cost would be, but
If I would guess, uh, if I would start a social media company today.
The cost may be an order of magnitude more.
Mm. Right. Um because of all the other things you now have to do.
uh the ad platforms are way more sophisticated. They have to build the moderation tools are way more s uh sophisticated.
Now
The good news, so so you may then come to to this and say, Well, was that a mistake then?
Well
We knew a lot about that going in and we weren't entirely new. It wasn't like we were starting an ad business from the scratch.
Right. Um
So we had already. Yes, uh that too. So we had we had
relatively good idea of what type of problems we would encounter
And to give you some credit for listeners, I think at the time
You probably had
maybe two hundred million people on the ad supported tier who weren't in premium when you launch podcasting, maybe something like a hundred and fifty million, but you had a gigantic scale advertising business. You just didn't have
user generated content being the content that it was advertising against. Yes. That's accurate. And and the amount of inventory, obviously, um that we were were uh monetizing it against was relatively small and and
one of the big things right now is obviously
This is a huge thing, perhaps even more so than music, for us to offer monetization to a lot of these podcasters that
Perhaps unlike yourself.
Can't sell uh ads.
Unless you're in a niche like ours.
If you're subscale.
you're never gonna be able to access Unilever or PG or Coke, you know, on your own or Nike.
So I wanna ask you about that because um I saw the um um episode you guys did with David Senra, by the way. Uh
So so uh and and he he's interesting because like in in my opinion, he seems to almost dig in more
in like what made him successful and like tries to not at all
Vear to
broadling the base of so how do you think about that? Like
'Cause you could just go
Serve your niche even better.
Uh or you could try to like, well
Let's try to include other forms of content. Like h how do you decide what what type of content to go after? Oh man, we are right in the middle of
figuring this I mean you always said for a long time you're like
I would rather not have growth and keep our audience
Who they are.
I'm not sure I'd go that far, but I would rather saturate our niche and then at some point stop growing than expand the niche.
And then Which I think we have three to four X headroom on our current. Yes, we we still can expand it on our
We did our Taylor Swift episode.
We did the MBA.
We did the NFL and then we did LVMH.
And
LBM H, we got
Forty thousand new subscribers.
Wow.
And we were like
Okay. So to your point about like some something is hacked here. Like there's a there's a new phenomenon happening. So we we have had to redefine what acquired is basically once a year since we started. It used to be technology acquisitions that actually went well. And then it was acquisition. And then it was, you know, and and
And so at some point
Um
We expanded beyond just
Tech founders and engineers, it became venture capitalists also. And then it became their LPs. There's a bunch of university endowment folks that listen.
And now we're realizing
As long as we
keep making these really deep, really long, really esoteric stories and analysis.
You can create smart content for smart people that is not scoped to a particular industry. And I think that that's our new sort of definition of the the job to be done from acquired.
Yeah.
I think it's
Brilliant.
how um you're able both to satisfy your own curiosity, I guess, and uh at the same time
sort of it it it doesn't seem that far fetched, uh some of the ideas um you're trying. Uh obviously I would I would probably
Assume the Taylor Swift one was
More out there than than
Something else.
But the L VM H one actually felt to me supernatural.
Um and it's it's funny, you know, how well talked about it it's been even among like
What I would have not assumed would have been your crowd. Like I had a bunch of
Like
really old school value investors that I I honestly didn't even realise listened to podcasts they've been pinging me about it. Have you listened to this one? It's like
Uh, which is pretty cool. Um so so I think there's a way where there's probably l some overlap between the audiences, but also kind of
Clear attracts a new
Yeah. I mean it's kinda like it's a very very different scale and different business, but um
It's it's a a little bit like the
Spotify adding podcasts to a music, but like we have this audience.
that is like traditionally very tech focused. We have this format that we've refined.
Uh
And now we're like, well, okay, if we bring something else into it, is that gonna expand it? Yeah. But I will say, unlike Spotify, which you can, by virtue of being a tech platform,
You can
aggregate a bunch of different audiences and then let them choose their own adventure on a really broad platform. We choose the adventures. We we create these serial episodes. And so if we go on a Bender and do uh like we just did Lock Eat Martin and it hasn't hasn't come out yet as we speak, but
we could have done eight Lockheed Martin episodes and we chose two particular stories to tell and we called that the Lockheed Martin episode. Yeah. If we went on a bender and did eight
Then like we did this underserving a lot of our other niches. We did two and a half episodes on Nintendo, two on Nintendo, one on Sega.
And
We had a blast, and people who love video games had a blast.
But by the time the Sega episode came out, the people who
don't love video games and video game history had stopped listening. Right.
But sort of diving deeper on that. Um I'm curious then
Um
Would it have been that much more effort for you guys to produce the eighth, or did you have the content, but it just didn't make sense from an audience point of view?
I think we had high level concepts in our head for
For eight, but it
It turns out uh most of the work is the last ten percent. Yeah. Yeah. It's like that. It's like software engineering where like there's the first ninety percent and then there's the second ninety percent. Yeah. And I think so much of the work is the last ten, twenty percent. Yeah.
There's usually one thing on the cutting room floor, though. So we're so we're playing with this idea of shorts, the what we did for Sega, if in approximately one hour.
Uh can we
take one thing that just we couldn't squeeze it in and and uh
Um and tell one more story. Mm-hmm.
Yeah, I was I was just thinking about sort of touching upon where we uh sort of were a little while ago about sort of paid versus ad supported.
I bet you that
There would be a very small one.
But there would be an audience that would listen to all eight.
Whether you wanna spend all the time right um doing the eight is a totally different uh question.
it seems to me like the best creators just pursue whatever they're interested in. And some of it will work, some of it won't work.
They don't really seem to care all that much.
Obviously they'll learn from from what seems to be resonating and all, but
But that's the cool part. Like we're we're living in an internet where
On the one hand, everyone talks about this f fifteen second kind of clips um thing and everyone's uh sort of
Getting down in that rabbit hole.
But then at the same time, uh, you could have like three, four, five hour long conversations
in super esoteric, very, very deep um topics and people love that too.
It's funny, us, uh Joe Rogan, Lex
At the same time that short form is having a breakout moment, extreme long form is also having a breakout moment.
We want your views on this.
on our very small scale, like we're struggling, like
we haven't acquired TikTok. We're on YouTube Shorts. We post on Twitter and like
None of that drives the needle for us. Like we've had videos on TikTok get
Couple million views.
And we don't know if it translated to a single new subscriber. Right. A single new subscriber. Welcome both of you. Welcome both of you. Thank you for staying with us.
At the same time, like you got you know, you are, at least on the podcasting side, the home of long form content.
