Acquired｜Spotify CEO Daniel Ek

It is impossible to flawlessly execute a podcast of this style and that's the beauty of it.

You come up with a bunch of stuff you want to talk about and then you end up having a

real organic conversation and then it turns into a product and that product is totally

different than what you envisioned in your head but can still be great.

But I think the amazing thing is unlike you talking to a journalist, et cetera, it's truly

a conversation one and the second part is there's enough time to actually elaborate

on the thought and the idea.

Whereas you have to be so succinct in how you express your idea and truly get it across

in 30 seconds or like you lose the moment and the journalists want to move on.

Brian Chesky is an example.

He's like the master on it and he just switches it on and he's like so good.

For some reason, he and I always ends up getting on the same panels and I'm like, it's

game over even before it started.

You're going to have all the great stuff.

Who got the truth now?

Is it you? Is it you?

Is it you? Sit down, say it straight, another story on the way.

Who got the truth?

Welcome to this episode of Acquired, the podcast about great technology companies and the

stories and playbooks behind them.

I'm Ben Gilbert.

I'm David Rosenthal.

And we are your hosts.

This episode, we sit down with Daniel Ek, the man who saved the music industry after

Napster and the piracy era killed the CD business.

Some of the stats are mind boggling.

Spotify has paid 40 billion dollars to artists over their lifetime.

They're now the single largest source of revenue for the entire music industry.

That's crazy.

Spotify also has over 500 million monthly active listeners, over 200 million of which

are paid subscribers.

Both of those numbers are bonkers.

And in today's conversation, we're talking about one, how Spotify managed to get to this

500 million number by stacking all these different expansion strategies on top of each

other over the years.

And two, we're going to dive into the current moment that Spotify is in.

They've entered podcasting in a huge way that has not only changed the experience for

consumers, but Spotify's business and their future as a company, which is, of course, very

interesting to David and I, as Acquired's growth has really exploded on Spotify.

Totally.

As I think we reference early on in our conversation with Daniel, over 60 percent of

Acquired's audience is now on Spotify, which is up from basically zero four years ago.

It's wild.

In fact, we were so interested in having this conversation that when Spotify asked if we

wanted to fly to Stockholm and record in person with Daniel in the Spotify studio, we

jumped at the chance.

Daniel also foreshadowed some of what's to come with the cousin of podcasting audiobooks.

We can't wait to hear what you think.

Come discuss it after you listen to this episode in the Acquired Slack, Acquired.fm slash

Slack.

You should subscribe to our interview show, our second show, ACQ2.

You can find it in any podcast player.

And we've had some killer back to back discussions with the CEOs of Retool and AngelList, both

about AI.

Now, without further ado, this show is not investment advice.

David, myself and our guest may have investments or many shares in the companies that we

discuss.

And the show is for informational and entertainment purposes only.

Now on to our conversation with Daniel Ek.

We wanted to start with like something kind of incredible has happened in podcasting.

If you look at January 1st, 2019, we had less than a thousand listeners on Spotify.

Yeah, crazy.

And now it's by far the majority of our listeners.

And unless you're us and you're looking at the data all the time or other podcasters, I think

it's easy to underestimate how seismic of a shift has happened in the podcasting ecosystem

since you guys dove in.

And I just wanted to sort of acquired style, go to a moment in time and say, how did that

happen? And how did you guys decide to become an audio company instead of a music company?

I like to say that there was probably this genius insight at some point in the moment, but

that's certainly not in the case of Spotify true.

It is often quite serendipitous.

And for a long time, you know, I was kind of fighting the urge on this, but we were oftentimes

trying to not think of ourselves as the users and customers, because once you got to kind of a

hundred million users, you're kind of like, well, obviously, I shouldn't be the target demo.

I need to kind of listen to what the actual users are telling me.

And there's some part that's true with that.

But then more and more, what I've realized is also that actually internally, we probably

have the best sounding board of a quite representative Spotify user and what they might

like. And so one of my favorite topics is how often people game our platform.

For instance, in Germany, unbeknownst to us, but one of the sort of crazy things that ended up

happening was just people started uploading audio books because it turns out that these

music labels actually own a bunch of audio book rights.

And so as the platform was taking off, they realized what else can we put on this platform

that gives us a leg up and creates more revenue for us.

And they realized that they have this catalog of audio books sitting on there.

So I think that was kind of one realization where we kind of realized, hey, this platform, it

doesn't seem to matter all that much what we're putting on it.

People just like consuming content.

And then I and others at Spotify, we were big podcast listeners ourselves and we love

that. But we hate the fact that we had to switch app from our normal one.

We hate the fact that we couldn't get the recommendations working.

We hate the fact that we couldn't get this to work on my car speaker or my home speaker and

all these things that we spent literally a decade building for the music industry.

So it kind of dawned upon us that podcasters have sort of the same problems that the music

creators have. And we should be able to play a pretty big role.

And all the primitives that we built for music should work really well in terms of

discoverability, in terms of ubiquity that we call, which is sort of our ability to play on

any device. And of course, our freemium model where the ad supported and eventually paid

models as well should be able to all work together.

And so the craziest thing in the beginning was probably when when we started talking about

it as building it in the same app.

That was what the biggest resistance was, because the common wisdom at the time was

obviously, well, podcasting has to be a distinct own thing.

I mean, this was like the you've talked about this before, the constellation of apps was

now, you know, all the like all the rage.

Facebook's got all these different apps and Apple has all these different apps.

And unless I'm a person who already defines myself as into podcasting, I'm never going to

click a podcast app to try and get into podcasting.

You can't expand the TAM if they're all in separate apps, which still is a super nerdy

thing. Even merchandising podcasting is a very different problem than music.

And it's actually one of the things that we're still working on trying to crack the code

on. But that was probably the most contrarian, both inside and outside.

But to us, it was probably the most obvious one because we had already seen the behavior

happening in Germany.

And once we had tried unloading it for ourselves so that we could play around with the

product, it was kind of obvious that this would be a great experience.

And it's probably been the most interesting one for me, where and what I often tell other

entrepreneurs is like, well, the fact that people doubt you in the beginning, you kind of

need to pay attention to that and hear what valid concerns they may have.

But a bunch of that is just like they're not used to the concept and it's going to change.

But by the time it changes, it will have already passed over.

And not that you were right, but actually, well, of course, this is kind of obvious, right?

So my favorite one obviously is streaming music, where when we began doing it, I always

got this sort of pushback of like, why would I want to rent my music?

I want to own my music.

And the phrase streaming did not exist.

Yeah, people were not talking about it and people actually conceptualized it more around

sort of renting things.

And why is that good for me?

This is horrible.

And that means that technically what happens if you guys don't want to have that song

anymore, that song disappears and people care so much about their music, like their

identity, like I want to own this.

I want my record collection.

Yeah, exactly.

And we were fighting against it where it was so obvious to us that because I grew up with

piracy that no, actually, all you want is access to it.

And it was such a hard notion for people to get conceptually because we'd been spending

30 years just getting people into that.

And I feel like most of the tech industry had spent a decade plus learning about having

separate apps. And we kind of said, no, no, no, it doesn't really matter.

We can put it in the same app and actually people will love it even more because we're

solving the same sort of user needs.

Where did that insight come from?

Was it you as a user?

Was it elsewhere in the company?

Well, it was really a lot more of a first principles kind of thinking around it.

It didn't really make sense if you look at that sort of like, what are we trying to solve

for? And was it truly so different in terms of a consumer experience?

No, it was the same playing view, slightly different sort of modalities, but totally

possible. And if you thought about it as a discovery, OK, well, that's a similar problem.

Ubiquity being able to play it on all these speakers made a lot of sense of having the

same thing. Search, all of these things were basically shared infrastructure that we

could utilize. And again, if you're searching for content, why you don't really care all

that much about it on YouTube and on one end, you're listening to music on one side,

you had all these other short form videos and sports and so on, you don't think that

those are distinctly different behaviors.

So why do you think about it that way?

And it's because you really think podcasting is a different format, but actually it's

audio. All right, go back to the radio days, talk radio and music and sports.

They were all on the same device.

Yeah, I mean, that's the thing with audiobooks, too, right?

Like what's the difference between an audiobook and a podcasting?

Well, you would say chaptering and some of those stuff.

