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How Spotify is Upending Music Licensing for Podcasts

Spotify has been busy. From 2015 to the start of 2020 the streaming service hosted around 750,000 podcasts. Midway through this year, they announced this figure was at 1.5 million, meaning the same number of podcasts were added in the first 6-7 months of 2020 as there were in the previous five years.

However, this is just a drop in the ocean of the extended world of podcasting. We are steadily closing in on 40 million podcast episodes, essentially doubling since 2018. Many behavioural factors are driving this growth with smartphones, smart speakers and mobile data proliferating throughout the world. Furthermore, with the amount of time we spend staring at our screens, a podcast is a welcome break on our eyes.

Spotify’s dip into this ocean has not been without a cost. Early 2019 acquisitions showed their commitment to the podcasting space with Anchor and Gimlet, not to mention huge exclusive deals with the likes of Joe Rogan, Michelle Obama and Addison Rae. What this article will show is how in only a year, Spotify has driven the landscape of podcasting away from the democratized open ecosystem that has endured since its mid-noughties inception to one that more closely resembles traditional broadcasting.

The Quest for Content

Spotify’s aggressive push into podcasting has given it more bargaining power, something it needed after being at the mercy of major label licenses for years. In a music streaming market that is saturating in the West, the key to more revenue and even profitability lies in attention, retention and advertising, all things that podcasts can deliver for Spotify. The result has been undeniable: despite leading the podcast space for years, MIDiA reports that Apple has fallen behind Spotify as the most widely used podcasting platform in Q2 2020.

Spotify podcast MIDiA

Spotify has added 750,000 podcasts in 6 months and increased user engagement with podcasts by 5% over the same time span. Surely, there is an inevitable substitution effect for the 21% of Spotify’s 299 million users now spending more of their time on podcasts. So what does it mean for rightsholders in the music industry when the world’s largest streaming platform is converting more and more music fans to podcasting fans?

This isn’t something that is being taken lightly. Execs have already vocalised concerns about the potential effect of podcast consumption on music listening. Combined with the fact that the average amount of time spent on music listening decreased in 2019, it appears that podcasts are proving to be a legitimate threat in the battle for consumer attention.

Whilst we could debate the extent that podcasts are cannibalising music streams, what cannot be ignored is the fact the music and podcasts are siblings in the same audio family. Pex found that 17% of podcasts included music and it is a feature that you will find across many of Spotify’s leading exclusives. In a similar way that artists can add skits and spoken word segments to enrich their albums, music is an essential part of the enrichment of the podcast experience.

If anything, the use of music to elevate podcasts is what should put the music industry in an enviable position. Rightsholders control a key ingredient for cooking up a quality podcast. Furthermore, instead of music simply being an intro theme or segment break, an artist can extend their brand through a podcast of their own. Some have already found a lot of success doing this.

If anything, the use of music to elevate podcasts is what should put the music industry in an enviable position. Rightsholders control a key ingredient for cooking up a quality podcast.

George Ezra’s candid conversations on George Ezra and Friends is one of the success stories for artists engaging with podcasts. Even producers are getting involved with the likes of Rick Rubin and Danger Mouse taking on podcasting projects of their own. George the Poet is another wonderful example. Not only has his podcast elevated his profile, but it has also been acclaimed in the podcasting community, winning multiple awards.

The success of these podcasts shows us a few things. One is that a lot of the skills needed to be a successful artist in the social media age, such as developing your voice, authenticity, personality and energy, transfer into podcasting exceptionally well. More importantly, stories are at the heart of songs and records. The best artists are great storytellers so it’s inevitable that creating engaging stories through podcasts comes naturally to them.

From a consumer perspective, fans want to get close to artists. Whereas engaging with a traditional podcaster might be primarily through the podcast itself, a fan’s relationship with an artist is much more multidimensional. Podcasts provide a space for artists to be vulnerable and speak freely to their fans for an unrestricted amount of time. What this facilitates is a profoundly intimate experience that can’t really be recreated on any other medium.