And you just launch the new
Wall Street all thinks it's the TikTokification of podcasts. It's the new home screen. The new home screen, yeah, yeah.
Uh both extremes seem to work.
I believe one of the biggest problems we have in this new crater economy is
Um is the one of attribution, right?
So you uh many creators like you um have or try many of these different platforms and use it, but
Um, you know, and they can they can see on each individual platform how well they're doing, but the it's very hard for them to understand what actually drives what. And
I actually see both. I see some creators who are like
underinvesting in other platforms and probably too singularly just because they have success on one, they kind of ignore all the others.
Which
My advice
To all of those is that
feels kind of dangerous to do because if there would be a uh an algorithm change or any of the kind
uh even, you know, unanticipated by the platform because, you know, they may
see that something uh resonates, watch time resonates better with some other metric. It doesn't have to be skewed as an evil thing. It just could be something that actually benefits the user.
But it but if you built your entire livelihood of that one
platform that could be a big problem for you.
So I see them underinvesting in other platforms. Um and then the other one also be true, which is they're over investing in too many and not realizing that
that actually they probably would do better in just
Focusing more on one or two.
And so
I think that there's two different problems. I
I believe
Um that
for us and why we care about this, um, and certainly why we designed the the um home feed the way we did is um
Because
fundamentally how we merchandise content has to be very different for music
Than it is.
For an audio book or a podcast.
Um and if you think about it is kind of logical because um in a song
It's a three minute commitment of your time.
And you can actually probably tell within the first ten, fifteen seconds whether this is worth investing your time in or not. Unless it's a radio head song.
That is true. That is true.
But you probably then know the brand and you know how to give it the time and attention to it because you're you're like, Well, love Radio Edge, I'm gonna give this sh song a chance and maybe not just one
chance. I'll I'll listen to it a few times before I make up my mind.
And obviously if you now think about that, uh with podcasting, I mean if if I'm listening to you guys and and even if it's a topic I don't necessarily know that I'm interested in, I might give it a shot because it's you guys. And I trust you because I built up this rapport with you.
It's a much bigger commitment though. It is a much bigger commitment for sure.
But I may give it
ten, fifteen, twenty minutes, right? Because I have that relationship.
But if I've never listened to you guys before
Yeah.
that w one hook that gets me in the how many people you know in marketing you usually had or in in early Spotify we had uh eight people needed to have heard about Spotify before we were able to sign someone up. Oh interesting. And so we realized that
the geographical density in which that happened, uh was actually a key sort of contributor and a timeline. So much of our early marketing efforts were in college cities in the US. Makes sense. You have like consumers who are probably more
attuned to music being a big part of their life. Um
small geographical areas.
So we we kinda bombarded it. Uh we did a bunch of different things that it was hugely successful. In retrospect now
Yeah.
God how long, fifteen years later.
Was it almost like a benefit that you had to launch geographically specifically because of the
label negotiations, like that you could really saturate
Sweden, the UK before moving to Oh yeah, for sure. We all believe that these like
sort of internet companies that go global day one, that's like the right approach. I I actually think
Ninety nine point nine percent. Th this is just untrue and false. The the entrepreneurs have to revise. We all all are benefited from constraining ourselves to finding what our first audience is.
And it could be geographically niche. It could be
uh that it actually is um, you know, again a subset of a um
uh demographic or or or whatever. But
But it but I m more often than not, it's actually geography helps.
limiting yourself to a city, to a state, to a country, whatever it might be.
And so that was a huge part. I can tell you definitively, Spotify would not have been alive today had it not been that we couldn't launch in the US as our first market. Uhhuh.
And and if you ask me at the time.
It was like
a huge kind of step back to say, well, I can't launch to the most
uh biggest market in the world and I'm I'm running an internet company like come on.
You believed and you told investors like, Oh, we're gonna be live in the US in like three months. We're having the conversations. Yeah. And then it was three years later actually happened. Yeah.
You must have been so stressed.
Yeah. Uh well I had many uh
uh many of those episodes. And and it it it it always followed with uh enormous weight gains uh and hair loss. So that was basically you literally ripped your hair out. Yeah, pretty much. Like I I started when I started I had hair and then like two or three years later I didn't have hair. When you started Spotify you had hair. Yeah.
Whoa. Yeah, there's like
Old pictures, um
Of me with hair like from the first um.
Year or something and then it kinda all disappeared. Wow. Uh and I don't know anything. Was it worth it? Was it worth the trade?
Um well um so
Uh obviously I I I I think it has been, but obviously I I can't recommend um it is an emotional roller coaster. You guys know this being an entrepreneur. It's not for the faint hearted and I think
Every really successful entrepreneur in my opinion
has had at least three near death experiences with their company, right? Where
You just feel like
I'm not sure whether this thing is gonna work, not work, uh whether we're gonna be alive tomorrow or not.
I kinda hate um how media portrays this and sometimes how on entrepreneurs
It's certainly not been my my journey. Like my journey was uh you know, I I had a lot of luck. Uh I worked insanely hard
Um uh to get to
to even half of where we were today and then
It's been a true sort of emotional roller coaster. And it it is true what you say, but like
For me, had you told me how hard this would have been, I would have never done it.
I'm happy I I went through it.
But I would have never done it.
Hm.
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That Ben and David sent you.
We wanted to ask about um
I wonder if you consider this one of those.
Near death moments.
But because we did the T Swept episode, yeah, we talked a lot about it on the show. Um
The week that nineteen eighty nine dropped.
And Taylor pulled off the platform. Like d do you consider that one of those moments?
Um this was twenty fourteen. Twenty fourteen. Yeah. October twenty four. Weirdly enough, no. Uh that that's that's the crazy part uh with it. It it w it was one of those where if you'd asked
Us.
Uh
Externally.
it felt like this massive event. But if you if you were inside of Spotify at that moment
Um there was no one who
thought that that was sort of the defining moment. Uh we certainly worried about okay, well is this the beginning of
Right. Like more artists um sort of pulling out, et cetera.
Um
for a few days. Um and and then, you know, I spoke to a lot of artists, but um
Mm.
uh there were certainly a lot of skepsis uh about Spotify at the time
But but generally speaking, there had been enough things in Europe where people really saw
Like no, actually this kinda works. Maybe it doesn't work yet in the US. Maybe it's better for her to do this thing.
But there was enough people that believed at that time that um
It was only a matter of time before the US would be
Majority streaming too.
The sort of
uh way it's been portrayed oftentimes with Spotify in particular has been like this sort of dogmatic
It has to be
uh all in with me or not. And and actually that's not how I advise
Artists or creators.
I always tell them like this kind of and it's kind of unusual thing because everyone wants to build their own platform and
And and so on, but but my firm view is that um truly I believe in open
as the model at its core. And so my view has been like
There's some artists.
