Four revelations from Amazon Music's podcast plans
Amazon Music and Audible will be adding podcasts to their respective services in the coming months. The news has already come out on sites like Billboard, GeekWire, 9to5Mac and The Desk, but I’ll give a brief rundown of the details before discussing their implications.
Earlier this week, a group labeled the “Amazon Music Podcast Team” sent an unsolicited blanket email to several podcasters, with the headline “Join Amazon Music and Audible Podcast Services.” A screenshot of the email is included below.
(As someone who used to release a podcast regularly, I received this email myself. You’ll notice the message asks that the information remain “confidential,” to which I repeat 9to5Mac’s word of caution: “There’s of course no way to unilaterally demand confidentiality — if you choose to write to someone without first asking them to agree to keep things private, they are under no obligation to do so.”)
Aside from the addition of podcasts itself, there isn’t that much new information in the email copy alone. For instance, the stat of “55 million customers” is the same one that Amazon Music announced back in January. There’s also no specified date for when podcasts will be available on either Amazon Music or Audible.
What’s more interesting is what podcasters see when they click through the submission portal — hosted on Amazon Music Backstage, a service that the music platform uses to get early feedback on new features — and are taken to the official Content License Agreement.
There are four main themes that jump out at me from this whole situation that I want to discuss:
1. Organization and user experience
The first issue is the way Amazon’s podcast team is organized relative to the company’s other music and audio operations. This becomes clearer if we compare the way Amazon is handling these operations to that of Apple and Spotify:
In general, there are two choices streaming companies can make with respect to music and podcasts: Whether to combine or separate the teams on the one hand, and the apps on the other hand. The former has major implications for company culture and strategy, while the latter has a direct impact on the end-user experience.
Apple separates both: They have two separate teams and apps for music and podcasts, namely Apple Music and Apple Podcasts. (Users were formerly able to access downloads of both digital music and podcasts via iTunes; that ended in June 2019, when Apple unbundled iTunes into separate apps for Podcasts, T.V. and Music on desktop.)
Spotify also has two different teams internally for music and podcasts, with two vastly different cultures and business-development priorities. But unlike with Apple, Spotify users can consume both music and podcasts on the same, central player.
Amazon’s setup remains somewhat unclear to me, but it seems like the inversion of Spotify: Same team, different apps.
Let’s break this down. The fact that the “Amazon Music Podcast Team” sent that blanket email to podcasters suggests that Amazon’s podcast operations are being handled under the Amazon Music brand. To my knowledge, there was no separate email sent to podcasters specifically from Audible, implying that Amazon Music is managing this whole process across all of Amazon’s services. (Audible does currently accept pitches for scripted podcasts for its Audible Originals division, but does not freely distribute third-party podcasts.)
But the email’s contents, and the accompanying submission form, suggest that any qualifying podcasts will be delivered to not one but two separate apps, namely both Amazon Music and Audible.
With this context, I think Amazon Music and Audible will quickly arrive at a situation where the majority of the content on their platforms will look the same, thanks to a deluge of third-party podcasts. As a result, either they will merge into one singular platform, or one of them will have to shut down.
At worst, without some fundamental change in organizational infrastructure, the similarity of Amazon Music to Audible would resemble the challenges that Alphabet (Google Play Music vs. YouTube Music vs. YouTube) and Microsoft (Xbox Music vs. Zune vs. many other music stores) have faced with their consumer-facing music strategies. Offering several differently-branded services that actually contain the same content as each other just creates more bulk, redundancy and confusion for the end user — e.g. “why should I download YouTube Music if I can just consume all the music I want on the YouTube app anyway?”
Over time, organizational bulk naturally trims itself. Google Play Music is shutting down this year; Microsoft’s consumer-facing services have all but evaporated. I predict the same thing will happen to Amazon Music and Audible once they both add podcasts; especially for a company like Amazon whose brand revolves around optimizing for convenience, it only makes sense to merge multiple forms of audio into a singular, smoother app and user experience.
