Spotify warns it’s ‘too early’ to calculate Joe Rogan Row’s impact
Daniel Ek, chief executive of Spotify, told investors it was “too early to tell” whether the Joe Rogan podcast backlash had cost the company’s customers, his first acknowledgment that the fallout could affect the company financially.
“Usually when we’ve had controversies in the past, those are measured in months, not days,” Ek said in a call after quarterly earnings on Wednesday.
Over the past week, artists such as Neil Young and Joni Mitchell have removed their music from Spotify because they believe Rogan’s podcast is spreading false information about coronavirus vaccines.
Ek faced the fallout defiantly on Wednesday, telling analysts, “We don’t change our policies based on a creator, or based on a media cycle or someone else’s calls.”
The controversy couldn’t have come at a worse time for Spotify, which warned on Wednesday that subscriber growth would slow significantly in the first quarter. Its shares fell as much as 23% in after-hours trading before recovering to hover around 10% lower.
Spotify and Young’s camp discussed how to resolve the disagreement, according to people briefed on the negotiations. Before considering a return to the site, Young wants more concrete details about Spotify’s promise to add “advisory content” notices to all podcasts discussing the coronavirus, the people said.
Ek promised on Wednesday that these notices would be “highly visible” and would be rolled out “right now, as we speak” on the Spotify app.
As Spotify has grown over the years, it has attempted a delicate balance with music and podcasts that might divide its audience. In addition to briefly dropping R Kelly from his playlists in 2018, he largely avoided the thorniest content standards issues plaguing other media companies.
But the combination of the proliferation of coronavirus misinformation, Spotify’s longstanding tensions with musicians and the outspoken podcast star has created a perfect storm for the music streamer. Rock stars are revolting, social media is abuzz with people pledging to #DeleteSpotify, and even the White House has weighed in. Publicist Jen Psaki told reporters Spotify’s disclaimer plan was a “positive step”.
Musicians have resented Spotify for many years, arguing that the band should pay more for their work. Along with the Rogan smashes, this tension has encouraged some to deploy the nuclear option of removing their music from service.
Most performers, however, do not own their music, and the major record labels are unlikely to approve of a group of contemporary stars removing their songs from the biggest distributor.
Universal Music has previously signaled its hesitation and has not taken action to remove music it owns from singer-songwriter India.Arie or Mitchell despite their public calls to do so, according to people familiar with the case.
“We can’t get into a situation where every time an artist has a problem with a service, we remove their music,” a senior label executive told the FT.
In issuing a mea culpa on accusations that Spotify’s Rogan podcast is spreading false information about Covid-19 vaccines, Ek had adopted a tone similar to that of big tech companies such as Facebook, arguing that the company should not become a “censor”.
But Facebook’s “fake news” problem stems from the millions of users who post on its site. Spotify, on the other hand, paid Rogan $100 million to produce podcasts and distributes the show exclusively. This makes the company more of an editor than a moderator.
As its business has evolved, Spotify has evolved more into the role of a media company that curates and commissions creative work. He first revealed his plans to get into podcasting in 2019, but Ek had long wanted to branch out from music, a business with a poor economy; the company pays two-thirds of the subscription proceeds to song owners.
“You were totally indebted to the record labels,” said a former Spotify executive who participated in discussions about how to branch out. “You’re still going to have these contract negotiations with Universal and it’s going to be a nightmare and your margins are going to be crap.”
Podcasts provided a possible way out of this punitive business model and a new narrative to sell on Wall Street. “If you become an audio company, you have more leverage because you’re not totally beholden to Universal,” the executive added. “Daniel [Ek] and the braintrust was like, ‘how can we diversify our offerings?’
Spotify has spent over a billion dollars buying up podcast companies, quickly establishing itself as a nascent industry player. In 2020, the company struck gold by convincing Rogan, the world’s most popular podcaster, to exclusively create podcasts for its platform.
But his biggest star, with his brash contrarian style, was also a liability. Spotify has removed more than 40 episodes of Rogan, including interviews with conspiracy theorist Alex Jones and former Breitbart editor Milo Yiannopoulos.
Seeking to appease critics, Spotify this week released its content rules, which include a ban on “dangerous false or misleading medical information”. But the examples provided by Spotify of what hits the danger line — like drinking bleach or suggesting that vaccines are “designed to cause death” — allow for considerable leeway.
Rogan’s Dec. 31 podcast episode, in which guest Robert Malone claimed that US hospitals were financially incentivized to misattribute deaths to Covid-19, does not violate Spotify’s rules, for example. It has not been deleted.
“The past few weeks have presented a number of learning opportunities,” Ek said Wednesday. “Of course, this is a very complicated question.”