We think of ourselves as like right on that line between a audiobook and a podcast.

Actually, we'd love your help trying to solve this for ourselves.

So we have recently realized that acquired is the canonical episode,

Nvidia episode or TSMC or Taylor Swift.

These are more like conversational audiobooks between David and I than they are

podcasts. They're four hours long.

They drop infrequently.

How does that kind of fit into what you imagine is the job to be done by audio?

And is it an audiobook?

Is it a podcast?

My view, I guess, is the boundaries are from a format side is definitely being

blurred quite a lot and for right reasons.

But the better way to think about audiobooks and podcasting is it's really around a

business model mostly.

So one way to frame it instead would be podcasting is ad supported audio and

audiobooks is paid audio.

So for you guys, I mean, I also happen to know you spend so much time and effort on

the research of that side.

You could imagine that in the future you have the ad supported side of your

podcast be certain types of episodes and you'd have for your subscribers the unlock

where they get access to, you know, these kind of deep dives, et cetera.

And obviously the subscription thing could be as simple as like, hey, you're part of

our other network and it doesn't cost money or you could paygate it all the way

through. But I think it's more of a business model.

That's the big format differentiation, because as we said, like the quality, the

mics we're using relative to an audiobook, there's no difference here.

You're using like high quality camera equipment, also very similar to more

professional styled and sort of do it yourself kind of equipment, editing, all

these things. It's getting more and more blurred, which is so interesting.

Like to us, like we've lived this over the past eight years.

Like what podcasting is unlocked and now with Spotify bringing so many more people to the

medium that weren't consuming before is like a mass audience for niche products.

Like if we were authors and we wrote a book and we get pitched all the time on writing a

book, like the business model for us does not make sense anymore, given the audience

size that we have in a particular type of audience, we monetize so much better with the

that unlock happen, it needed to become a mass medium.

Yep.

It's interesting to think about would that change if audiobooks can access a mass

audience in the same way?

Yeah. And obviously our view is we eventually think audiobooks should be much, much

larger than what it is today.

Hundreds of millions of people who are actually listening to audiobooks because the

content is great rather than today what's tens of millions of people.

Is that the market size today of audiobooks?

We believe it's like tens of millions.

It's one of the fastest growing categories, which makes it interesting.

But it's again, fundamentally, it's both a business model problem.

It's, you know, again, a discovery problem and all those other things.

You either got to pay a lot of money for a one off purchase or you need to have a pretty

expensive subscription to a service that you may or may not use that and get value out of.

It reminds me of music in 2008.

Exactly.

Yeah, you guys are exactly right.

And there probably needs to exist a different business model for all of these things.

But you could even in your case, I mean, you guys have probably right now a pretty

defined audience, I would guess, and probably a very high value audience, which makes ad

support and monetization probably better than the average creator for you guys.

Just given the type of audience that people want to want to get to.

But you could even contemplate like some of your deep dives.

Like I've, I've heard like actual hedge fund investors literally have that as the sole

input to their entire process.

Just terrifying.

Yeah, well, not investment advice.

Yeah, exactly.

But I mean, you know, it is one of the areas that I'm kind of the most intrigued about.

I think Ben Thompson had this piece very recently, I think he called it like the

unified content business model piece.

I don't necessarily agree with everything he said, but I think his main takeaway is

obviously that all media models ought to move to freemium.

It's as someone who's been saying that for 15 years, I obviously agree with him there.

But I think that's true in all formats, right?

Like, as I said, I think, you know, what's the difference between audiobooks and

podcasting, there are definitely differences, but the formats are blurring.

But the main one is the business model, as I said.

So it's just it's talk audio, but with a paid or an ad supported business model.

And I guess my advice to you guys would just be, I think you should kind of like

explore both and see to an extent what's possible.

Yeah.

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Speaking of the podcasting business model, there's the potential for podcasting to be a

far better business at scale than music streaming.

Obviously, with music streaming, you take 30 percent and you share 70 percent with the

labels. With podcasting, there's the potential for real operating leverage, especially if

you own the content to build a fantastic ad network or, you know, however you want to

monetize it. But you actually can take advantage of the scale of your audience in a way that

it's sort of hard to outrun your costs in the music world.

I'm curious how early in your sort of dreaming about becoming a podcasting platform.

Did you start thinking about that or was it purely product driven?

Well, I think it was a bit of both and you have to to contemplate that if you're making

moves, like certainly of our size, because many of these investments that we're making are

multi-year ones and pretty substantial from a signaling point of view, too.

And obviously, public market investors want to know, like, well, is this ultimately a good

business? And why do you think that is?

And for me to upset, well, we've bought a bunch of companies, but I don't really know what kind

of business it'll be. It's probably not going to be the right answer.

So obviously, we contemplated that and we thought about that.

But the reality is there's a lot of the grasses greener on the other side when when you go too

deep in that. So obviously, on the one hand, if you deal with a lot of licensed content and,

you know, in this case, from some major labels and obviously a lot of indies as well, but still

relatively supply constrained from from some big ones, the natural tendencies for you to think,

well, this is much better because all of a sudden you have this sort of much wider

scope of different creators that matters.

It's great. You can aggregate a fragmented market.

Yeah, you can do the aggregation theory.

That's all good and great.

We don't really contemplate all that much.

It's obviously there's other challenges for that business.

Moderation all of a sudden becomes a massive thing.

You have to build an actual ad network that probably then scales.

So in theory, yes, you're right.

You may have an opportunity to gain more margin over time in this model.

But fundamentally, you have to do many more steps along the way.

Like we don't have to contemplate content moderation as much when it comes to music.

We certainly don't have to have these very elaborate systematic processes about what

constitutes speech and violence.

And we knew that because I'd seen enough of these obviously platforms, but it is important

because if you think about it from a P&L, so on the surface of this, these models are great,

right?

Because very high gross margins and so on and so forth.

Great at scale, expensive at small scale.

Yes, but even at scale, if you think about it, is the cost increasing or decreasing?

And if you think about right now, obviously AI will come in and it will be massive.

But I think at one point in time, Facebook or now meta had over 100,000 content moderators

actually working for them.

100,000?

I believe so.

I don't know an insane amount of people.

So it's tempting to believe that that's a fixed cost and that they're running this

like unbelievably high gross margin advertising business and they can outrun those fixed costs

no problem.

But in reality, what you're saying is actually they build up a whole bunch of variable costs

to that don't fit into this platonic form of ideal social media business model.

Yeah, for sure.

And even today, if you think about it, so all right.

Well, maybe that's not 100,000 and more because they've been able to automate some of that

process.

But it's kind of mouse game as well.

So the other side is now using quite sophisticated.

They use open AI too.

Yeah, exactly, to do that.

And that means that your AI models has to be a lot more sophisticated and that still adds cost.

So I think the best case scenario, I was looking at this.

This is very old data, but I believe at the time of Facebook's IPO, it was something like

the cost for Facebook to onboard a user was like a dollar a user or something like that

in like hardware cost and all that stuff, basically to have lifetime value of a customer.

And so at that time, obviously, the monetization wasn't as advanced.

So that was what was burning cash for quite a while.

And then eventually, their growth rate probably slowed down enough where their monetization

started kicking in and kind of scaled up enough where those two effects kind of took out each

other and they became very profitable.

But if you look at it now, I don't know what the cost would be.

But if I would guess, if I would start a social media company today,

the cost may be an order of magnitude more.

Because of all the other things you now have to do.

The ad platforms are way more sophisticated.

They have to build the moderation tools are way more sophisticated.

Now, the good news.

So you may then come to this and say, well, was that a mistake then?

Well, we knew a lot about that going in and we weren't entirely new.

It wasn't like we were starting an ad business from the scratch.

So we had already made.

You worked with Facebook for a long time.

Yes, that too.

So we had relatively good idea of what type of problems we would encounter.

And to give you some credit for listeners, I think at the time, you probably had maybe

200 million people on the ad supported tier who weren't in premium when you

launch podcasting, maybe something like 150 million.

But you had a gigantic scale advertising business.

You just didn't have user generated content being the content that it was advertising against.

Yes, that's accurate.

And the amount of inventory obviously that we were were monetizing against was relatively small.

