Spotify CEO Daniel Ek on the Future of Podcasts

27:50And so what we really see, and you can see that with the Meghan Trainor session that we had here too, she's an artist, but she's also an author. She's also a podcast. Right. And so I believe that the future of these creative entrepreneurs is really that they're multi-talented and they're going to want to do a lot of different things. And if you think about that experience today on the other platforms that exist today, it's typically one format in how that shows up. There's lots of type of content you can put in that. We talked about sort of podcasting, actually working in a video format similar to other videos, the more native to say a YouTube or something, right?

28:34But it's still the same format. But actually at Spotify, we clearly distinguish the different formats and the experience is very different. So a piece of music content is different to a piece of podcast that's also different to a book that's also different to a course. And that's really different from just normal video that you will upload. And the benefit you get is imagine me being here on the show. Let's say I was an author. we could have directly linked in the show notes or even as we're speaking here now on the visual side to the book that I'm sitting here talking about. And because you can assume this book straight away on Spotify, there's a direct conversion to that experience.

29:20And similarly, you could be a music person and then also be on a podcast and vice versa. And I think that is the interplay. I was just shown, by the way, a piece of software here by another creator was showing this sort of research tool on how to find great guests and like typing sort of a topic and you can see who's overperforming or underperforming. and it was pretty wild. It was way more sort of scientific than I would have imagined getting guests on. But the interesting part for us though is more around, okay, well, what happens when you have that guest? And how do we sort of take this relationship forward where if you wanted to know more about me, you could also see all the other things that I've been part of, whether that is thing I published myself or whether that's where I've been a guest myself too.

30:18So that's kind of, that is the future, I think. It's really interesting. Our top performing episode on Spotify is actually with a musician named Jacob Collier. Oh, yeah. And I think largely because Jacob is like so, you know, abundant in the Spotify environment. But that's really interesting. One thing that kind of surprised me from, you know, the earnings call was that I think around like 84 % of Spotify's revenue is from premium subscribers. And 11 % was ad supported. that that was surprising to me but it also makes sense um and actually you know you mentioned like as creators we are entrepreneurs yeah and i think about you know we've always toyed around with some level of subscription right podcasting has done patreon and like that actually works really well with these deep relation intimate relationships you have with audiences um the big change that's happening and correct me if i'm wrong but like we do run and sell our own dai campaigns and run them through megaphone yep so those won't play for premium subscribers anymore correct correct if you opt into this program right which which you know for me the ideal scenario actually is that we move in a direction where the subscription can support it and and a lot of that is because in podcasting when you do that you do get to have a more direct value relationship with your audience yeah we just had a guest on named peter atia uh he's a doctor he does not do any advertising.

31:44It's fully subscription-based. And that changes his decision-making on episodes. Because when you're so deeply performance-backed with advertising, but that is a significant shift in the industry that you guys are pushing. Yeah, for sure. But just to take a step back, I think it was a few years back, if you look at something like in tech, there's this guy called Ben Thompson's Techery. So the way he shows up on the platform, for him, he has a subscription to himself through Stratechery that you subscribe to and to Dithering, this other podcast that he does as well. And again, this kind of plays into us trying to be the best partner to creators, irregardless of the situation you're in.

32:34So if you look at how he shows up is you have to be a subscriber. so he solves his own monetization by me subscribing on his website to Stratechery and that unlocks his content on Spotify so for the average person who's not a subscriber if you type in Stratechery you'll find it and it has like a lock on it and it says that you have to be a paying subscriber in order to listen to his content Is that done via Spotify or is that like an RSS key with So that is something we call SOA so that unlocks the experience on Spotify. But all of the payment mechanism and the membership and all that stuff, that's on his service.

33:17Do you ever bundle that in the Spotify premium subscription? Well, that's obviously sort of a natural question now that we're in the subscription. But for me, the most important thing that I'm trying to convey here is we're actually very flexible on how creators monetize their work and we want to offer as many options as possible all the way to you having your own subscription and actually you're like, look, I can take care of monetization myself. I just need this to be in the Spotify experience because that's where my users are for. That's the future I believe in too where creators should come to us and we will have all of these different tools depending on the different circumstances of what you may need help with.

