Live audio experiences will be adopted by every major platform just like Stories have been, Spotify CEO Daniel Ek told investors on Wednesday’s earnings call. The streaming service recently acquired a live audio app, Locker Room, whose technology it expects to use to power a range of new live audio conversations centered around sports, culture and, of course music.
Investors were curious how exactly Locker Room would fit in with Spotify’s current offerings, given the streamer today is focused on delivering recorded content — music and podcasts — amd not some sort of live social networking experience.
Ek, mirroring what many in the industry have already been thinking, said he sees live audio as a new set of capabilities that will be broadly adopted by all. He basically dubbed it the next “Stories” — a feature popularized by Snapchat, but that eventually made its way to every platform.
“It’s really no different than how you think about Stories,” Ek said, explaining his thoughts on live audio. “Stories today exist on a format on a number of platforms, including Spotify, including, of course, Instagram, Snap and many others. So, I do look at [live audio] as a compelling feature set, and I think creators will engage in the places where they have the best sort of creator-to-fan affinity for the type of interactions that they’re looking for. And I think this is very similar to say how Stories played out historically.”
In other words, each platform may attract a certain kind of live audio creator, and Spotify sees its own potential in the realm of music and culture — the latter thanks to its existing and expansive investments in podcasts.
The interest in live audio emerged in the middle of a pandemic that trapped people at home and shut down traditional networking and large events, like conferences. But that doesn’t mean there’s no future for the format when the world opens back up.
Of course, Clubhouse gets credit for dring the interest in the live audio space as its exclusive invite-only status attracted a crowd of determined networkers (and clout-chasers) looking to participate in the next big thing. But as the app grew more popular, snagging big-name celeb guests — like Tesla founder Elon Musk, Facebook CEO Mark Zuckerberg, actor-turned-investor Ashton Kutcher, Drake, Oprah, and more — other tech companies began to take notice. Soon, everyone was building a Clubhouse clone.
Today, Facebook, Instagram, Reddit, Twitter, Discord, Telegram, and even LinkedIn have plans for live audio in various stages of development or availability.
Instead of starting from scratch, however, Spotify made an acquisition. Thanks to Locker Room, originally a place to discuss sports, Spotify said it would soon open up live audio to more professional athletes, writers, musicians, songwriters, podcasters, and “other global voices” who want to host real-time conversations.
In its first earnings call since the deal was announced, investors asked whether Spotify believed linear consumption of spoken word audio was more interesting than music streaming.
Ek explained how spoken word content may only be the beginning of what’s to come as the format evolves.
“As more people start engaging with a feature in a medium, you start seeing more and more professional creators jump on board. So I think it’s probably going to start out with spoken word content,” he said. “But specifically as it relates to Spotify, I think that there will be a lot of musicians that want to engage in everything from speaking to their fans to having listening parties and all other things because it’s so clear to them that on the Spotify platform, that engagement drives meaningful conversion to monetization opportunities just on the basis of our revenue model.”
Spotify said that the biggest request it gets from its over 8 million creators are to have more ways for them to connect with fans. Live audio, by its nature, would give them a very direct way to do just that, given Spotify’s reach of over 350 million users.
In other words, live audio does not present some either/or scenario with regard to music streaming, as the investor’s question suggested. It’s more of a loop where one thing feeds the other. And “live,” apparently, could also mean music, not just chat.
For example, Ek hinted, when an artist has an album to promote, “you as the fan, may be able to experience that earlier than other consumers can.” Oh really?
Artists could also use live audio to talk about their thinking around writing a song, similar to what the Genius integration “Behind the Lyrics” today provides.
“I think it really comes down to the quality of the content,” said Ek. “And I think when I look at our 8 million creators, we have some of the world’s best storytellers on the platform, and that’s ultimately what people will tune into, and that’s what matters.”
But one area that could be difficult is moderation of live content. Live audio presents a whole new range of challenges for any company, as conversations can go off the rails quickly. And Spotify’s position on drawing line between free speech and policing misinformation or other inappropriate content is still somewhat murky. Its top podcaster Joe Rogan recently advised listeners to not get the Covid vaccine, if they were young and healthy, for example. Spotify declined to weigh in on this particular controversy. But it has removed some 40-plus episodes from the same podcast in the past — some for seemingly lesser violations, like an episode about Bulletproof Coffee and its health claims, for instance.
Before Spotify wades into live audio, it may want to first solidify its own values around creator content. It will need a careful, worst-case-scenario plan for what happens when a live session goes out of bounds, too.
Despite Ek’s optimism around live audio, Spotify’s stock tumbled after earnings as there were signs of slowing growth on the horizon, thanks to increased pressure from rivals, like Apple and Amazon. The company added 3 million paid subscribers in the quarter, but missed on expectations of monthly active users and lowered its full-year guidance. Revenues were up €2.1 billion ($2.6 billion) in the quarter, a 16% increase from the same period last year but down 1% from Q4 2020, raising concerns. But live audio could give fans a reason to tune back in more often in the future, if the Spotify can make the integration work.