That
At that time, I don't believe it's true anymore, but like the Adels of the world
That probably benefited from physical scarcity.
That probably didn't need to be on streaming.
Uh the probably um
should have done a windowing type model.
Um
The number of those artists
Uh
We're going to be very, very small. Yeah.
Uh but she was certainly one of them. Was that because of the demographics of her
Uh audience uh
I think so, but also
She
On her own.
Um
can basically control the site geist, right? Like she can decide that this is a big cultural moment. Taylor Swift. Yes. Yeah. Um
It is remarkable. Not a lot of people in the world can get hundreds of millions of people around the world to to wait
Yeah. Uh for a moment and she did it brilliantly with this uh album launch
Two.
I stayed up till midnight.
Yeah.
And sort of she got them in on the hour, uh, and it was like each hour was another sort of give. So she played that to perfection.
Um and and she's really remarkable at understanding how to speak to her audience. Um and she does it authentically.
So she can do that and there's definitely
other artists that can do the same.
But um
uh what's rare is for her to have that kind of side geist um and connection with that
uh deep connection with that audience, the f the the fan base that she has, uh how vigorous uh and how intense they are.
At that scale.
That's the unique thing, right?
Was there something that changed between
twenty fourteen and when she came back on Spotify.
Uh
where it may have made sense for her not to be
here in twenty fourteen, but then in twenty seventeen or whenever that was that she came back that
the world had changed enough where it did make sense and how did the relationship between
Like did you actually talk to her? Like how did that all go down?
Yeah, I think the predominant thing that changed um was streaming just became the majority.
of the industry in in a bigger way. So
uh if the option was like, hey, am I on streaming or not on streaming, do I think she could have reached number one at that point?
Without streaming.
Probably not, would have been the answer. And and she's super smart, so she understood that. Um getting to your point, like
Even in twenty fourteen in Europe.
That had already happened, but it hadn't happened in the US. No, but definitely hadn't happened in the US. We were much earlier
I mean Spotify at that time was like
shy of three years in the US.
Streaming penetration was relatively low, radio was like the the predominant thing.
Uh at that time physical sales I was still very big.
Um, you know, I remember I think it was Lil Wayne that sold like three million albums in that year.
uh on Costco out of all places.
Some sort of demographic connection thing was going on. I love that the intersection of like Charlie Munger and Lil Wayne and Costco. Costco sells more chickens than anyone in the US. In the world, actually. Costco just is an unbelievable distribution channel, if you can get it. Yeah. We were talking about it before, but
Uh, Starbucks and and Howard Schultz was actually one of the
the biggest retailers of CDs.
Uh in the West. Uh that's actually how I met him the first time. Oh really? Yeah, because they were they were um
Yeah, becoming a partner of ours. That's right. You did a partnership with Starbucks. Um exactly at that moment and uh got to know him
Um
spend some time with them. So yeah, I mean, the world just looked very different, uh, back at that time. And I think that changed and
And yeah, I mean, uh ever since, uh she's been great with the team and and
She's super
Smart.
That was our big takeaway from the episode was just like she is really
Really smart.
Dave and I were talking before this episode, are there other artists
that you've got an interface with where you walk away and you're like
better business acumen than any founder I've met, any investor I've met. We've kind of become obsessed with like who are people who are
Top of their game artists.
And top of their game business people.
Quite a few of them. Um, because I actually believe these days if you consider
a mega artist of that stature. It's like they're their own enterprise and they're the CEO of that enterprise.
There's they they certainly have people who help them.
But at this level today
There's almost no one of them that's not very active as well.
on the business side and understand deeply what their audience wants, what's authentic to them.
Um by making move X.
How does that affect that relationship? And what's super cool to me is that
You know, you you have everything from from the Taylor Swifts of the world
Um and then you have
Um something like
BTS.
Which is like
Insane. And how are they different? Because they're reason they're same order of magnitude scale, right?
I don't
Uh pretend to know.
all of Taylor Swift's business sides and uh who's uh involved in everything. Um but from
From what I would guess is she probably runs with a pretty lean team.
Um That's what we heard when we were researching the episode. Yeah.
Um, and that's certainly been our interaction with the with her. It's like
very tight, uh very lean. Um and then if if you think about um
Uh something like BTS, but I actually quite a lot of the Korean artists
It is like an industry.
It's huge. Hm.
Just on the songwriting side, it's the difference between uh if uh in Taylor Swift's
Camp it's like two, three, four maybe at the top.
In some Koreans it's
Two hundred uh writers involved. And that's like
Small part and then you have like everything from merchandising. There's another few hundred
The talent development too, like the pipeline to go from
you enter into the K pop system.
to you become a member of XYZ group is uh Yeah. Well that that that could be your next deep dive because honestly it is fascinating how they do it and the three sixty how they think about it, not just from
sort of maximizing the re recorded side, but actually thinking about sort of fan development of
all the digital platforms, they have their own developers, uh programmers and building specific platforms. It it it's it's pretty cool.
One thing I'm really curious on that we hadn't thought about before.
We came here yesterday to Stockholm when we were talking with
Other folks on the Spotify team.
I'm curious.

What uh the past few years have been with
Bad Bunny and Regaton. And I've heard you talk about that like you knew.
From the data on Spotify that this was gonna be huge. And now
I think it's the largest
genre on Spotify. And many of our listeners will not know
Either of those two terms you just threw out.
And I think this is a broader trend, right? We're now living in a very global world, uh when it comes to culture.
Um
At the same time.
There's still a lot of local nuances, right?
So um it's this extremity that we talked about. On the one end, um you have this super super niches um that exists.
But then once every blue moon one of these niche is kind of
develop into something that's actually quite sizable and you kind of start realizing that maybe this has a global appeal.
um on top of it. So
In Latam as an example, uh gospel music.
It's quite big.
Hm.
Uh and funk music is also quite big.
Okay, well that's probably not what you would associate with popular music.
They're real.
things and obviously they exist in microcosms.
Elsewhere, like you could probably guess in the south in the US
Golf spill might.
Be a larger genre, et cetera.
Um so it's not like it's totally kind of isolated and just happening there.
But there's something that creates uh a sort of cultural rest announce uh with um those types of styles.
And then you have something like reggaeton and and it it usually starts pretty small.
Um and then actually in in each cluster it's kind of like starts
developing more broadly. And and when you r really look at it like
It is passed.
Oftentimes a pretty huge diaspora.
outside of of that sort of near region as well.
So I mean uh the Hispanic population in the US would be kind of an obvious one, right?
And so many years ago, we kind of started seeing th them breaking out of their natural clusters and becoming a pretty big thing. And it was
For me at that time there was
Just
pretty obvious that um if we
Invested in that genre um
On a global basis, we thought that the
that would have a global appeal.