And one of the big things right now is obviously this is a huge thing,

perhaps even more so than music for us to offer monetization to a lot of these

podcasters that perhaps unlike yourself can't sell ads unless you're in a niche like ours.

If you're subscale, you're never going to be able to access Unilever or P&G or Coke,

you know, on your own or Nike.

So I want to ask you about that because I saw the episode you guys did with David Senra, by the way.

Oh, David's a man.

And he's interesting because like, in my opinion, he seems to almost dig in more

in like what made him successful and like tries to not at all veer to broadening the base.

So how do you think about that?

Like, because you could just go serve your niche even better, or you could try to like,

well, let's try to include other forms of content.

How do you decide what type of content to go after?

Oh, man, we are right in the middle of figuring this.

I mean, you always said for a long time, you're like,

I would rather not have growth and keep our audience who they are.

I'm not sure I'd go that far, but I would rather saturate our niche.

And then at some point stop growing, then expand the niche.

Which I think we have three to four X headroom on our current.

Yes, we still can expand in our niche.

But then we did our Taylor Swift episode.

We did the NBA, we did the NFL, and then we did LVMH.

And LVMH, we got 40,000 new subscribers.

Wow.

And we were like, okay, so to your point about like some something is hacked here.

Like there's a there's a new phenomenon happening.

So we we have had to redefine what acquired is basically once a year since we started.

It used to be technology acquisitions that actually went well.

And then it was acquisition.

We would never be talking about still that.

And then it was, you know, and and and so at some point,

we expanded beyond just tech founders and engineers.

It became venture capitalists also, and then it became their LPs.

There's a bunch of university endowment folks that listen.

And now we're realizing as long as we keep making these really deep,

really long, really esoteric stories and analysis,

you can create smart content for smart people that is not scoped to a particular industry.

And I think that that's our new sort of definition of the job to be done from acquired.

Yeah, I think it's brilliant how you're able both to satisfy your own curiosity,

I guess, and at the same time, sort of it doesn't seem that far fetched.

Some of the ideas you're trying.

Obviously, I would I would probably assume the Taylor Swift one was

more out there than than something else.

But but the LVMH one actually felt to me supernatural.

And it's funny, you know, how well talked about it.

It's been even among like what I would have not assumed would have been your crowd.

Like I had a bunch of like really old school value investors that I honestly didn't even

listen to this one.

It's like, which is pretty cool.

So I think there's a way where there's probably some overlap between the audiences,

but also kind of clearly attracts a new.

Yeah, I mean, it's kind of like it's a very, very different scale and different business.

But it's a little bit like the Spotify adding podcast to a music.

But like, we have this audience that is like traditionally very tech focused,

we have this format that we've refined.

And now we're like, well, OK, if we bring something else into it, is that going to expand it?

Yeah.

But I will say, unlike Spotify, which you can by virtue of being a tech platform,

you can aggregate a bunch of different audiences and then let them choose their own adventure

on a really broad platform.

We choose the adventures.

We create these serial episodes.

And so if we go on a bender and do like we just did Lockheed Martin and it hasn't hasn't

come out yet as we speak, but we could have done eight Lockheed Martin episodes and we chose

two particular stories to tell.

And we called that the Lockheed Martin episode.

If we went on a bender and did eight, then like we were under serving a lot of our other niches.

We did two and a half episodes on Nintendo, two on Nintendo, one on Sega.

And we had a blast and people who love video games had a blast.

But by the time the Sega episode came out, the people who

don't love video games and video game history had stopped listening.

Right.

But sort of diving deeper on that, I'm curious, then would it have been that much more effort

for you guys to produce the eight or did you have the content?

But it just didn't make sense from an audience point of view.

I think we had high level concepts in our head for for eight.

But it turns out most of the work is the last 10 percent.

Yeah.

It's like that.

It's like software engineering where like there's the first 90 percent and then there's the second

90 percent.

And I think so much of the work is the last 10, 20 percent.

There's usually one thing on the cutting room floor, though.

So we're playing with this idea of shorts.

What we did for Sega, if in approximately one hour, can we take one thing that just

we couldn't squeeze it in and tell one more story?

Yeah, I was just thinking about sort of touching upon where we sort of were a little while ago

about sort of paid versus ad supported.

I bet you that there would be a very small one, but there would be an audience that would

listen to all eight.

Whether you want to spend all the time doing the eight is a totally different question.

It seems to me like the best creators just pursue whatever they're interested in.

And some of it will work.

Some of it won't work.

They don't really seem to care all that much.

Obviously, they'll learn from from what seems to be resonating and not.

But but that's the cool part.

Like we're living in an Internet where on the one hand, everyone talks about this

15 second kind of clips thing and everyone's sort of getting down in that rabbit hole.

But then at the same time, you can have like three, four, five hour long conversations

in super esoteric, very, very deep topics.

And people love that, too.

It's funny, us, Joe Rogan, Lex, at the same time that short form is having a breakout moment,

extreme long form is also having a breakout moment.

We want your views on this on our very small scale.

Like we're struggling.

Like we haven't acquired TikTok.

We're on YouTube Shorts.

We post on Twitter and like none of that drives the needle for us.

Like we've had videos on TikTok get a couple million views and we don't know if it

translated to a single new subscriber.

Or in many cases, we do know it translated to a single new subscriber.

Welcome both of you.

Thank you for staying with us.

At the same time, like you get you are, at least on the podcasting side,

the home of long form content.

And you just launched the new Wall Street all thinks it's the TikTokification of podcast.

It's the new home screen.

The new home screen.

Yeah, both extremes seem to work.

I believe one of the biggest problems we have in this new creator economy is

is the one of attribution, right?

So many creators like you have or try many of these different platforms and use it, but

you know, and they can they can see on each individual platform how well they're doing,

but it's very hard for them to understand what actually drives what.

And I actually see both.

I see some creators who are like under investing in other platforms and probably

too singularly just because they have success on one.

They kind of ignore all the others, which my advice to all of those is that

feels kind of dangerous to do, because if there would be an algorithm change or any of the kind,

even, you know, unanticipated by the platform, because, you know, they may see that something

resonates, watch time resonates better with some other metric.

It doesn't have to be skewed as an evil thing.

It just could be something that actually benefits the user.

But it but if you built your entire livelihood of that one platform,

that could be a big problem for you.

So I see them under investing in other platforms.

And then the other one also be true, which is they're over investing in too many and not

realizing that that actually they probably would do better in just focusing more on one or two.

And so I think that there's two different problems.

I believe that for us and why we care about this and certainly why we designed the home

feed the way we did is because fundamentally how we merchandise content has to be very

different for music than it is for an audio book or a podcast.

And if you think about it, it's kind of logical because in a song,

it's a three minute commitments of your time.

And you can actually probably tell within the first 10, 15 seconds,

whether this is worth investing your time in or not.

Unless it's a radiohead song.

That is true.

But you probably then know the brand and you know how to give it the time and attention

to it because you're like, well, love radii.

I'm going to give this song a chance and maybe not just one chance.

I'll listen to it a few times before I make up my mind.

And obviously, if you now think about that with podcasting,

I mean, if I'm listening to you guys and even if it's a topic,

I don't necessarily know that I'm interested in.

I might give it a shot because it's you guys and I trust you

because I built up this report with you.

It's a much bigger commitment though.

It is a much bigger commitment for sure.

But I may give it 10, 15, 20 minutes, right?

Because I have that relationship.

But if I never listened to you guys before,

that one hook that gets me in, how many people, you know, in marketing you usually had

and in early Spotify, we had eight people needed to have heard about Spotify before

we were able to sign someone up.

Oh, interesting.

And so we realized that the geographical density in which that happened

was actually a key sort of contributor and a timeline.

So much of our early marketing efforts were in college cities in the US.

Makes sense.

You have like consumers who are probably more attuned to music being a big part of their life,

small geographical areas.

So we kind of bombarded it.

We did a bunch of different things that was hugely successful.

In retrospect now, you know, God, how long 15 years later,

was it almost like a benefit that you had to launch geographically specifically

because of the label negotiations?

Like that you could really saturate Sweden, the UK before moving.

Oh, yeah, for sure.

We all believe that these like sort of internet companies that go global day one,

that's like the right approach.

I actually think 99.9%, this is just untrue and false.

The entrepreneurs have to revise.