34:04Some may want us to help with monetization. Some may not. And that could be true of advertising, but it could actually be true like in Ben Thompson's case of subscription too. Some may want us to do more on the discovery and promotion front. So on the music side, we have something called Marketplace where we actually help artists and label teams and managers promote their music in a pretty big way. What's the equivalent for that in podcasting or in books? That's a big thing to contemplate. And then all the way to, of course, the formats of what kind of ways, clips, videos, not videos, audio, books, courses, all of these different things that is sort of part of the palette of what this sort of next creative entrepreneur is doing.

34:53And I think this is sort of the key for me because, you know, as we spoke about it, it's not a one size fits all. And I realized why we on the internet, this is how the internet works. We had to start with the one size fits all to get the consumers. But we're ready for this next generation of platform. And I think this next generation platform is going to give the creator a lot more control and the consumer a lot more control too of how they want to interact and how they want to monetize that relationship and how the creator wants to grow. And we're just trying to build the best, basically be the R &D department for the creative entrepreneur of tomorrow.

35:36My last question for you is about tools for creators on Spotify and specifically AI. Samir showed me Notebook LM a couple weeks ago, and my mind was blown that we input our newsletter, and it gave us back a pretty entertaining 15-minute podcast from two AI hosts. And we see the AI playlist or the DJ that Spotify is adopting AI in certain ways. How do you see AI playing a role in the next generation? Oh, it's going to be huge. And by the way, I'm a huge fan of the notebook LM thing too. And I was speaking to the team who built it. And it's so amazing. So much of this is just serendipity. They've sort of had this thing internally that a bunch of engineers kind of liked and put it out in the world and it sort of took off.

36:26And it's now one of the more popular AI products out there. And that's the crazy thing because you can't really predict it. the way I would put it is, you know, what happens with technology, we get this sort of breakthrough once a decade or so, and then all the rules change overnight. And the whole industry are kind of scrambling and trying to figure out what are the new best practices in this world. And then eventually kind of settles. We had it with, you know, mobile, you know, when the app store came around, we all, all the best practice, I don't know if you remember, but all the designs were kind of unique and novel.

37:01And these days, it's more like best practices of how you build a sort of app. I think we're entering the same era for AI too. But our goal is pretty simple. We want to utilize AI to allow creators to express themselves in new ways and in much more lower the barrier and lower the friction of creating amazing things, basically. And then for consumers, it is really about tailoring Spotify to be more personalized towards you and having a more personal relationship to Spotify. You can certainly imagine being able to converse a lot more. You can see it already with the AI playlists we're doing where you can, in a more natural language way, express sort of what you want to listen to and Spotify responding to it by creating something that's tailor-made for exactly that.

37:58And so imagine now what that takes us in five or 10 or 15 years, and it's going to be a very different Spotify than the one you're seeing now. Yeah, I appreciate that. I mean, I think I actually put in the earnings call to Notebook LM to listen to it as a podcast. Great. And I think that's the bizarre question for me in the future is if I'm interested in the Spotify earnings call plus the NBA scores from the night before, plus stocks, can I just input a bunch of articles and then produce my own podcast and say my commute is 25 minutes? Probably. You should be able to do that. But the more amazing things is also we can do that, of course, across music and talk and books and whatever based on that experience rather than necessarily changing how the creative work was done.

38:52and we can sort of augment it to fit that journey. We think a lot in sessions, by the way, like what is the session we're filling here and what is the user intent? And that's actually how we got into podcasting because we realized in the car, one of the key reasons why people weren't listening to Spotify in the car was because we didn't have talk. And talk was a part of the listening. They still listen to 80 % even on radio music, but they wanted the talk part to inform them about news, about weather, about all these other things. So it certainly, I think, kind of tailors to that. Well, cool. Thank you so much, Daniel.