And Yeah, because before a platform like that
Obviously like it could happen and maybe there are examples where it did, but like
That's like it's just so wild. May maybe the acquired audience, not as many people know Bad Bunny or like know the lyrics to his songs, but like a large portion of
non Spanish speaking Americans and like non Spanish speaking people around the world know all the lyrics in Spanish to Bad Bunny song. They may not know what the lyrics are about, though. Yeah, that would be a very different thing. There's a lot of local cultural things that uh seems like what is talking about
You know, someone cheating with this one and all this kind of relationship stuff.
Um that's the sort of local nuances. Um but
But yeah, I mean
Yeah, that that's the fascinating thing, right? But but the same time, uh, you probably wouldn't have uh imagined um MSG being sold out and
like twenty thousand, if not more, people singing Korean lyrics.
that doesn't look Korean, by the way, like no every word to every lyric. And that's the amazing thing, right? Like when things catch on, it's music. It makes people feel there's something about the artist. There's something about how they're communicating.
uh that resonates with you as an individual. Um and it is the foundational storytelling. We've always used music. It is so hard to describe art, right? Like we we can objectively describe oh there's art, but
How you feel.
Why do you feel a certain way when you're looking at a painting? Why do you feel a certain way when you're listening to a song?
It's really hard uh to describe that. And and that's the amazing thing about what we're able to do.
And the c really cool thing is you're you're able to take artists that otherwise

You know, um perhaps
may not even have been able to be professional and and now they have a global
Audience.
I don't know how to express it other than that they have some sort of God given talent. Uh that's the best way I can describe this kind of genius when they're able to express
These things in a way that it just resonates with the
With people uh all over the world.
Just instantly it's like how how do you do that? It it's clearly they're tapping something innate to humans, independent of culture, which
absent data if you were to ask me and say, Hey, do you think that
Um
someone is inventing a brand new genre of music today, do you think it's going to appeal to people similar to them or all humans equally in some way? I I I would probably tell you like
No, it's more about nurture than nature. Yeah.
Yeah, we're like we were talking about on the Nintendo episode. Like there are
Always only gonna be a handful of Shigeru Miyamoto's in the world.
But
Until recently and in the gaming industry it's still pretty much the case. Like
you need to also have the luck of being being the Venn diagram of a Shigeru Miyamoto
who happened to be the arcade cabinet designer at Nintendo, in order for like the possibility of Mario and Zelda to happen. Yeah.
And like in
music and podcasting now and this where like
Everybody has the opportunity. Not everybody's a Shigeru Miyamoto. Not everybody's, you know, a bad bunny. Most people aren't.
But you have the opportunity to be one.
I think that's so interesting. Uh I was talking to Ted Sarandos about this. Um he's on on our board and um this was a number of months ago, but like
If you think about filmmaking, it's still uh as you said, uh one of the things about a Nintendo is you have to have the resources enabled to build a game, and that's still not cheap. Um and it's expensive and back in the day, maybe you had to build the entire console in order to even have a chance of doing it.
Um but these days you still like a triple A game uh is
few hundred million dollars. Yeah. Uh very big production. Five years.
Very big productions, right. And and uh
Sure, you can build an indie game and so on and so forth, but but it but it's still a very limited number of people that are able to do that.
But even in filmmaking or in T V series, uh, the amount of people that used to be able to be showrunners or like producing or directing these
It was
Fairly limited.
group of people, right? Yeah. Very socially connected, people hanging out in back lots in LA, part of the studio
And it probably mattered a lot, not just to diminish any of their talent, but it probably mattered who you knew, um was an integral component.
and having talent. So you kind of had two differ different things. But in the last few years as the budgets have expanded,
Uh, and certainly in the Netflix case.
um it it would have been physically impossible to just keep this um
Same set of
producers, directors, et cetera, right?
Because
They're just trying to make so much more content.
So one of the interesting things is
The same thing is happening now where there's lifetime directors and producers uh not just doing
sort of local productions, but actually now coming to Hollywood and and doing that as well. And I've seen it in in in my case, um there's been a bunch of Swedish
Um
writers and producers and and uh actors now that are getting into Hollywood productions and it's been
You know, fun to see. Um
And and not just the usual names, but actually like
some more unknown talent uh making its way as well.
And there are more people trying, but there are also also more opportunities.
Um, and then obviously as you mentioned on the podcasting side, uh the same is true there, but but it's true on both sides. That's that's the crazy thing. But there's also more competition, which is I think when when people are are
Talking about Spotify and criticizing it, that's the part.
I think is the biggest misconception.
Because they hear so many, many people who are trying and it doesn't work where they're not making a lot of money of it.
they're naturally sort of drawing the conclusion that, hey, there has to be something wrong with the model. This model can't work.
But in reality both things could be true at the same time. Right. There are a lot more people
Who are failing.
But there are also a lot more people who are succeeding. Like the total pool is so much bigger. Yeah.
And and I think that's podcasting is like much earlier in its maturity. Yeah. So we may not hear it. Plus we don't have this sort of um
I I'm not sure a podcaster sees it as
Uh it's a sort of given that monetization
is there and it needs to be there from day one.
Whereas I think obviously with the professionalization of music, that's a much bigger part of the expectancy.
But that's actually a kind of a um
Mm.
relatively limited.
part of our human history. It's not been
Uh you know.
It's probably the less than a hundred years that we've had recorded music and it being a forum.
And yet it's part of the copyright regime, it's part of like um some pretty
um important loss.
Uh so I think it comes with a different expectancy. I'm n I'm not saying that's wrong. I'm just saying
Just
the arc of history. And I was actually gonna latch on to something you talked about sort of
being creative too.
one of the things I often think about when you think about sort of the history of music
Going back to it.
At the time of Mozart, if I wanted to
Create music.
The reality is I had to be a musical genius.
'Cause I needed to hear every single tone.
In my head, um, every single note
I needed to hear all the different instruments, how they would all play together.
I could write him down.
But I can never hear them all being played at once.
Right.
Many times the composers that of that era
they were only able to listen to their actual compositions like a few days before the actual

that they were doing and then making small tweaks. But by that time it had to be pretty perfect. And so sure, they could play a little bit on the piano, but then they kind of needed to not visualize, but s someho somehow uh internalize
What what what that ended up being. So having a whole orchestra is the triple A game equivalent. Yes, exactly. Um and so obviously uh very few could do that, but also the process
The creation process was insane because you you needed to do so much.
Mm.
Um, and then you know, you you move forward and think about a sort of
the era of playing instruments, um, and take jazz, which is highly technical, right? Like
Every single member.
in a jazz band is
Excellent.
at their instrument, right? Like really excellent.