Spotify’s young and culturally literate audience create the perfect space for artist podcasts to thrive. Should we be seeing more artists doing this? The costs involved are marginal compared to producing an album or even a single. Of course, narrative podcasts with extensive sound design can be crafted with the same degree of production as a hit single. Even so, where a fan can skip through songs and might not even listen to the whole thing for even three minutes, podcasts are hardly skippable. Stitcher’s podcasting report found that even as listeners spend more time listening to podcasts, most of them still make it all the way through to the end of an episode. If attention is what artists and Spotify are after then podcasts are an excellent bet.

From Headphones to Screens

Podcasts are an episodic medium and bear more resemblance to television than they do to recorded music. Therefore, it’s no surprise that we’re starting to see podcasts turned into TV shows with Song Exploder’s recent Netflix deal, which is a great example of how music and podcasts are a wonderful match.

Song exploder

Music podcasts span across a wide range of topics from musical analysis, like Song Exploder, Sodajerker, Dissect and Tape Notes to the music industry, such as CMU’s Setlist, Trapital and The Digital Music News Podcast. There are even crossovers like Disgraceland’s true crime and music history mashup. With music seeping into so many aspects of our lives, no topic is really off-limits.

Netflix has also been incredibly active in the music space. From documentaries about Taylor Swift and Quincy Jones to reality shows like Rhythm and Flow, they’ve been seriously investing in building cultural capital through music-focused content. It’s clear to see, therefore, why Netflix appears to be the perfect platform for music podcasts looking to take the leap into audiovisual. This also makes sense for Netflix on a more strategic level – building partnerships with other pure-play services like Spotify is a logical step towards combating the bundling strategies of Apple and Amazon.

If podcasts keep growing at this rate then Spotify is going to be the host of millions of items of raw intellectual property. Chernin Entertainment’s deal with Spotify to adapt podcasts for TV and film could be the start of a new gold-rush for IP. And with this IP, just as we have iconic syncs in film and television, we could see irreplaceable music moments from podcasts which fans will be dying to see visualised on the big screen. Licensing music to a podcast may not be a sync deal, but it could be the foundation for a lucrative one down the line.

For studios, it’s a great way to test the waters before committing to a large production. In a post-pandemic world, the less risk involved in the production the better and knowing an audience already exists, as Netflix found with The Umbrella Academy and The Witcher, can prove to be the foundation of a hit.

The opportunities for podcasting in the music space are varied and significant with the potential to translate into audiovisual franchises.

The opportunities for podcasting in the music space are varied and significant with the potential to translate into audiovisual franchises. Those that really commit to the medium will benefit more than others, with the majors and BMG’s podcasting activities as good examples of how to get a foothold in this space. However, for many rightsholders simply looking to get more out of their catalog, the licensing realm can be messy and challenging.

The Wonderful World of Music Licensing

Licensing music for podcasts is currently a bit all over the place, to say the least. A lack of any authoritative industry-standard has set a market where fees can fluctuate from one party to another. This is exacerbated by the fact that some podcasts end up pulling in a significant amount of revenue whereas others barely make any. How can you know what to charge if even the licensing party has no idea what they’re going to make?

Whilst step deals based on the increasing success of a podcast might make sense, the licensing picture gets more complicated as it becomes harder to establish exactly what a podcast is. On the surface it’s simple – charge a fee for the master and publishing and/or a percentage of ad revenue. But not all podcasts are made equal. How does the fee change when a podcast is downloaded rather than streamed? Is it exclusive to one platform or is it widely distributed? What if the podcast has a visual component? What if it’s live-streamed? What if it earns ad revenue? What if the podcaster receives one off sponsorship or endorsement? Whatever it is, if it uses music then it needs to be licensed.