39:28Thank you for joining us. Appreciate it. Excited to see this next chapter. Yeah, I am too. Well, thanks for having me. All right. Welcome to the debrief. That last bit of that conversation, I think we could have had a long conversation with Daniel about AI, but he did have to leave. Yeah, his eyes really lit up. And he said a bunch of stuff that I was like, wait, what does that mean? Yeah, you never know. The thing about Daniel that's really interesting and different from some of the other platform CEOs that we've talked to is that he's a founder CEO. And when you talk to a founder CEO, they are in the weeds of building.

39:57So he gets excited about looking at the future five, 10, 15 years, and he's working on stuff that's like, not at all what's happening today. It's what's gonna happen, what the world could look like in 15 years. Yeah, and with most of the tech CEOs and platform CEOs that we've sat with, you get this underlying feeling that they've just seen more than anybody else. They just wanna know everything. Yeah. But obviously they're keeping it to themselves. So, I mean, the first thing that I want to say about meeting Daniel is like, I really just wanted to ask him like, in looking back on this conversation, just what's it like to be the founder of Spotify?

40:30What's that like? That's crazy. Yeah. You made one of the most influential apps of our generation. There's a whole narrative show on Netflix about you. Yeah. What's, how does that feel? But I think in zooming out at the world of, you know, what this could mean and what this does mean for video creators. I also want to talk about our own experience with Spotify and posting content on Spotify. But first, let's talk about some things from the interview, some things that really stuck out. For me, the first thing that really stuck out was when you asked him about, you know, the Joe Rogan deals, the Caller Daddy deals.

41:01And the reason that he gave for those massive deals in the millions, which were like NBA contract style deals, was not necessarily that they made sense economically, although I'm sure they may have, right? The reason that he gave was that the podcast space was declining and we felt that it needed some energy and excitement. Right? Almost as if we were going to save podcasting, we needed to do something big. That's amazing. That was reason number one. Again, that's some founder visionary stuff where you're like, hey, if podcasting is going to be a big part of our platform, we need to re-energize the podcast world.

41:44And I actually do think that that stat about 900 ,000 podcasts being launched in 2020, yes, it has to do with the fact that people were home and during the pandemic, but I also think it has a lot to do with the deals that were announced. Like the same reason people get excited to become an NBA player. Yeah, man, it was a new American dream. It's a new American dream for all types of people, not just content creators. Podcasting is also very different from filmmaking. You can do it. It is a thing that a lot of people can do. And seeing a headline like Joe Rogan, Inc.'s deal for$100 million, Call Her Daddy for$60 million, your mind goes, wait, I got to pick up a mic.

42:24You know, if you're a creative person, if you're someone who has something to say, like you're - That's where it just opened people's eyes to like, wait, I didn't realize that could happen. I didn't realize these were so valuable. Yeah. Yeah. Yeah. And again, when you look at the ease of production, it's like, okay, I can give it a shot. So yeah, I found that really interesting that these massive deals, which they don't do as much anymore, were really there to like provide energy to the space. And I think they did. Like if you look at what podcasting is in 2024, it is without a doubt one of the biggest culture drivers in the US.

43:00Totally. For sure. Right. I don't know internationally how much it has impacted other countries, but I think in the US, podcasting is one of the one of the drivers of culture, of decision making. It's a really interesting medium that's that's that's totally different from any other one. The more you think about it, obviously, they're not just making that move so that the podcast space feels energized. That's way too much money to dole out. So there are economic reasons for it. And if you think about it, with music, both YouTube and Spotify have to pay the record labels. And they pay the record labels a lot.

43:35They're not getting as much money from premium subscriptions from someone who's in music than from someone who makes a podcast, right? Because you're not paying any royalties for that content. So there actually is a pretty good economic incentive because the creators are paying for the cost of production and then you get more revenue from those if it provides value to users and they sign up, right? Yeah. The reality is, again, the difference between the two platforms is that Spotify is a membership club, right? It's subscription. So it's, can I keep my members happy and can I get new members? That's what's important.