And it's really hard.
Like it's really hard to be that good of a musician and and play jazz.
Um, and then, you know, fast forward a little bit more and take um someone like um you know Swedish Avichi uh as an example. He was a brilliant composer, he truly was.
But um he didn't really know how to play any instruments.
Um
technical musical proficiency.
may or may not be correlated with making great music. Exactly. Uh exactly my point. But but he actually had a different tool.
He had a he he had software, right? And he's actually he was really good at that software, and he know all the knobs and
um, you know, plugins and all that stuff and how how how it worked. And a lot of musicians are that way today. Like if you actually look at the workflow, it's very technical.
It's very uh detailed, it's very nuanced. Like I have this um thing that I do
Where I probably shouldn't admit this, but like I said on YouTube on the evenings I look at music producers, their workflows and like when they get into the weeds of like um decoding how they do stuff.
having just like our faces lit up, we walked in this studio and we're like, we think we are like highly technical.
podcast producers. We think we're like top point one percent of the I think we are. Uh you know better. And then we walk into the studio here, you know
In sp in in Stockholm and we're like.
This is
Just a scale beyond our imagination. Yeah. Yeah. We're we're we're very fortunate and it's a lot of fun because artists love just hanging out there too because
We've got kind of everything that they like to to use and to do.
But
My point uh is, I mean, if you think about it, it is a kind of a very technical workflow that takes a lot of time to get into.
And some of the parts of that workflow you'd have to watch probably hundreds of hours of YouTube videos to even decode or how to do it and like start getting into it.
And a lot of these uh
Today's composers
are experts in their workflows, right? Like they've they've kind of had their their plug in sets. They've got like these sixteen things that they they see chain together in order to create that one effect that defines them and so on and so forth.
So
The barrier still
Like if you said today, I wanna start making music and I wanna make something that sounds pretty good, it's still quite high.
Uh that barrier.
And
it's getting lower and lower and it's it's getting easier and easier. But but the but I would still argue the bar for you to sound make something that sounds professional would actually be
a a high quality song, it requires a lot of time and a lot of effort.
And it might be less capex and less equipment. I mean, you hear the the rise of the, you know, apartment music producer on the laptop. Yep. But
it still takes an enormous amount of self training, mastery, creativity.
my opinion is it it takes a little bit too much to get started. Like it's quite a barrier to entry still. I mean if you just want to make something like super simple, it doesn't take a lot. There's there's all Smuvel and all these other apps. You can probably make something. Um
But th from there on to actually compose something getting into the
the uh idea of the workflows, the plugins, all that kind of concept, it's quite a lot uh to master.
And I think that's the potential power with something like AI, obviously, right?
Which is
So we're
most likely going to have another order of magnitude of simplicity.
You know, on a on a personal level
I if you liken that to coding
Um I used to code, um, but I haven't now for for
About ten years.
And so
probably a little bit embarrassing to admit, but uh the barrier to entry or reentry, uh, for me was so high
with all um you know node, all of these different frameworks, uh even setting my up my own workflow for me to be able to to do something in the Spotify
Ecosystem
hundreds of hours probably for me to kind of re um
Acquaint myself with all all the stuff, right? How do I install the PHP server? Yeah. I got bad news for you. Yeah. Uh it it it it's it's changed a lot, right? And so the amazing thing is um I I just for the fun of it, like wanted to start doing stuff and I asked chat GPT to help me.
And
Pretty much.
Um on a few hours on a Sunday afternoon I was up and running.
And and uh because of that sort of
starter help. I had my own my own uh sort of environment set up. I was contributing code. I was
Iterating
Did you contribute code to the Spotify code base? No, they won't let me do that yet. So I I got a little bit more work to do before before they allow me to do it.
Yeah.
I think out of spite they probably won't let me do that anyway. They pride themselves on on not uh
I don't have any access to any of the actual systems. Um
But it was uh it was such a liberating feeling because it it made the re-entry for me um so much easier.
Uh and so much more enjoyable.
And so I think about that. So if you think about the world of music now, there are tens of millions of people uh in the world
That probably are recording stuff, but there's
Hundred
Two hundred million, something like that. That's playing some kind of instrument.
and expressing themselves musically.
Mm.
Yeah, there's nothing that says that
It wouldn't be possible for those
hundred million plus people.
To make something that actually sounds pretty good.
Now
Again, um
w what is that going to going to do with the music industry? And is it really going to be that all of a sudden everything becomes commoditized?
I don't believe so.
Because we've seen time and time again that quality rises to the top and actually becomes even more valuable.
Um in that world. Photography being the sort of
key reference point. Ever when Instagram came, oh no no one's gonna want photography, but
price of fine art photography actually increased, not decreased.
So my view is you're gonna see both extremes. You're gonna see the middle getting wiped out, more people participate, but
the very, very top is probably going to increase in value.
uh as well. And they'll figure out other things to do with this technology.
But
it is pretty cool for humanity and we talked about that being able to relate and like you know expressing ideas. Um every permutation of every
Cultural idea.
Will finally be able to be expressed.
We've never been in a world where that's been possible before.
And it'll be really fascinating to see.
What that means for our understanding of other cultures, our a ability to relate to other people.
Some really cool stuff.
already happened over the past few years in podcasting too, right? Like there are
I don't know, you probably know better than me millions of podcasts out there, right? Two million? Two million.
Plus I'm sure at this point.
A little bit more than double that now. Really? Yeah, yeah. Whoa. So like it's kinda like you're these are numbers like you're talking. There are four to five million people out there that are like
I can make a podcast. Yeah.
And
Yeah.
The very, very top ones.
are still like of a quality bar that is
So high and getting higher. Yep.
But like I've heard you guys talk about this, that you're now
Can take shows
That are in a specific language in a specific region.
That you can identify based on the data.
There's something really cool happening here. Yeah.
And then bring them to other around the globe to other audiences.
Yeah.
And right now, obviously that's a manual
Um
process where um you know we have to hire voice actors that reenact that we have to kind of tweak the script a little bit to make it culturally relevant.
And obviously this won't be news to you, but perhaps to some of your listeners that
Uh, I mean already
probably today it won't be as high quality and the cost would be too expensive to express this, but
There's there's no reason technically why
You guys.
and I this podcast couldn't be done right now in Chinese with our voices.
Well I was gonna say as a so you have X now. The
A I DJ.
That
Speaks.
Many languages?
Well, we've had him speak Swedish, uh, for sure. Uh, and he obviously doesn't know s Swedish, um
But but it's um only today available, uh because the intonation is a little bit off. Uh so it's it's really only English language content.
And honestly, that's probably just a training problem. So if if we were training uh the models on specific languages, uh not just X voice uh per se, I I think that would have been totally possible.