Though the medium of podcasts remained relatively stable for years, we’re now seeing accelerated changes in the way they are created, distributed and consumed. For example, Spotify recently added polls to their podcasts, introducing interactive elements into what has so far been a passive medium. Who knows what a podcast could end up being in five or ten years time. In the meantime, if rightsholders want to maximise the value of their catalog through podcasts, they need to pay attention to these developments and be prepared to make the licensing process as efficient and scalable as possible.

If rightsholders want to maximise the value of their catalog through podcasts, they need to pay attention to these developments and be prepared to make the licensing process as efficient and scalable as possible.

Given the complications and costs involved in the licensing process, it’s no surprise that the podcasting community often leans towards alternative solutions. Some use music unlicensed and claim fair use, arguing that their podcast is a form of education or critique. Others make the conscious decision to refrain from using music at all, often at the expense of quality. Even those who do license music can end up having to remove episodes due to the mounting costs of licenses, which is exactly what happened with the aforementioned Song Exploder.

With no set standards, podcasters are typically at the mercy of music rightsholders and with few clear solutions presented by the music industry, it’s no wonder that podcasters are being deterred from licensing music. Whilst new services are starting to appear for licensing commercial music in podcasts, such as and SongsForPodcasters, the best solution currently is for podcasters to look towards production music libraries.

Spotify’s Big News

So far, production music has been the most convenient way to get music into podcasts. However, this has now changed to a certain extent with Spotify introducing a new feature this month that allows podcasters to put full songs into their podcasts. Previous playlists like Your Daily Drive have allowed music and podcasts to live alongside each other, but this move takes things to a whole new level.

The ability to integrate music is done through Spotify’s podcast production platform Anchor. Instead of needing to go through the licensing process, podcasters can add a song that’s on Spotify to their shows, and any streams of those shows will generate royalties for the rightsholders. Now, the use of the song can’t be played underneath or parallel to the podcast. It’s more like an alternating feature.

It’s a move that is long overdue but regardless, rightsholders may still not be happy. There are plenty of podcasts outside of Spotify, and the question now is how many of these podcasters will flock to using Anchor knowing they can use music without any issue. It remains to be seen what effect this will have on podcasters outside of Spotify, music licensing in podcasting and of course, let’s not forget the challenge this presents to radio.

Music has a big role to play in podcasts and there will still be demand for licenses for music to play alongside a podcast as a theme or in the background. The emerging wellness and mindfulness trend is a brilliant example of this. There’s a reason why mindfulness platform Headspace hired John Legend as their Chief Music Officer. The synergy between spoken word and ambient music is a fundamental part of the mindful experience. For helping people meditate, sleep and focus, the right music is needed to help the platform be at its best.

Music has a big role to play in podcasts and there will still be demand for licenses for music to play alongside a podcast as a theme or in the background.

It may come as a surprise to see an almost spiritual relationship between music and spoken word. However, in a country like India, that’s exactly the role music has played since recorded audio landed on its shores. For over a century, religious content like prayers and chants have been a key staple of audio broadcasting. As mentioned throughout this article, no topic is off limits and music can enrich the audio experience no matter what form it takes.

The World’s Your Oyster

It’s important to remember that podcasting is a global medium. For many emerging markets, the cost of data for high definition streaming is simply unfeasible for a large segment of the population. Podcasting occupies a role where consumers can still be entertained and engaged at a fraction of the cost. This makes podcasts an interesting avenue to explore for those looking to expand into markets across Asia, Africa and Latin America.

This global market is still largely untapped and with a higher demand for localised and diverse voices in podcasting across the world, music can play a key role in engaging with this need. No matter what voices and content emerge in this production boom, there is always going to be music that can elevate a podcast and help it stand out in an increasingly competitive market.

Spotify may have made it easy for podcasters to play music in their podcasts. However, there is still an abundance of ways for music to be used that will still require a license. It’s this usage that has the potential to create truly inspiring, engaging and transcendent content. All that needs to be done is to connect the right podcaster to the right music and make a deal. It should be simple, right?