Who gains if Spotify loses?

A customer samples headphones at an Apple Store in Los Angeles.
A customer samples headphones at an Apple Store in Los Angeles.
Image: REUTERS/Lucy Nicholson
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Spotify’s response to Neil Young and Joni Mitchell removing their music from the platform came quickly and from the company’s CEO, underlining the seriousness of  the threat to the streaming giant.

Daniel Ek posted new guidelines yesterday about how Spotify will handle misinformation shared on its platform, an effort to address the artists who are protesting claims about covid-19 made on Joe Rogan’s Spotify podcast.

The tumult resulted in a 12% stock drop last week, erasing $2 billion in value from its $33 billion market cap and adding to a downward trend that began at the start of the year. Today, the stock has recovered the losses from last week, but the high profile artist exits have revealed what may become an ongoing problem for Spotify and an opportunity for its competitors.

In his post, Ek said Spotify needs to maintain guidelines without acting as a censor. Framing his decision to keep Rogan’s podcast as an anti-censorship stance could lead to more exits in the coming months. As a result, the music streaming landscape could begin to look very different if the artist exodus continues. 

If the Spotify controversy continues, streaming music upstarts could benefit

One beneficiary could be Amazon Music. On Neil Young’s personal website, he followed up his boycott decision by encouraging his fans to sign up for Amazon service. He included a special link to a four-month free promotion for new users, compared to the normal 30-day free sign-up promotion most users see. 

Additionally, Amazon-owned Twitch recently partnered with Warner Music—the label that distributes the music of Young and Mitchell—to launch artist channels and music events on the platform. And in October, Warner Music also hired Spotify’s head of catalog and label partnerships, a move that could hint at bigger streaming plans from Warner Music that don’t include Spotify. While Warner may not have orchestrated Young’s exit from Spotify, it may stand to benefit from it.

The other big winners in a potential Spotify fall from grace could be Apple Music, YouTube Music and Google Play Music—both owned by Alphabet—and Pandora, as well as a range of smaller services.

In particular, Big Tech music streamers like Apple, Google, and Amazon would reap the benefits of Spotify’s grip being loosened, since each offer broad multimedia platforms that extend beyond audio and into video and gaming. The synergies of licensing audio and video and the various content deals, online events, and consumer packages that can arise from such platform maturity are far off in the distance for Spotify, but immediately available to its Big Tech rivals. 

So far, Spotify’s attempts to move into video have been mostly piecemeal and dominated by podcasts from the likes of Rogan, The Ringer, and a few others. Spotify’s biggest advantage—its focus on audio—could also become its single greatest point of failure in a media environment dominated by platforms that are already developing into full-fledged alternative broadcast networks. 

Similarly, audio-centric startups like Tidal, Deezer, and SoundCloud may eventually be acquired or rendered irrelevant, especially as the focus moves to the metaverse, where audio is just one component of an immersive multimedia experience.