We all are benefited from constraining ourselves to finding what our first audience is.

And it could be geographically niched.

It could be that it actually is, you know, again, a subset of a demographic or whatever.

But more often than not, it's actually geography helps.

Limiting yourself to a city, to a state, to a country, whatever it might be.

And so that was a huge part.

I can tell you definitively Spotify would not have been alive today had it not been

that we couldn't launch in the US as our first market.

And if you asked me at the time, it was like a huge kind of step back to say,

well, I can't launch in the most biggest market in the world.

And I'm running an internet company.

Like, come on.

You told the stories of, you believed and you told investors like, oh,

we're going to be live in the US in like three months.

We're having the conversations.

And then it was three years later.

You must have been so stressed.

Yeah.

Well, I had many, many of those episodes and it always followed

with enormous weight gains and hair loss.

You literally ripped your hair out.

Yeah, pretty much.

When I started, I had hair and then like two, three years later, I didn't have hair.

When you started Spotify, you had hair.

Whoa.

Yeah.

There's like old pictures of me with hair, like from the first year or something.

And then it kind of all disappeared.

Wow.

And I don't know anything.

Was it worth it?

Was it worth the trade?

Well, so obviously, I think it has been, but obviously I can't recommend.

It is an emotional roller coaster.

You guys know this being an entrepreneur.

It's not for the faint hearted.

And I think every really successful entrepreneur, in my opinion, has had at

least three near death experiences with their company, right?

Where you just feel like, I'm not sure whether this thing is going to work, not

work, whether we're going to be alive tomorrow or not.

And I kind of hate how media portrays this and sometimes how entrepreneurs

we're supposed to be sort of like, we're so big.

We're like, we understood everything from day one.

It's certainly not been my journey.

Like my journey was, you know, I had a lot of luck.

I worked insanely hard to get to even half of where we were today.

And then it's been a true sort of emotional roller coaster.

And it is true what you say, but like, for me, had you told me how hard this

would have been, I would have never done it.

I'm happy I went through it, but I would have never done it.

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We wanted to ask about, I wonder if you consider this one of those near-death moments,

but because we did the T-Swift episode, we talked a lot about it on the show,

the week that 1989 dropped and Taylor pulled off the platform. Do you consider that one of those

moments? This was 2014, October 2014. Weirdly enough, no. That's the crazy part with it.

It was one of those where if you'd asked us externally, it felt like this massive event.

But if you were inside of Spotify at that moment, there was no one who thought that that was sort

of the defining moment. We certainly worried about, okay, well, is this the beginning of

like more artists sort of pulling out, et cetera, for a few days. And then, you know,

I spoke to a lot of artists, but I think there were certainly a lot of skepticism about Spotify

at the time. But generally speaking, there had been enough things in Europe where people really

saw like, no, actually this kind of works. Maybe it doesn't work yet in the US. Maybe it's better

for her to do this thing. But there was enough people that believed at that time that it was

only a matter of time before the US would be majority streaming too. The sort of way it's

been portrayed oftentimes with Spotify in particular has been like this sort of dogmatic,

it has to be all in with me or not. And actually that's not how I advise artists or creators.

I always tell them like this kind of, and it's kind of an unusual thing because everyone wants

to build their own platform and so on. But my firm view is that truly I believe in open

as the model at its core. And so my view has been like, there's some artists that at that time,

I don't believe it's true anymore, but like the adults of the world that probably benefited from

physical scarcity that probably didn't need to be on streaming that probably should have

done a windowing type model. The number of those artists were going to be very, very small.

But she was certainly one of them. Was that because of the demographics of her

audience? I think so, but also she on her own can basically control the

side guys. Like she can decide that this is a big cultural moment. Taylor Swift.

Yes. It is remarkable. Not a lot of people in the world can get hundreds of millions of people

around the world to wait for a moment. And she did it brilliantly with this album launch too.

I stayed up till midnight. Yeah. A lot of, I don't know if it was hundreds of millions,

but certainly tens of millions of people literally waited and sort of she got them

in on the hour and it was like each hour was another sort of gift. So she played that to

perfection. And she's really remarkable at understanding how to speak to her audience

and she does it authentically. So she can do that. And there's definitely other artists that

can do the same. But what's rare is for her to have that kind of side guys and connection with

that deep connection with that audience, the fan base that she has, how vigorous and how intense

they are at that scale. That's the unique thing, right? Was there something that changed between

2014 and when she came back on Spotify where it may have made sense for her not to be

here in 2014, but then in 2017 or whenever that was that she came back that the world had changed

enough where it did make sense. And how did the relationship between like, did you actually talk

to her? Like how did that all go down? Yeah. I think the predominant thing that changed

was streaming just became the majority of the industry in a bigger way. So if the option was

like, Hey, am I on streaming or not on streaming? Do I think she could have reached number one at

that point without streaming? Probably not would have been the answer. And she's super smart. So

she understood that. And kind of to your point, like even in 2014 in Europe, that had already

happened, but it hadn't happened in the US. No, it definitely hadn't happened in the US.

We were much earlier. I mean, Spotify at that time was like shy of three years in the US.

Streaming penetration was relatively low. Radio was like the predominant thing. At that time,

physical sales was still very big. I remember I think it was Lil Wayne that sold like 3 million

albums in that year on Costco out of all places. No way. Yeah. It's some sort of demographic

connection thing. What's going on? I love that. The intersection of like

Charlie Munger and Lil Wayne and Costco. Costco sells more chickens than anyone in the US.

In the world actually Costco just is an unbelievable distribution channel if you can get it.

Yeah. And we were talking about it before, but Starbucks and Howard Schultz was actually one of

the biggest retailers of CDs in the US. That's actually how I met him the first time.

Oh, really? Yeah. Because they were

becoming a partner of ours. That's right. You did a partnership with Starbucks.

Exactly at that moment and got to know him, spend some time with them. So yeah, I mean,

the world just looked very different back at that time. I think that changed.

Ever since she's been great with the team and she's super smart.

That was our big takeaway from the episode. She is really, really smart.

Dave and I were talking before this episode, are there other artists that you've got an interface

with where you walk away and you're like, better business acumen than any founder I've met,

any investor I've met? We've kind of become obsessed with who are people who are top of

their game artists and top of their game business people. There's quite a few of them because I

actually believe these days, if you consider a mega artist of that stature, it's like they're

their own enterprise and they're the CEO of that enterprise. They certainly have people who help

them. But at this level today, there's almost no one of them that's not very active as well.

On the business side and understand deeply what their audience wants, what's authentic to them

by making move X, how does that affect that relationship? And what's super cool to me is

that you have everything from the Taylor Swift's of the world and then you have

something like BTS, which is like insane. And how are they different? Because they're

same order of magnitude scale, right? I don't pretend to know all of Taylor Swift's business

sides and who's involved in everything. But from what I would guess is she probably runs with a

pretty lean team. That's what we heard when we were researching the episode. Yeah. And that's

certainly been our interaction with her. It's like very tight, very lean. And then if you think about

something like BTS, but actually quite a lot of the Korean artists, it is like an industry.

It's huge. Just on the songwriting side, it's the difference between if in Taylor Swift's camp,

it's like two, three, four maybe at the top. In some Koreans, it's 200 writers involved.

And that's like a small part. And then you have like everything from merchandising. There's another

few hundred. The talent development too. Like the pipeline to go from you enter into the K-pop

system to you become a member of XYZ Group. Yeah. Well, that could be your next deep dive.

Because honestly, it is fascinating how they do it and the 360, how they think about it,

not just from sort of maximizing their recorded side, but actually thinking about sort of fan

development, all the digital platforms, they have their own developers, programmers,

building specific platforms. It's pretty cool. One thing I'm really curious on that we hadn't

thought about before, we came here yesterday to Stockholm when we were talking with other

folks on the Spotify team. I'm curious in this lens, what the past few years have been with

Bad Bunny and Regaton. And I've heard you talk about lately, you knew from the data on Spotify

that this was going to be huge. And now I think it's the largest genre on Spotify.

And many of our listeners will not know either of those two terms you just threw out.

And I think this is a broader trend, right? We're now living in a very global world when it comes

to culture. At the same time, there's still a lot of local nuances, right? So it's this extremity

that we talked about. On the one end, you have this super, super niches that exist. But then once

every blue moon, one of these niches kind of develop into something that's actually quite

sizable. And you kind of start realizing that maybe this has a global appeal on top of it.