Um and again, the largest problem today is the cost per minute uh would be too high for most podcasts. I think you guys could actually support it probably with your model, but the average podcaster couldn't.
You know I don't know if you guys seen this, but like Mr Beast has like a Spanish language
Shadow I don't know w if he has like a you know French one, et cetera, but we certainly has a Spanish language. Computer translated or or humans re recording? Um I think it's humans re recording it at the moment. Uh but it's huge. Uh I think he may have like
fifteen, twenty percent more subscribers, uh additional subscribers, not more than what the English language one has.
Um so so it's it's it's like a really um
A really big deal. And I think that's like the next step, right? Like where
Uh
You know, in your case, like why wouldn't you
mm, take the L V M episode and
Make it all in French or whatever. Yeah.
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I've been uncomfortable until now.
um using any sort of AI for any seconds of audio in our podcast. Like we always played around with the D script replacement of certain words, but then we never shipped it to production because I was always like
Uh it doesn't sound quite as good and you know, everything should be hand mastered and acquired.
And then for the first time on a recent episode, uh, we used an AI tool that dramat our editor found it dramatically increased the quality, the sound quality of the episode based on the mic that the guest was using.
And once you start doing that, you're like
Well I mean AI
Do all sorts of things to our audio. Yeah.
Yeah, I mean
I think we're only in the beginning, obviously, and that's
Hugely exciting for creators like yourself.
But it's also scary, right? Because uh
It's totally possible of
For us to make an entire episode where
we're saying totally different things than what we're saying now. And it
at some point in the future might be virtually uh indistinguishable
From the real thing.
Yeah, and and platforms probably have a role to play in verifying authenticity. Like that that actually raises the value of platforms because
uh platforms like Spotify, YouTube, you actually can point to we know for a fact that this was created by the creator, and we can stamp it and say that this
You know, approved by the creator. Yeah. Yeah.
No, no, I think you're you're entirely right, which is why, you know, um
Yeah, there's been a lot of sort of debate around the Elon Musk, the subscriber uh thing.
Uh and actually as as usual when you tease it out, there's many different
the things in that
Controversy.
But perhaps the most potent and most interesting one has been the one around the the notion and idea around like staking as a way of reducing
Um the bot.
um thing.
And I feel like so much has just ended up being sort of hey, do you do I have to pay in order to reach my audience now? That kind of s switcheroo.
But I think the more interesting one was kind of like well
Forget about if it's paid or not, but just increasing the cost.
uh of spam but also increasing kind of uh the quality
of verification and uh being able to truly understand what's what in in the end. Twitter's so interesting that um
We were talking with uh
Friend who's a creator peer, but
Um his platform is Twitter.
And you can't monetize Twitter. Like there's no Rev share. Yeah. Traditional social platforms like that.
You've kinda got them on one end of the spectrum.
You've got
Spotify.
Well, maybe Spotify podcasting and then Spotify music at the far end of the spectrum. And then you've got YouTube kinda in the middle.
How do you think about what role
for monetization, maybe especially on the podcasting side.
Um
Spotify should play for creators.
Yeah, I mean
Um
Our goal is to be the best partner of craters.
Um
No not the only partner, but just the best. Um and and win by

um not forcing the creator to do something, but just offering a really good way for creators to work.
uh low friction, but also lots of potential to customize their business the way they would like to.
I think for some craters
the monetization aspect is absolutely critical. They may even be a gatekeeper, uh, or or a gate between them doing something on that platform or not.
And maybe they have switching costs uh relative to what other stuff they're doing. Think about a crater that's
in a traditional media ecosystem if they wanna like take their thing, okay, well maybe my
uh this will b I will be less valuable on cable or whatever other thing I'm I'm on
That would be one end of the spectrum, right? Um
And then you have another crater that may have
an entirely different business model. I don't know about your other Twitter creator friend, but um
Uh perhaps that crater either has a different
business model somewhere else. Well you have to. You can't have a business model on Twitter. Yeah, you you you can't do that. But you know the question is if if that's truly a creator or you know, um you could argue VCs, a lot of them have Twitter as as their marketing center, right? Yeah. Just top of phone. And podcasts. Yeah.
There are many different ways and the needs are different. Um, which is why, you know, for some of them they were probably happily forfeited.
all the monetization because they feel like they have such a strong other business model.
Um on on the customization point is really interesting too. And I think that's the
That's the um really interesting nuance about about YouTube because like on the one hand
I think YouTube for creators is amazing because
You can completely abstract the business. Like
You just make the content and they take care of the business and you get a check. Yep.
On the other hand, like
You know
I can't even remember if we have
Ads on uh YouTube ads on acquire content. I think we don't because like
Do we wanna
Sprite ad in the middle of this? Like no. Like we want creative control. And like you lose that in a if the platform is like too opinionated about what's happening with monetization. Yeah.
most of us as platforms go, uh, we have to start out, um
very simple with our models, right? And it takes a long time to then change that default um setting.
But I mean, um I as I I even talked about in music.
um it had to be like very binary. You had to be on or you had to be off. There was kind of no in between uh like uh well uh let's do windowing let's do th this and that
Et cetera.
Because that was the only way. My biggest uh problem was getting everyone off of piracy into this other model and I needed the consistency of user experience.
That was the model.
Now the next decade of music may look very different.
uh it may look like something where there's going to be a lot more options for what a creator chooses to do.
Uh I certainly would hope so and we're certainly gonna work towards that avenue.
But any change that we're doing with the scale that we're having is
Going to be a
There's going to be winners and losers. It's almost impossible to find a single thing we could do that's just universally going to help. And that naturally naturally
creates the constraints that it's more of a one way door than a two way door where we can kind of like iterate and and invest on it. So I I'm I'm
fairly certain that like
What you're seeing now in this world of
Oh platforms and and
Crater ecosystem says.
If you asked um YouTube um like hey
w if you had to if you could redesign the platform right now, uh would you just
make all the same decisions you made about discovery and monetization all over again? The answer would probably not.
Almost assuredly no. Yeah. Right.
Um, as evident actually by shorts. That works a little bit different on their platform, right?
And they're all different too, because shorts, uh, obviously you have many more potential impressions over a shorter period of time and you know, an average YouTube video has been
X minutes um and that means more interstitial ads. Um and then we have host red ads were the equivalent of of sort of um more native ads or paid promotional ads that both Instagram and YouTube ad
So
We're living in an ecosystem where on the one end
Ten, fifteen years ago they're
Uh we were very primitive in terms of monetization.
And today
It is very, very different. Yeah.
And I kind of think about it in a way like this is not too dissimilar from
mom and pop shops they've sort of like coming up in the US as a cultural norm.