44:08On YouTube, it's different from that. It's like, can I bring people to the platform and increase their session time? But this now comes to the second thing that I pulled from the interview, which is Daniel describing Spotify as algatorial from a discovery perspective, meaning it's not algorithmic. It's not editorial. It's a mix of the two. And that is tangibly different from YouTube, which is algorithmic. Yeah. Editorial means you make a decision of what you think is good, right? So it's a bit, it can feel like it's a bit out of your hands as a creator. I think on YouTube, views are incredibly available if you study.

44:44Yeah. If you study the platform. works, you can find viewership. And that is obviously different. What was interesting to me in talking to Daniel was he said, look, like we have algorithms as well, but we rank things on a spectrum of discovery versus dependability. And we lean more towards dependability, which means that as a creator, what is important on Spotify is, are you consistent? Are you there? Are you there for your community every week? Whereas there are a lot of creators on YouTube who are like, you don't even know their upload cadence. It's just about making a good video. You might not know.

45:19That can be watched for all of time. You might not know if a creator like a Ryan Trahan takes six weeks between uploads. You might not even like think about it, but he'll still get 20 million views on his next upload or 10 million views. I'll speak to my own user behavior on YouTube. I'm looking for the best possible video once I. In that moment. In that moment when I open up YouTube. And I don't care if it's from four days ago or if it's from two years ago necessarily. But when I open up Spotify, I'm not looking for an episode from years ago for the most part. Right. And I think that's why it is more about dependability.

45:53Are you there every single week? And you're looking for something on Spotify that's very familiar to you. Like to find a new show is really hard because you don't want it when you open that environment. But I think Spotify is just more like Netflix than it is like YouTube. Right. It's more editorial. It's more editorial. Like Netflix, when we open up Netflix, Netflix tells us what shows matter. And I think Spotify is the same. When you open up Spotify, it tells you what shows matter. Yeah. And I think that is - The only difference though is that anyone can upload to Spotify. Right. Not everybody can upload to Netflix.

46:25The third thing from the interview that was interesting was him just talking about the general state of advertising. The creator economy, bottom line, is built on the foundation of advertising. That is why the creator economy exists. But he brings up some interesting points of that consumers are tuning out of ads. And it is a question that as the creator economy has emerged, consumers are hearing more ads than ever before, right? I want to take this moment to thank the sponsor of this episode, Samir's Haircut. Yeah. It's new. It's fresh. I'm sure you noticed it. It's different than the episode when we sat down with Daniel.

47:01Thanks to Samir's Haircut. Back to the episode. Yeah. I thought maybe you had a sponsor and maybe you booked a deal without me. That's great. Look, man, you're on the business side. I'm on the creative side. I'm not booking us. I'm not booking sponsors. But yeah, it's an interesting conversation for the future of just the creator economy in general. You know, his suggestion is kind of like, are ads as effective? Are they effective enough? Now, of course, for a platform that is a membership club, you don't really want ads there. If 84 % of your revenue is coming from subscription, do you need the 11 % advertising?

47:37How important is that to you? Obviously, in a$4.1 billion quarter, it's not insignificant. But he can say that from the context of advertising is not as important to Spotify. So I think you have to take it with a grain of salt. But it's interesting of the overload of ads. The other thing was in their presentation, they said that podcast episodes are now like on average 11 % ads. Yeah, it was a really interesting point that was made during the announcements that your episodes, the better they are and the longer they are, the more ads will play and the worse the experience will be. So you're kind of like at odds, right?

48:16The experience is at odds with making money. Right. Now, we do receive premium subscription revenue from YouTube. Yeah. And during the conversation in my head, I was like, I don't know how much revenue that is or how that. Or what the split is. What the split is on premium revenue. I still don't know that answer. We don't know that answer actually for Spotify either. We don't know what the split is or how the mechanics work. And I think that's going to be really important, actually, that it gets more defined in the future of how as a creator, do I look at my analytics and know what matters when it comes to the money I will get from premium subscriptions?