So in Latin, as an example, gospel music is quite big. And funk music is also quite big.

Okay, well, that's probably not what you associate with popular music. But there are real things.

And obviously, they exist in microcosms elsewhere. Like you could probably guess in the South,

in the US, gospel might be a larger genre, etc. So it's not like it's totally kind of isolated

and just happening there. But there's something that creates a sort of cultural resonance with

those types of styles. And then you have something like reggaeton. And it usually starts pretty

small. And then actually, in each cluster, it's kind of like starts developing more broadly.

And when you really look at it, like, it has oftentimes a pretty huge diaspora outside of

that sort of near region as well. So I mean, the Hispanic population, the US would be kind of an

obvious one, right? And so many years ago, we kind of started seeing them breaking out their natural

clusters and becoming a pretty big thing. And it was, for me at that time, it was just pretty

obvious that if we invested in that genre on a global basis, we thought that that would have

a global appeal. And yeah, because before a platform like that, obviously, like, it could

happen. And maybe there are examples where it did. But like, that's like, it's just so maybe the

acquired audience, not as many people know Bad Bunny or like know the lyrics to his songs,

but like a large portion of non-Spanish speaking Americans and like non-Spanish speaking people

around the world know all the lyrics in Spanish to Bad Bunny songs. They may not know what the

lyrics about them. Yeah, that would be a very different thing. There's a lot of local cultural

things that seems like what is talking about, you know, someone cheating with this one,

all this kind of relationship stuff. That's the sort of local nuances. But yeah, I mean,

yeah, that's the fascinating thing, right? But at the same time, you probably wouldn't have imagined

MSG being sold out and like 20,000, if not more, people singing Korean lyrics that doesn't look

Korean, by the way, like know every word to every lyric. And that's the amazing thing, right? Like

when things catch on, it's music, it makes people feel there's something about the artist,

there's something about how they're communicating that resonates with you as an individual.

And it is the foundational storytelling, we've always used music, it is so hard to describe art,

right? Like we can objectively describe, oh, there's art, but how you feel, why do you feel

a certain way when you're looking at a painting? Why do you feel a certain way when you're listening

to a song? It's really hard to describe that. And that's the amazing thing about what we're able to

do. And the really cool thing is you're able to take artists that otherwise, you know, perhaps

may not even have been able to be professional. And now they have a global audience. I don't know

how to express it other than they have some sort of God given talent. That's the best way I can

describe this kind of genius when they're able to express these things in a way that it just resonates

with people all over the world. Just instantly it's like, how do you do that?

It's clearly they're tapping something innate to humans, independent of culture, which absent data,

if you were to ask me and say, Hey, do you think that someone is inventing a brand new genre of

music today? Do you think it's going to appeal to people similar to them or all humans equally in

some way? I would probably tell you, like, know it's more about nurture than nature.

It's like we were talking about on the Nintendo episode, like there are always only going to be

a handful of Shigeru Miyamoto's in the world. But until recently and in the gaming industry,

it's still pretty much the case. Like, you need to also have the luck of being be in the Venn

diagram of a Shigeru Miyamoto, who happened to be the arcade cabinet designer at Nintendo,

in order for like the possibility of Mario and Zelda to happen. And like in music and

podcasting now in this world, like, everybody has the opportunity. Not everybody's a Shigeru Miyamoto,

not everybody's, you know, a bad bunny. Most people aren't. But you have the opportunity to be one.

I think that's so interesting. I was talking to Ted Sarandos about this.

He's on our board. And this was a number of months ago. But like, if you think about filmmaking,

it's still, as you said, one of the things about Nintendo is you have to have the resources

in able to build a game. And that's still not cheap. And it's expensive. And back in the day,

maybe you had to build the entire console in order to even have a chance of doing it.

But these days, you still like AAA game is a few hundred million dollars. Yeah,

very big product five years, very big productions. Right. And and sure, you can build an indie game

and so on and so forth. But but but it's still a very limited number of people that are able to

do that. But even in filmmaking or in TV series, the amount of people that used to be able to be

showrunners or like producing or directing these things, it was a fairly limited group of people.

Right. Yeah. Very socially connected. People hanging out in back lots in L.A., part of the studio.

And it probably mattered a lot not to diminish any of their talent, but it probably mattered who you

knew was an integral component and having talent. So you kind of had two different things. But in

the last few years, as the budgets have expanded, certainly in the Netflix case,

it would have been physically impossible to just keep this same set of producers,

directors, et cetera, right? Because they're just trying to make so much more content.

So one of the interesting things is the same thing is happening now where there's

lifetime directors and producers, not just doing sort of local productions, but actually now coming

to Hollywood and doing that as well. And I've seen it in my case. There's been a bunch of

Swedish writers and producers and actors now that are getting into Hollywood productions and it's

been fun to see. And not just the usual names, but actually like some more unknown talent

making its way as well. And there are more people trying, but there are also more opportunities.

And then obviously, as you mentioned on the podcasting side, the same is true there, but

it's true on both sides. That's a crazy thing, but there's also more competition, which is,

I think when people are talking about Spotify and criticizing it, that's the part I think is

the biggest misconception because they hear so many people who are trying and it doesn't work

where they're not making a lot of money of it. They're naturally sort of drawing the conclusion

that, hey, there has to be something wrong with the bottle. This model can't work. But in reality,

both things could be true at the same time. Right. There are a lot more people who are

failing, but there are also a lot more people who are succeeding. The total pool is so much bigger.

Yeah. And I think podcasting is much earlier in its maturity, so we may not hear it. Plus,

we don't have this sort of, I'm not sure a podcaster sees it as it's sort of given that

monetization is there and it needs to be there from day one. Whereas I think, obviously,

with the professionalization of music, that's a much bigger part of the expectancy. But that's

actually kind of a relatively limited part of our human history. It's not been, you know,

it's probably the less than 100 years that we've had recorded music and it being a form. And yet,

it's part of the copyright regime. It's part of like some pretty important loss. So I think it

comes with a different expectancy. I'm not saying that's wrong. I'm just saying just the arc of

history. And I was actually going to latch on to something you talked about sort of being creative

to. One of the things I often think about when you think about sort of the history of music,

going back to it, at the time of Mozart, if I wanted to create music, the reality is I had to

be a musical genius. Because I needed to hear every single tone in my head, every single note,

I needed to hear all the different instruments, how they would all play together. I could write

them down, but I could never hear them all being played at once, right? Many times the composers

of that era, they were only able to listen to their actual compositions like a few days before

the actual concert that they were doing and then making small tweaks. But by that time, it had to

be pretty perfect. And so sure, they could play a little bit on the piano, but then they kind of

needed to not visualize, but somehow internalize what that ended up being. So having a whole

orchestra is the AAA game equivalent. Yes, exactly. And so obviously very few could do that,

but also the process, the creation process was insane because you needed to do so much.

And then you move forward and think about the era of playing instruments and take jazz, which

is highly technical, right? Every single member in a jazz band is excellent at their instruments,

right? Like really excellent. And it's really hard. It's really hard to be that good of a musician

and play jazz. And then fast forward a little bit more and take someone like Swedish Avicii

as an example. He was a brilliant composer. He truly was, but he didn't really know how to play

any instruments. It turns out that technical musical proficiency may or may not be correlated

with making great music. Exactly. Exactly my point. But he actually had a different tool.

