By now most of us have seen the headlines on both sides:
Neil Young attempted to boycott Spotify in an effort to cancel Joe Rogan.
Spotify quickly chose Joe Rogan (and Podcasts) over Neil Young.
Off the top, I see three lessons here:
Be careful what you ask for.
Know the actual game you are playing.
Taking drugs for years causes you to make rash decisions.
The broader story has two angles: Spotify’s Future & Neil Young’s Past
ANGLE #1: Spotify’s Future
On one side, Spotify’s future revenue spreadsheet is a red ocean of low margin music streaming (red ocean is a reference from the book Blue Ocean Strategy). Spotify is the market leader, holding 30% share according to industry analysts. This is 2X Apple which is the #2 market share holder at 15%. Spotify, Apple Music, Amazon Music, YouTube Music, Tencent Music, Pandora/SiriusXM and other small DSPs including Deezer are vying for market share of consumer subscriptions which typically range from $9.99 per month for individuals to $19.99 per month for families.
Music streaming is, and has long been, a bloody war. Napster launched in 1999 and promptly ended up in court. But this triggered digital distribution and the $19 CD (“album” for those who remember) was broken into pieces and sold as individual songs for $0.99. Music artists screamed and said they were now receiving tiny slices of a penny per song, labels ran to court and bemoaned the same economics even as many streamers (DSPs) launched, although few showed sustainable long-term profitability. Pandora is a good example. After going public and nearly bleeding to death under the bright lights of Wall Street, we know how the story ended: Sirius acquired Pandora in 2019. A giant like Apple can kinda sorta hide the actual performance and profitability of Apple Music, but Pandora could not. Block’s (Square’s new name) acquisition of Tidal has similar economic risks despite glassy-eyed quotes announcing a bright future for music artists and happiness for all mankind.
To be fair, music streaming is evolving. Lossless music is coming (along with higher consumer price points) and Block/Tidal is reaching out to artists with new royalty algebra. I could dive in to a Biz Doc Case Study on the future of music streaming right here, but I’ll save that for later. Suffice to say, despite being the #1 DSP in global market share with 170M+ subscribers, Spotify knows it’s in a red ocean long-term.
On the other side of Spotify’s future revenue spreadsheet is a HUGE bet on podcast publishing. Spotify has dished out multi-million-dollar exclusive content contracts to established talent including Joe Rogan, Grantland and Call Her Daddy (formerly on Barstool Sports).
So, against this backdrop, in walks Neil Young who posts an angry letter unwittingly (the right word) demanding Spotify choose either the red ocean of music (specifically Young’s music) or podcasts. After headlines and media pundits went back and forth for a few days, Spotify made an EASY economic choice - Podcasts!
Meanwhile Joni Mitchell (a contemporary of Young’s who also arose in the 1960’s) proclaimed support for Neil Young and took her music off Spotify. I was somewhat surprised by this because I keep forgetting she’s still alive. Nonetheless, she got herself a do-gooder headline which quickly came and went as it should.
ANGLE #2: Neil Young’s Past
Everyone has a past. Sometimes the facts in the past can be, shall we say, an inconvenient truth. Over a year ago the media broadly reported that Neil Young, a demonstrated and long-standing critic of the music industry that has paid him quite handsomely, made what can be objectively called a “massive capitalist asset sale” (the following is a quote from Forbes):
“Neil Young sold 50% of his publishing rights to his entire song catalog to Hipgnosis Songs Fund, a UK-based investment fund, in a deal worth a reported $150 million. It gave Hipgnosis the rights to the worldwide copyright and income interests from the 1,180 songs composed by Young.”
So Young “sold out to the man” over a year ago. Then, with millions in his pocket from Hipgnosis, lashed out by posting an angry letter demanding Spotify take down his music or cancel Joe Rogan’s podcast, which brings in 11M regular listeners. Taking down Neil Young’s music means Spotify would stop paying royalties to Neil Young… wait, wait, wait, sorry - I mean stop paying Hipgnosis - the nice people who paid Young $150M. After the reaction boiled over in the media, Young quietly, yet promptly, deleted the angry letter. One wonders if the Hipgnosis people flipped out at the loss of royalties on an asset they paid 9-digits to acquire and told Neil Young to pull down his angry letter (I am going with “hell-yes!”).
But wait, there’s more. This is not the first time Neil Young positioned himself as a self-righteous do-gooder. In 1988 Young wrote the song ‘This Note’s for You’ which famously skewered musical artists including Michael Jackson and Whitney Houston for shilling for corporate brands including Coke and Pepsi. Taking massive checks from corporate giants was outrageous to Young so he wrote a protest song and filmed a music video to go along with it.
MTV initially bowed to pressure from Jackson and Houston’s lawyers (NOTE: MTV did NOT bow to Young) and banned Young’s song and video. Young then wrote (stop me if this tactic sounds familiar) an angry letter that included this now famous line:
“MTV, you spineless twerps. You refuse to play ‘This Note’s For You’ because you’re afraid to offend your sponsors. What does the ‘M’ in MTV stand for: music or money?
Long live rock and roll.”
Keep in mind, this is the same Neil Young who, 20-years later, would (OMG!) do his own massive corporate deal and sell the rights to his catalog for $150M to Hipgnosis. Judging Neil Young by his actions, it seems “M” does stand for money.
The irony of the furor Young triggered in 1988 is that MTV ultimately stepped back and began to play Young’s song and it received accolades and awards. With this history in mind, it’s easy to assume that Neil Young believed the outcome of the angry letter aimed at Spotify this year would be no different: the giant (Spotify) would cave and he would win. Except that they didn’t and he didn’t.
Quoting Neil Young’s lyrics from Hey, Hey, My, My, “It’s better to burn out than to fade away,” Young may have just done exactly that.
Long live podcasts!