Um, you know, on the one hand, um
you you had physical infrastructure urbanization driving these kind of
things uh where we both created these uh mega uh walmarts of the world um as a direct consequence, but actually the complete opposite was also true.
We had this hyper local thing, et cetera. Um, and if you think about it today, these mom and pop st stores, the ones that are still around,
They're hyper distinct in what they're offering.
They're really focused on community in many cases, really knowing your customer. They're offering events around their stores.
They're offering of obviously online things through uh Shopify and so on and so forth.
And in a way I think about it in a very similar way for the crater.
uh economy too. Uh we had to start very simple. Uh it was based on a very
simple model where uh there were free platform, ad supported platforms, and paid platforms.
All of that is kind of not merging together.
In addition to that just monetizing the content in itself.
it's probably becoming a auxiliary revenue sources around them.
three sixty. Very similar again to Mom and Pop
Uh shops like where we could do live events.
You could be doing merchandising
You could build um another business um like Kylie Jenner or something on the side of the world.
I mean
Taylor Swift monetizes through it everything you're talking about the same way a Mom and Pop coffee shop does. She just does it at scale. And it's necessarily had to be because streaming
While at first it looked risky and then turned out to be I don't think it's blowing smoke to say
you guys save the music industry.
Like it is the thing that while the industry was in dramatic decline ended up making it so that the music industry now generates more revenue than it ever has before, with by far the largest thing being streaming.
At the same time
If you're a Taylor Swift or you're any big artist, you're not making as much money
streaming as you would have on CD sales in the C D sales heyday. So you sort of have to figure out what the new business model looks like as a creator and you have to figure out what your sort of
unique constellation of revenue streams are because it's not just gonna be
Walmart or Target is gonna cut me the check from selling C Ds.
Yeah. The music industry's healthier than it's ever been before, but but um
Certainly when you think about it from a singular artist point of view.
Um, you know, there was a point in time where um the majority of the revenue
could be derived from recording music.
But um the challenge to that, what I would say is that
The
time in history where that was true was actually very
Short.
Right, like the heyday of the C D era, right? Yes. And wasn't true back in the radio era.
And so the question is what what what's the analogy? Was it that like that's the right model or was it actually that having multiple revenue models was always the answer?
Um, but there happened to be a moment in time where recorded music was sort of the prevalence. Um
revenue source.
And
I I I don't know. I mean I certainly don't say that to try to shy away from from sort of our role and and
My goal is just like I
think these people generally
Whether you're a podcaster, whether you're um musician.
are insanely creative people.
And I love seeing uh people like yourself or uh David or
uh Sandra or or Taylor Swift or whoever
Like Joe Rogan or like
that are like really deep. Um
on w whatever they're passionate about and they're able to
get across the microphone.
And and having lots of people
uh that can resonate with them. That opens up like so much more opportunity. One of the things we learned on the L VMH episode is that
Rihanna.

female recording artist billionaire.
Because of Fenty Beauty. You know, and like imagine that in the CD era, like that wouldn't have happened. Oh yeah.
And that's the insane part too, right? Because uh that fame, uh, in a way it doesn't
necessarily if you to think about an Elvis Presley.
Um
What time did it take for Elvis Presley to get to a billion people?
that had hurt him.
I don't know, but uh I would venture to say um it probably took a decade at the very least, maybe two, uh for him to do that. And sure, it was worth a lot, that billion then.
But it was hard hard to scale to that.
And then you think about it.
How many uh artists today
Get to be heard by a billion people.
And actually that number's way higher.
And it's way faster.
For you to do it.
Now but because it's not as scarce anymore, perhaps the
the the societal value slash monetary value, whatever you want to put it on it.
Maybe it's not the same because it's not as scarce.
But as you said, if you're smart in how you do it, um and this is the sort of the the side guest on how you execute it, it doesn't work when it's not authentic.
So you take the Rihanna example, it worked because she had a way to do it which was authentic to her, but also authentic to her audience.
If uh she would have tried to uh
flog something else that she didn't care about.
It probably wouldn't have worked.
And that's the unique thing when when you realize and you think about it yourself as an enterprise and you know, J C um you know, I'm not probably a businessman. Exactly.
He understands. He sold his sold his champagne company to LBM H recently fifty percent stake.
Yeah.
But back to that, they're incredibly talented, um
uh artists and they're incredibly talented uh business people as well.
Yeah.
Well, as we start to wrap up here, there's one question that I've really wanted to ask you.
Which is
As I've studied Spotify over the last
month and a half preparing for this.
It seems like
You guys have been very intentional about
the way that you grow and having a completely different strategy.
to add each next 100 million users. You guys are now over 500 million users.
AI didn't know the scale of that.
before I started researching. It's it's pretty unbelievable.
And B.
I sort of thought that, well, you know, they just let compounding do its thing. But I think you guys it it's it's not well understood by the public or certainly wasn't

how you change strategy in order to go get that next group of people each time.
And I'm curious, as you reflect back, w what advice would you have for founders who are scaling
to sort of continually stack these S curves on top of each other and do completely new
different business activities.
while maintaining the cohesiveness of one platform.
Yeah, I think it's a very astute observation. Um
that you're making that um it's it's not been sort of
being able to just ride on this
Macro Tailwind and just do that. Um, but actually it's been many different things.
That's driven the success of Spotify and
The w the way way I I oftentimes talk about it is
If you think about an exponential curve, um, if you really zoom in on that exponential curve
It actually is like a lot of
different linear uh curves.
stacked on top of each other that creates that kind of uh exponential curve.
And this will sound like a little bit of a cliche, but what I've really realized
Perhaps even in just the last two, three years more
I I
I I knew it and I could talk about it, but I hadn't truly internalized it.
Um
To be
uh intentional about the culture you're building, right?
There are many different cultures that can be successful.
But there are trade offs with each
um cultural expression. And
Oftentimes today
what I see with younger entrepreneurs is that they're unintentional about
What type of culture there they are.
So they flip flop between them. So as an example
You know, we all um you know, many years ago, I was certainly enamored with Google, right? Like the twenty percent projects and all these different things. Those are cultural expressions.
It's not the culture itself, but it's the cultural expressions. Um
So that's where uh where where the early innings of Spotify's culture was.
like I'm sure almost every Silicon Valley company of that era.
Um, and then uh we all switched and maybe became Facebook for a while and we all kind of took that of like moving fast and breaking things and so on and so forth.
And then you had like an Amazon kind of um model where on the one end it was incredibly long term, but also maybe a little bit more bottoms up innovation.
Then top down.
Um and then you see another cultural expression with like a Tesla, where incredibly top down, incredibly focused company actually for this type of scale um that they're doing.