He had software, right? And he's actually, he was really good at that software. And you know,

all the knobs and, you know, plug-ins and all that stuff and how it worked. And a lot of

musicians are that way today. Like if you actually look at the workflow, it's very technical. It's

very detailed, it's very nuanced. Like I have this thing that I do where I probably shouldn't admit

this, but like I said on YouTube on evenings, I look at music producers, their workflows. And

when they get into the weeds of like decoding how they do stuff. Oh man, we were like having

just like our faces lit up. We walked in this studio and we're like, we think we are like

highly technical podcast producers. We think we're like top 0.1%. I think we are. You know

better. And then we walk into this studio here, you know, in Stockholm and we're like,

this is just a scale beyond our imagination. Yeah, we're very fortunate. And it's a lot of

fun because artists love just hanging out here too, because we've got kind of everything that

they like to use and to do. But my point is, I mean, if you think about it, it is a kind of

a very technical workflow that takes a lot of time to get into. And some of the parts of that

workflow, you'd have to watch probably hundreds of hours of YouTube videos to even decode or how to

do it and like start getting into it. And a lot of these today's composers are experts in their

workflows, right? Like they've kind of had their plug-in sets. They've got like these 16 things

that they say change together in order to create that one effect that defines them and so on and

so forth. So the barrier still, like if you said today, I want to start making music and I want to

make something that sounds pretty good. It's still quite high, that barrier. And it's getting

lower and lower and it's getting easier and easier. But I would still argue the bar for you to

make something that sounds professional would actually be a high quality song. It requires a

lot of time and a lot of effort. And it might be less capex and less equipment. I mean, you hear

the rise of the apartment music producer on the laptop, but it still takes an enormous

amount of self-training, mastery, creativity. My opinion is it takes a little bit too much to

get started. Like it's quite a barrier to entry still. I mean, if you just want to make something

like super simple, it doesn't take a lot. There's all Smuvel and all these other apps,

you can probably make something. But from there on to actually compose something getting into the

idea of the workflows, the plugins, all that kind of concepts, it's quite a lot to master.

And I think that's the potential power with something like AI obviously, right? Which is,

we're most likely going to have another order of magnitude of simplicity. On a personal level,

if you liken that to coding, I used to code, but I haven't now for about 10 years. And so

probably a little bit embarrassing to admit, but the barrier to entry or re-entry for me was

so high with all node, all of these different frameworks, even setting up my own workflow for

me to be able to do something in the Spotify ecosystem. There's hundreds of hours probably

for me to kind of reacquaint myself with all the stuff, right? How do I install the PHP server?

Yeah, exactly.

I got bad news for you.

Yeah, it's changed a lot, right? And so the amazing thing is I just for the fun of it,

like wanted to start doing stuff and I asked chat GPT to help me. And pretty much on a few hours on

a Sunday afternoon, I was up and running. And because of that sort of starter help, I had my

own sort of environment set up, I was contributing code, I was iterating.

Did you contribute code to the Spotify code base?

No, they won't let me do that yet. So I got a little bit more work to do before they allow me.

You got to pass a coding test.

Yeah, I think out of spite, they probably won't let me do that anyway. They pride themselves on

I don't have any access to any of the actual systems. But it was such a liberating feeling

because it made the re-entry for me so much easier and so much more enjoyable.

And so I think about that. So if you think about the world of music now, there are tens of millions

of people in the world that probably are recording stuff, but there's 100, 200 million, something

like that, that's playing some kind of instrument and expressing themselves musically. There's

something that actually sounds pretty good. Now, again, what is that going to do with the music

industry? And is it really going to be that all of a sudden everything becomes commoditized?

I don't believe so. Because we've seen time and time again, the quality rises to the top and

actually becomes even more valuable in that world, photography being the sort of key reference point

when Instagram came, oh, no, no one's going to want photography, but price of fine art photography

actually increased, not decreased. So my view is you're going to see both extremes. You're going

to see the middle getting wiped out, more people participate, but the very, very top is probably

going to increase in value as well. And they'll figure out other things to do with this technology.

But it is pretty cool for humanity. And we talked about that being able to relate and

expressing ideas. Every permutation of every cultural idea will finally be able to be expressed.

We'd never been in a world where that's been possible before. And it'll be really fascinating

to see what that means for our understanding of other cultures, our ability to relate to other

people, some really cool stuff. This has kind of like already happened over the past few years in

podcasting too. You probably know better than me, millions of podcasts out there.

Two million.

Two million plus I'm sure at this point.

It's about a little bit more than double that now.

Really?

Yeah, yeah, yeah.

Whoa. So it's kind of like these are numbers like you're talking. There are four to five

million people out there that are like, I can make a podcast. And yet the very, very top ones

are still of a quality bar that is so high and getting higher. But I've heard you guys talk about

this that you now can take shows that are in a specific language, in a specific region,

that you can identify based on the data. There's something really cool happening here.

And then bring them to other around the globe to other audiences.

Yeah. And right now, obviously, that's a manual process where we have to hire voice actors that

reenact that we have to kind of tweak the script a little bit to make it culturally relevant.

And obviously, this won't be news to you. But perhaps to some of your listeners that,

I mean, already, probably today, it won't be as high quality and the cost would be too

expensive to express this. But there's there's no reason technically why you guys and I,

this podcast couldn't be done right now in Chinese with our voices.

Well, I was going to say as a so you have X now.

The AI DJ that speaks many languages.

Well, we've had him speak Swedish for sure. And he obviously doesn't know Swedish. But it's

only today available because the intonation is a little bit off. So it's really only English

language content. And honestly, that's probably just a training problem. So if we were training

the models on specific languages and not just X voice per se, I think that would have been

totally possible. And again, the largest problem today is the cost per minute would be too high

for most podcasts. I think you guys could actually support it probably with your model,

but the average podcaster couldn't. You know, I don't know if you guys seen this,

but like Mr. Beast has like a Spanish language channel. I don't know if he has like, you know,

French one, et cetera. But we certainly has a Spanish language computer translated or humans

rerecording. I think it's humans rerecording it at the moment, but it's huge. I think it may have

like 15, 20 percent more subscribers, additional subscribers, not more than what the English

language one has. So it's like a really big deal. And I think that's like the next step,

right? Like where, where, you know, in your case, like why wouldn't you

take the LVMH episode and make it all in French or whatever?

It should at least be in French.

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to the show. We have become quite the payments nerds this year and have a much deeper appreciation

of just how important the modern payments industry is to the world. Money movement fuels

literally everything in modern society. And Modern Treasury is right there at the heart of it.

Yep. And money is moving to a real time future. In today's world, consumers expect instant access

to goods and services and businesses need real time ways to track revenue, respond to customers,

etc. So with software powered business models, markets that never sleep and faster ways to pay,

it is clear that the instant economy is here to stay ahead. Businesses just need to move

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Yep. And that's where Modern Treasury comes in. A payment operations platform designed for this

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With Modern Treasury, your company can move money faster and more efficiently than ever,

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your payment operations and join the instant economy, head on over to ModernTreasury.com

slash acquired or click the link in the show notes and tell them Ben and David sent you.

I've been uncomfortable until now using any sort of AI for any seconds of audio in our

podcast. Like we always played around with the D script replacement of certain words,

but then we never shipped it to production because I was always like,

it doesn't sound quite as good and everything should be hand mastered and acquired. And then

for the first time on a recent episode, we used an AI tool that our editor found it dramatically

increase the quality, the sound quality of the episode based on the mic that the guest was using.

And once you start doing that, you're like, well, I mean, shouldn't AI do all sorts of

things to our audio? Yeah. Yeah. I mean, I think we're only in the beginning obviously,

and that's hugely exciting for creators like yourself, but it's also scary, right? Because

it's totally possible for us to make an entire episode where we're saying totally different

things than what we're saying now. And it at some point in the future might be virtually

indistinguishable from the real thing. Yeah. And platforms probably have a role to play in

authenticity. That actually raises the value of platforms because platforms like Spotify,

YouTube, you actually can point to, we know for a fact that this was created by the creator and

we can stamp it and say that you can trust this. Or approved by the creator. Yeah. No, I think

you're entirely right, which is why there's been a lot of debate around the Elon Musk,

the subscriber thing. And actually, as usual, when you tease it out, there's many different

things in that controversy. But perhaps the most potent and most interesting one has been the one

around the notion and idea around staking as a way of producing the bot thing. And I feel like so

much has just ended up being sort of, hey, do I have to pay in order to reach my audience now?

That kind of switcheroo. But I think the more interesting one was kind of like, well, forget

about if it's paid or not, but just increasing the cost of spam, but also increasing kind of

the quality of verification and being able to truly understand what's what in the end.

Twitter is so interesting that we were talking with a friend who's a creator peer, but

his platform is Twitter and you can't monetize Twitter. Like there's no rev share. Yeah.

Traditional social platforms like that. You've kind of got them on one end of the spectrum.

You've got Spotify, well, maybe Spotify podcasting and then Spotify music at the far end of the

spectrum. And then you've got YouTube kind of in the middle. How do you think about what role

for monetization, maybe especially on the podcasting side, Spotify should play for creators?