48:54Right. Because on YouTube, it's super straightforward. It's like 55-45. We get it. Right. So I don't know that answer, but we've done 140 million views on long form episodes on YouTube. What percentage do you think our premium revenue is? 2.5. 10%. Oh, yeah. That's more than I thought. It's way more than I thought too. So 10 % of our lifetime revenue from YouTube, which is near a million dollars, 100 ,000 of that comes from YouTube Premium. $100 ,000 from YouTube Premium? Yeah. Whoa, wow. Yeah, it's more than I thought. And so then you look at it and you go, what if that environment is just like more, the lion's share of the revenue is coming from premium subscriptions and we do 140 million downloads on Spotify.

49:45That could be really significant. Yeah, time will tell, I think. what these payouts look like. Because if there's one thing that certain creators will absolutely share, they're back-end metrics, right? And that's one of the biggest educational moments, and it will be one of the biggest educational moments for all of us to see, okay, that's how many streams, that's how many watch hours this creator got, and that's how much they got paid. On YouTube, if two creators have the same amount of views and watch time, they could have drastically different payouts depending on their CPMs and what industry they're in and what advertising is like in their industry.

50:20Whereas on Spotify, I think technically, like a stream is a stream, a watch hour is a watch hour. That's true. So I'm going to be really interested to see when creators start sharing their revenue, are there two creators with essentially the exact same viewership and watch hours? Do they have the exact same payout? So one thing that interests me quite a bit about this is if this works, does this open the doors for other subscription platforms like a Netflix to work with creators. Like if this model works, could there be a world where you're like an approved Netflix partner? You're part of the Netflix partner program and you get to upload content to Netflix because there are now also, every platform is freemium.

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51:34It could. And if you're somewhat editorial, you don't have to surface any of the content. No. Yeah. So it could be laying the foundation for what the future of the creator economy could look like. I'd be fascinated if a company like Netflix said, hey, here's our brand guidelines for what it means to be a Netflix production. Here's the quality of the camera. Here's the type of stories we tell. Put it out there for all of us. And be like, if you do these things, you can upload to Netflix. And here will be, this is the way that we will compensate. I mean, it's not so different from what Spotify is doing.

52:08Yeah, it's not. So if it works, it could be something that we see. Yeah. Down the road, are we going to see YouTube, Spotify, and Netflix basically converging into a very similar platform? So I want to talk about the four things, in my opinion, that Spotify needs to do to win video creators or to make it a good experience for video creators. Hit me. The first is establish revenue transparency and milestones. So meaning how does this aligned incentive structure work? Because again, we know that with YouTube. If we grow, YouTube grows. If YouTube grows, we grow because we know the split. We know how we get paid.

52:48I think we have to know the transparency into how we get paid. Is it watch hours? Is it whatever it is? And then milestones, meaning like what is the YouTube play button for Spotify? If you're a new creator, what are you trying to get to? What am I trying to get to? Am I trying to get to a million downloads? Am I trying to get to a million watch hours? Am I trying to get to a million followers? Like, what am I trying to get to? So I need that. The second thing is they have to support discovery and curation in the Spotify way. And they've done discovery and curation for music better than I think anyone else, in my opinion.

53:20One of the greatest tools is blends. I don't know how many people use that, but that's like if you and I created a blended playlist that's like your top artist, my top artist, and it's updated on Weedlearn. weekly basis. So you pull the thread of, of podcasting and word of mouth. That's how podcasts get discovered is if I told you, Hey, you got to listen to this podcast. Can they do blends or some sort of like friends discover of what pods you're listening to, what pods I'm listening to and mix them together? I think YouTube should do that too. And Instagram and TikTok. You were like, Hey, this is, I want to look at a for you page that is strictly what myself and my buddy are into.

54:00Like, can I borrow Colin's algorithm? Yeah, yeah. Like, yeah. Can we like combine algorithms for a second? Yeah, it'd be super interesting. But it's like playlisting that they do all the time in music. But you could do that with podcasting and you can mix users. You can also show me celebrities' algorithms when it comes to, or celebrities' picks when it comes to podcasting. Word of mouth is how podcasts get discovered. How do you scale that in the platform? That's interesting. I would also love to know, like, what's your most listened to podcast? What's your most listened to artist? Yeah, we'll find out in Wrapped.