And my point is
I think the most important thing, um, is to th really, really think through and be really, really
diligent about the culture you create.
And we certainly were victims of that at Spotify because we had taken all these different things. There were certainly things that were of Spotify.
But we kept talking about all these other companies and we're like well we'll like this thing that Amazon's doing, so we should
Copy that. And then oh we like this thing that Google's doing, so we should copy that. And actually what end what ended up happening was we're we were at
one point in time almost like a little bit of a Frankenstein monster, because we had
Some of the stuff from everyone's
And we had some of the bad stuff from everyone too, um, instead of sort of really lean leaning into that.
And then sort of without really being intentional about it, we we started
iterating and improving on that culture.
And I often get this question, so
For instance, uh, you know, when we launch certain things, people are like well
You know, this thing wasn't very great.
And they have a mental model of what they expect of sp of Spotify.
And the mental model may be
Hey, your music app is so amazing. How come um
In twenty nineteen, your podcast.
Just sucked.
And so that m must mean that podcasting won't work, having a separate app must be the the right thing to do, et cetera.
Um and and what people didn't realize is we're actually one of these companies that happily will release something out that's
Not great, they probably have the right strategy, but the execution isn't s super crisp and perfect. You said this about audiobooks at Stream On. You got on stage to the public and said
We have audio books.
I don't think it's great right now. Yeah. Um and it's true. And it's not great right now, but we will make it great. Um
But that's a different culture, right? And that's one where we're iterating on.
But then the flip side of that uh would be something like AI DJ, where um actually
I think
It it is really high quality and unlike a lot of other products.
um that are AI where where it's really kind of wonky. We've made something that's actually working.
And it's working on very large scale.
probably one of the most popular
AI
product out there uh now in terms of reach. We don't
really tout it all that much.
But it's huge in terms of like moving our metrics in a pretty substantial way. Like Discover Weekly huge? Yes. Uh and I I think it'll even outdo Discover Weekly. Um
It is really cool.
But we had to be super
uh intentional about it because we knew that um it it was an area where
Um, we had to think through the consequences of this because
uh it would be highly scrutinized.
So as you can imagine, uh one of the benefits by choosing to do it for music and not for podcasting was
Um, obviously that's it would have been uh horrible if we somehow summarized or said something based on a podcast.
Um
that I wasn't safe or or or culturally attuned to say
And yet with music it's kind of the
the primary candidate plus it's it's the one where we have a huge audience that's listening in the background every day.
Uh and the really wants more context.
And and my point being is um
Understanding when to do which
Um
And understanding that there's there's
Both of these cultures are perfectly fine.
Um but just being very intentful about when you're choosing to do what.
And having the right mental models and and
not sort of becoming half assed in everything, but actually becoming really good at what makes you you.
And I would say that probably other thing that's been hugely important and that I wish more people talked about it.
Yes.
There are not many of us.
But there's a few of our
few companies like Spotify which
in a way it's been heavily influenced by Silicon Valley, but we are not Silicon Valley first.
So that sort of notion of being on the side and watching
Um
And sort of iterating in a corner.
Spotify's definitely sort of not the overnight success. It's been a sleeper for many, many years. And when you started the common wisdom was anybody who's starting an online music thing
it will die. And I think you saw advice from hundreds of people who all told you, Don't do this. This category is toxic. Yep.
You're you're exactly right. And and um
But but also because we were kind of
doing this in Europe for the first few years, we we started getting some some real uh
first learnings. And I think this is like really key because if you think about the tr the ones we talk about as iconic companies, the Apples, the
Amazons uh of the world.
We all tend to forget a few things, but one is that many of them are quite old at this point. They're twenty plus years old. So they've had a time to refine their cultures and and getting that that right.
And the other thing is they almost started in empty ecosystems.
And Amazon, sure, there was Microsoft, but they started an internet company.
in Seattle.
Right.
There was a software company that was really big.
But it's not the same culture. They didn't start it in Silicon Valley. And I like to believe that that culture became
very distinct also by
Having to
figure out its own things from first principles and from learning rather than just being able to
Gathered through osmosis.
Going slower in the beginning.
Uh to then go faster.
But um
I I think it's been hugely important for Spotify's journey and we're I feel like we're
We're just right now.
getting into our own of like what is our culture.
In a very unique way. That it's probably the most exciting thing for me at the moment. Still
This is so cool. I love this as a final
Thought from you'cause uh
It so matches.
Uh something that surprised us.
From the LBM H episode. It's just like
All of those brands which are like
You know, the most iconic things, you know, both owned by LVMH and ones that aren't like Hermes and you know, they are all N of one.
You can't copy them. They don't copy anybody else. They are their own thing.
If you're going to be around for four hundred years.
That is by necessity the case. You're not taking from anybody else. Yeah.
And I have to imagine
It's hard.
for you internally.
And that it takes a decade or two to figure out.
what it is that makes you special too.
Because when you started, you were
the company that figured out how to make it so music felt like it was on your hard drive and play fast when it wasn't through a hybrid of peer to peer and client server solutions. Yep. And that's not at all. Thank you for summarizing that so easily, by the way.
It has to be a a a very like
uh methodical individual journey to to figure that that out.
Yeah, um
And that's why I said, I mean, I I used to talk about culture, but but I would honestly say
Uh, it was probably two, three years ago where it fur the where it really clicked for me, like, oh
That's what it actually means. It's not twenty percent work time. That's just an expression of a culture.
The more interesting thing is um the true culture.
of what makes Google Google or
um and Amazon, Amazon, et cetera. And and
I don't even know whether that's possible to change.
Going a decade forward, that's probably the most exciting thing for me to still contribute to and work on is the culture and and I think that's what's driving at the moment
Pretty much every major decision we're making.
Well, Daniel.
Thank you so much.
Thank you.
Guys for coming. Really appreciate it.
Thank you for hosting us.
Course.
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Well, listeners, thank you so much for tuning in for this conversation with Daniel. We'd love to hear what you think, of course, in the Slack at acquire.fm slash slack, where we're always hanging out discussing episodes after we release them. Um, but there's a new Spotify feature that we've been playing around with too. David, what is it? Yeah, Spotify just launched this at Stream On recently.
There is a question on the page in the Spotify app for this episode that says, what did you think of this episode? And you can reply and leave your thoughts right there.
Awesome.
Well thank you so much, listeners. Uh check out in any podcast player ACQ two.
With uh awesome recent interviews.
and uh many more to come. I think we have the best interview lineup that we've ever had here on Acquired coming up. So uh subscribe to ACQ2 to get access to that. And um
I think that's it.
Listeners.
Thank you so much. Thanks to Spotify and Daniel. We'll see you next time. We'll see you next time.
Who got the truth?
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