Yeah, I mean, our goal is to be the best partner of creators. Not the only partner,

but just the best. And win by basically not forcing the creator to do something,

but just offering a really good way for creators to work, low friction, but also lots of potential

to customize their business the way they would like to. I think for some creators,

the monetization aspect is absolutely critical. They may even be a gatekeeper

or a gate between them doing something on that platform or not. And maybe they have switching

costs relative to what other stuff they're doing. Think about a creator that's in a traditional

media ecosystem. If they want to take their thing, OK, well, maybe I will be less valuable on cable

or whatever other thing I'm on. That would be one end of the spectrum. And then you have another

creator that may have an entirely different business model. I don't know about your other

Twitter creator friend, but perhaps that creator either has a different business model somewhere

else. Well, you have to. You can't have a business model on Twitter. Yeah, you can't do that. But

the question is if that's truly a creator or you could argue VCs, a lot of them have Twitter

as their marketing channel. That's true. Just top of thumb. And podcasts. Yeah, there are many

different ways and the needs are different, which is why for some of them, they would probably

happily forfeit all the monetization because they feel like they have such a strong other business

model on the back end. The customization point is really interesting too. And I think that's

the really interesting nuance about YouTube, because on the one hand, I think YouTube for

creators is amazing because you can completely abstract the business. You just make the content

and they take care of the business and you get a check. On the other hand, I can't even remember

if we have ads on YouTube ads on acquired content. I think we don't because do we want a

Sprite ad in the middle of this? No, we want creative control. And you lose that if the

platform is too opinionated about what's happening with monetization. Yeah. Most of us as platforms

go, we have to start out very simple with our models. And it takes a long time to then change

that default setting. But I mean, I even talked about the music. It had to be very binary. It had

to be on or you had to be off. There was kind of no in between like, well, let's do windowing.

Let's do this and that, et cetera, because that was the only way. My biggest problem was getting

everyone off of piracy into this other model. And I needed the consistency of user experience.

That was the model. Now, the next decade of music may look very different. It may look

like something where there's going to be a lot more options for what a creator chooses to do.

I certainly would hope so. And we're certainly going to work towards that avenue. But any change

that we're doing with the scale that we're having is going to be there's going to be winners and

losers. It's almost impossible to find a single thing we could do that's just universally going

to help. And that naturally naturally creates the constraints that it's more of a one way door than

a two way door where we can kind of like iterate and invest on it. So I'm fairly certain that like

what you're seeing now in this world of platforms and creator ecosystems is if you asked YouTube,

like, hey, if you could redesign the platform right now, would you just make all the same

decisions you made about discovery and monetization all over again? The answer would probably not.

Almost assuredly, no.

Right. As evident actually by shorts, that works a little bit different on their platform, right?

And they're all different, too, because shorts, obviously, you have many more potential

impressions over a shorter period of time. And, you know, an average YouTube video has been

X minutes. And that means more interstitial ads. And then we have host read ads or the equivalent

of sort of more native ads or paid promotional ads that both Instagram and YouTube. So we're

living in an ecosystem where on the one end, 10, 15 years ago, we were very primitive in terms

of monetization. And today it is very, very different. Yeah. And I kind of think about it

in a way like this is not too dissimilar from mom and pop shops. They've sort of like coming

up in the U.S. as a cultural norm. You know, on the one hand, you had physical infrastructure,

urbanization driving these kind of things where we both created these mega Walmarts of the world

as a direct consequence. But actually the complete opposite was also true. We had this hyper local

thing, et cetera. And if you think about it today, these mom and pop stores, the ones that are still

around, they're hyper distinct in what they're offering. They're really focused on community,

many cases, really knowing your customer. They're offering events around their stores.

They're offering obviously online things through Shopify and so on and so forth.

And in a way, I think about it in a very similar way for the creator economy too. We had to start

very simple. It was based on a very simple model where there were free platform ad supported

platforms and paid platform. All of that is kind of not merging together. In addition to that,

just monetizing the content in itself, it's probably becoming an auxiliary revenue sources

around them 360. Very similar again to mom and pop shops where you could do live events,

you could be doing merchandising, you could build another business like Kylie Jenner or something

on the side of it. And what's cool is this is true at scale now too. Taylor Swift monetizes

through everything you're talking about the same way mom and pop coffee shop does. She just does it

first. It looked risky and then turned out to be, I don't think it's blowing smoke to say,

you guys save the music industry. Like it is the thing that while the industry was in dramatic

decline, ended up making it so that the music industry now generates more revenue than it ever

has before with by far the largest thing being streaming. At the same time, if you're a Taylor

Swift or you're any big artist, you're not making as much money streaming as you would have on CD

sales and the CD sales heyday. So you sort of have to figure out what the new business model

looks like as a creator and you have to figure out what your sort of unique constellation of

revenue streams are because it's not just going to be Walmart or Target is going to cut me the

check from selling CDs. Yeah, the music industry is healthier than it's ever been before. But

certainly when you think about it from a singular artist point of view, there was a point in time

where the majority of the revenue could be derived from recording music. But the challenge

to that, what I would say is that the time in history where that was true was actually very,

very short. It was the heyday of the CD era, right? Yes. That wasn't true back in the radio era.

And so the question is, what's the analogy? Was it that like that's the right model or was it

actually that having multiple revenue models was always the answer? But there happened to be a

moment in time where recorded music was sort of the prevalent revenue source. And I don't know,

I mean, I certainly don't say that to try to shy away from from sort of our role. And my goal is

just like, I think these people generally, whether you're a podcaster, whether you're a musician,

are insanely creative people. And I love seeing people like yourself or David or Sandra or

Taylor Swift or whoever, or Rogan or whoever that are like really deep on whatever they're

passionate about. And they're able to get across the microphone and having lots of people that

can resonate with them. That opens up like so much more opportunity. One of the things we learned

on the LVMH episode is that Rihanna became the first female recording artist billionaire

because of Fenty Beauty. Imagine that in the CD era, like that wouldn't have happened.

And that's the insane part too, right? Because that fame, in a way, it doesn't necessarily,

if you think about Elvis Presley, what time did it take for Elvis Presley to get to a

billion people that had hurt him? I don't know, but I would venture to say it probably took a

decade at the very least, maybe two for him to do that. And sure, it was worth a lot,

that billion then, but it was hard to scale to that. And then you think about how many artists

today get to be heard by a billion people. And actually that number's way higher and it's way

faster for you to do it. Now, but because it's not as scarce anymore, perhaps the societal value

slash monetary value, whatever you want to put it on it, maybe it's not the same because it's

not as scarce. But as you said, if you're smart in how you do it, and this is the sort of the

side guys on how you execute it, it doesn't work when it's not authentic. So you take the Rihanna

example, it worked because she had a way to do it, which was authentic to her, but also

authentic to her audience. If she would have tried to flog something else that she didn't care about,

it probably wouldn't have worked. And that's the unique thing when you realize and you think about

it yourself as an enterprise and JC. I'm a business man.

Exactly. He sold his champagne company at LVMH recently or 50% stake.

Yeah, but back to that, they're incredibly talented artists and they're incredibly talented

business people as well.

Yeah. Well, as we start to wrap up here, there's one question that I've really wanted to ask you,

which is, as I've studied Spotify over the last month and a half preparing for this,

it seems like you guys have been very intentional about the way that you grow and having a

completely different strategy to add each next 100 million users. You guys are now over 500

million users. A, I didn't know the scale of that before I started researching. It's

pretty unbelievable. And B, I sort of thought that, well, they just let compounding do its thing.

But I think you guys, it's not well understood by the public or certain wasn't by me,

how you change strategy in order to go get that next group of people each time. And I'm curious,

as you reflect back, what advice would you have for founders who are scaling to sort of

continually stack these S curves on top of each other and do completely new different

business activities while maintaining the cohesiveness of one platform?