54:30we'll find out. I'm pretty sure mine is Sabrina Carpenter, actually. Yeah. You've said that many times. I'm pretty confident. Carry on. But like outside of the hits, you're listening to that too? Yeah. Like deep cuts. Yeah. Slim Pickens is great. Never heard of it. I don't even know what that means. Nope. All right. Number three, and I'm pretty adamant about this one. Keep viewership private. Whoa. So on Spotify, one of the extreme differences between Spotify and YouTube is that you cannot see how many views a video does on Spotify. I think they will naturally be tempted to have public viewership, but that goes against the allegatorial method, in my opinion.

55:10You cannot have editorial consideration of what makes good content on your platform and show me what a model citizen looks like on your platform with public viewership because public viewership means too much in the world of video. If there's a video with 20 ,000 views and a video with a million views, but the one with 20 ,000 is more representative of where you want the platform to go. The one with a million will dictate the behavior of thousands of creators. And that's a great thing that like content has become democratic in that way. And the audience tells you what's good content. But, you know, we don't know.

55:43We don't, I guess sometimes we do. Netflix is like now kind of releasing some public numbers, but largely we don't know how things are doing. And like, I think numbers have, we have too much of a relationship with numbers. And in a subscription environment, I don't want numbers. I don't want to know. I agree with that. And as a creator, I want to keep that environment private. I think you'll probably have, if you're Spotify, you'll have a better experience bringing video creators over to the platform if viewership numbers are private. What I am okay with are rankings, right? This is the number three podcast in business this week.

56:20You are the number five. I think they should go further in that direction. And that's my number four is established model citizens. if you are going to roll out video and video creators, and that means not just video podcasting, then push to the front of the line. Show us who are the model citizens. Tell us what makes good content. We asked Daniel the question in the interview of like, what is the next Spotify model citizen? And it was kind of interesting. It was actually more, his answer was more of like a creator who's making multiple formats. The multi-homed, multi-modal, he called it. Yeah.

56:54So a creator who, for example, if we had a book that was for sale, you can listen to the audio book and you can reach it from this episode. Just made me laugh thinking about how Jake Shane has an album, podcaster and TikTok creator. He has an album now out, which is like a comedy album. But that's like a funny thought to think about. Can I pause for a sec? Yeah. I think, I know we haven't had a gripe in a while. I think I have a gripe. Okay. When someone goes, just made me laugh. And then they say something. Why? You didn't laugh. No, but I, did I not laugh? No, you didn't You go back? You just said, ah, it just made me laugh.

57:26I was laughing in my head. You were laughing in your head. Laughing out loud. Wow. You know, I typically disagree with your gripes, but I think I agree with that. Yeah. I apologize for saying that. Yeah. I accept your apology. It made me think in a comedic way. Sure. In a lighthearted way. In a lighthearted way. Thank you. In my own mind. I appreciate the change. But yeah, it does inform you. It's like, oh, maybe I, yeah, releasing an audio book here is interesting. alongside a podcast or a course or like what does that mix look like? So continuing to push forward those case studies of like, what does a model citizen look like?

58:01Overall, exciting that Spotify is getting into the space like this and that there is competition for YouTube in a very different way, a different model. Yeah. I think largely also because Spotify is a serious home of music, which makes it culturally just hold a different space in the world. And I think Spotify being a big show on Spotify also holds a different cultural space. So I think the platform's really interesting. I think this event was really interesting. And if this subscription model works, I think it's going to open up a whole new side of the creator economy. Agreed. All right. So thanks so much, Daniel, for coming on the show.

58:41And if you guys have thoughts about Spotify and video, put them in the comments here, either on YouTube or the comments on Spotify, because this show's on both. I'll be honest. I don't really check the comments on Spotify, but on this episode. I do. And they're hilarious. I'll check them. Yeah. So if you've got something to say, even if you're watching on YouTube, just click on head over to Spotify and leave a comment, leave a comment. All right. See ya.