Yeah, I think it's a very astute observation that you're making that it's not been sort of

being able to just ride on this macro tailwind and just do that. But actually,

it's been many different things that's driven the success of Spotify. And the way I oftentimes

talk about it is, if you think about an exponential curve, if you really zoom in on that exponential

curve, it actually is like a lot of different linear curves stacked on top of each other that

creates that kind of exponential curve. And this will sound like a little bit of cliche, but what

I've really realized, perhaps even in just the last two, three years more, I knew that I could

talk about it, but I hadn't truly internalized it is to be intentional about the culture you're

building, right? There are many different cultures that can be successful, but there are tradeoffs

with each cultural expression. And oftentimes today, what I see with younger entrepreneurs

is that they're unintentional about what type of culture they are. So they flip flop between them.

So as an example, we all many years ago, I was certainly enamored with Google, right? Like the

20% projects and all these different things, those are cultural expressions. It's not the culture

itself, but it's the cultural expressions. So that's where the early innings of Spotify's culture

was like, I'm sure almost every Silicon Valley company of that era. And then we all switched,

maybe became Facebook for a while. And we all kind of took that of like moving fast and breaking

things and so on and so forth. And then you had like an Amazon kind of model where on the one

end, it was incredibly long term, but also maybe a little bit more bottoms up innovation than top

down. And then you see another cultural expression with like a Tesla where incredibly top down,

incredibly focused company actually for this type of scale that they're doing. And my point is,

I think the most important thing is to really, really think through and be really, really

diligent about the culture you create. And we certainly were victims of that at Spotify,

because we had taken all these different things. There were certainly things that were Spotify,

but we kept talking about all these other companies and we're like, well, we like this

thing that Amazon is doing, so we should copy that. And then, oh, we like this thing that

Google's doing, so we should copy that. And actually what ended up happening was we were at

one point in time, almost like a little bit of a Frankenstein monster, because we had

some of the stuff from everyone. And we had some of the bad stuff from everyone too,

instead of sort of really leaning into that. And then sort of without really being intentional

about it, we started iterating and improving on that culture. And I often get this question. So,

for instance, you know, when we launched certain things, people are like, well,

you know, this thing wasn't very great. And they have a mental model of what they expect

of Spotify. And the mental model may be, hey, your music app is so amazing. How come

in 2019 your podcast just sucked? And so that must mean that podcasting will work,

having a separate app must be the right thing to do, etc. And what people didn't realize is we're

actually one of these companies that happily will release something out that's not great.

It's probably have the right strategy, but execution isn't super crisp and perfect.

You said this about audiobooks at Stream On. You got on stage to the public and said,

we have audiobooks. I don't think it's great right now.

Yeah. And it's true. And it's not great right now. But we will make it great.

But that's a different culture, right? And that's one where we're iterating on.

But then the flip side of that would be something like AI DJ, where actually, I think it is really

high quality. And unlike a lot of other products that are AI, where it's really kind of wonky,

we've made something that's actually working and is working on very large scale, probably one of

the most popular AI products out there now in terms of reach. We don't really count it all that

much, but it's huge in terms of moving our metrics in a pretty substantial way.

Like Discover Weekly huge?

Yes. And I think it'll even outdo Discover Weekly. So it is really cool. But we had to be

super intentional about it because we knew that it was an area where we had to think through the

consequences of this because it would be highly scrutinized. So as you can imagine, one of the

benefits by choosing to do it for music and not for podcasting was obviously that it would have

been horrible if we somehow summarized or said something based on a podcast that wasn't safe or

culturally attuned to say. And yet with music, it's kind of the the primary candidate. Plus,

it's the one where we have a huge audience that's listening in the background every day

and they really want more context. And my point being is understanding when to do which

and understanding that both of these cultures are perfectly fine, but just being very

intentful about when you're choosing to do what and having the right mental models and not sort

of becoming half-assed in everything, but actually become really good at what makes you you.

And I would say that probably other thing that's been hugely important and that I wish more people

talked about it is there are not many of us, but there's a few of our few companies like Spotify,

which in a way has been heavily influenced by Silicon Valley, but we are not Silicon Valley

first. So that sort of notion of being on the side and watching and sort of iterating in a corner

Spotify is definitely sort of not the overnight success. It's been a sleeper for many, many years.

And when you started, the common wisdom was anybody who's starting an online music thing,

it will die. And I think you sought advice from hundreds of people who all told you don't do this.

This category is toxic.

Yeah, you're exactly right. And but also because we were kind of doing this in Europe

for the first few years, we started getting some real first learnings. And I think this is like

really key because if you think about the ones we talk about as iconic companies, the Apples, the

Amazons of the world, we all tend to forget a few things. But one is that many of them are quite

old at this point, they're 20 plus years old. So they've had a time to refine their cultures then

and getting that that right. And the other thing is they almost started in empty ecosystems.

And Amazon, sure, there was Microsoft, but they started an internet company in Seattle, right,

where there was a software company that was really big. Yeah, but it's not the same culture.

They didn't start it in Silicon Valley, same culture.

And I like to believe that that culture became very distinct also by having to figure out its

own things from first principles and from learning rather than just being able to gather

through osmosis. And that might might have been going slower in the beginning to then go faster.

But I think it's been hugely important for Spotify's journey. And we're I feel like we're

just right now getting into our own of like what is our culture in a very unique way that

it's probably the most exciting thing for me at the moment, still being here at Spotify 17 years.

This is so cool. I love this as a final thought from you because it so matches something that

surprised us from the LVMH episode. It's just like all of those brands, which are like, you know,

most iconic things both owned by LVMH and ones that aren't like Hermes and, you know,

yeah, they are all end of one. You can't copy them. They don't copy anybody else.

They are their own thing. If you're going to be around for 400 years,

that is by necessity the case you're not taking from anybody else. Yeah.

And I have to imagine it's hard for you internally and that it takes a decade or two to figure out

what it is that makes you special, too, because when you started, you were the company that

figured out how to make it so music felt like it was on your hard drive and play fast when it

wasn't through a hybrid of peer to peer and client server solutions. Yep. And that's not at all.

Thank you for summarizing that. It has to be a very like

methodical individual journey, too, to figure that out.

Yeah. And that's why I said, I mean, I used to talk about culture, but I would honestly say

it was probably two, three years ago where it really clicked for me, like, oh,

that's what it actually means. It's not 20 percent work time. That's just an expression of a culture.

The more interesting thing is the true culture of what makes Google Google or an Amazon Amazon,

et cetera. And I don't even know whether that's possible to change going a decade forward.

That's probably the most exciting thing for me to still contribute to and work on is the culture.

And and I think that's what's driving at the moment. Pretty much every major decision we're

making. Well, Daniel, thank you so much. Thank you, guys, for coming. Really appreciate it.

Thank you for hosting us. Of course. Well, listeners, thank you so much for tuning in

for this conversation with Daniel. We'd love to hear what you think, of course, in the Slack

at acquired.fm slash Slack, where we're always hanging out discussing episodes after we release

them. But there's a new Spotify feature that we've been playing around with, too. David, what is it?

Yeah, Spotify just launched this stream on recently. There is a question on the page in

the Spotify app for this episode that says, what did you think of this episode? And you can reply

and leave your thoughts right there. Awesome. Well, thank you so much, listeners. Check out in

any podcast player ACQ to with awesome recent interviews and many more to come. I think we

have the best interview lineup that we've ever had here on acquired coming up. So subscribe to

to get access to that. And I think that's it. Listeners, thank you so much.

Thanks to Spotify and Daniel. We'll see you next time. We'll see you next time.

[从音乐到音频宇宙：Spotify 如何重塑内容生态与创作者经济]-[Spotify CEO Daniel Ek]

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从音乐到音频宇宙：Spotify 如何重塑内容生态与创作者经济

打破格式界限：统一音频体验

商业模式的演变：从广告支持到付费订阅

全球化与文化共鸣：Bad Bunny 与泰勒·斯威夫特的启示

创业哲学： intentional 文化与 S 曲线增长

AI 与未来：降低门槛与提升质量

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[从音乐到音频宇宙：Spotify 如何重塑内容生态与创作者经济]-[Spotify CEO Daniel Ek]

📋 Summary

从音乐到音频宇宙：Spotify 如何重塑内容生态与创作者经济

打破格式界限：统一音频体验

商业模式的演变：从广告支持到付费订阅

全球化与文化共鸣：Bad Bunny 与泰勒·斯威夫特的启示

创业哲学： intentional 文化与 S 曲线增长

AI 与未来：降低门槛与提升质量

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