To be clear, this doesn’t necessarily mean there has to be only one price point. An Audible membership currently costs more than an Amazon Music Unlimited subscription ($14.95/month versus $7.99/month, respectively), so there’s the opportunity to offer multiple price tiers for a singular app depending on the kind of listening experience that users are looking for. In fact, this could grow into a major competitive advantage for Amazon against Spotify, which doesn’t really have a foothold in the audiobook market (yet).
2. Retention
In their email copy, the Amazon Music podcast team shared that podcasts will be available on both the free and paid tiers of the service. It’s unclear how on-demand podcast listening will mesh smoothly with Amazon Music’s free tier — which launched in November 2019, and resembles Pandora in that there is no way for users to listen to individual songs or albums on-demand (only playlists and lean-back radio stations are available).
But in any case, the inclusion of both music and podcasts on both free and paid tiers will make Amazon Music look more similar to Spotify, particularly in terms of underlying business incentives.
My hypothesis is that Amazon Music and Spotify both treat podcast content more as a retention tool to drive their respective core revenue streams than as a viable standalone business opportunity.
Spotify claims that its nine-figure investment in podcast acquisition and licensing deals is improving both free-to-paid user conversion and retention on the platform. In other words, it’s less about the inherent revenue potential of podcasts themselves, especially given that Spotify still made only 7% of its revenue from ads in Q2 2020. Rather, it’s about using podcasts as a loss-leading marketing tool to beef up Spotify’s core business model, namely paid subscriptions. (Kenny Ning recently covered how the math behind these claims doesn’t really add up.)
Podcasts will play a similar role for Amazon Music — and, more importantly for Amazon in general. According to its latest earnings report, Amazon makes less than 5% of its revenue from advertising ($4.22 billion out of $88.9 billion), so it’s safe to assume that adding podcasts to Amazon Music is not about growing ad revenue.
In fact, the playing field is much larger than for Spotify: The way I see Amazon’s hypothesis is that podcasts will improve conversion and retention for Amazon Music and Audible, which will then improve retention for Amazon Prime, which will then increase sales across all of Amazon’s businesses.
Again, if this hypothesis is true, it makes sense for Amazon Music and Audible to merge into a singular app to reduce bulk and drive more conversion.
3. Rights
Licensing music for podcasts is complicated, and will likely turn into a bigger issue over time as formerly music-focused services like Amazon Music invest more in podcasts as a growth and user-retention tool.
The below is quoted from Amazon’s Content License Agreement:
If requested, you will use your best efforts to give us information available to you with respect to the ownership and control in compositions embodied in any sound recording in your Content (including but not limited to the name of the sound recording) in a form that we designate. You will only deliver Content to us for which you have obtained all necessary rights, consents and waivers (including but not limited to sound recordings, musical works, compositions or lyrics that may be included in Content) that may be required in connection with our exploitation of the rights you’ve granted under this Agreement.
This kind of policy — which puts the onus of obtaining music rights on podcast hosts, not on the platform — isn’t unique to Amazon. Spotify’s terms also require that podcasters “have all rights and authorizations relating to any sound recordings and musical works included in the Authorized User Content.” As a recipient of ample music-related podcast spam, Spotify also prohibits podcasters from “using the Spotify for Podcasters Service to distribute music tracks, DJ mixes or similar content to the Spotify Service. The Spotify for Podcasters Service is not intended to be a music distribution tool. If you wish to deliver music to Spotify, please refer to our Spotify for Artists service.”
For how fast the podcast industry moves, there’s been relatively little development with respect to music rights. There are some newer marketplaces, like SyncFloor and SoundExchange’s Podcastmusic.com, that allow podcast producers to purchase rights to use music in their episodes as easily as buying stock music. But for the most part, rights are still negotiated on a case-by-case basis, which is highly inefficient. And podcast plays don’t generate royalties for the podcast creators in question, let alone for the rightsholders whose music is included in a given episode, creating a potentially massive gap in passive income for everyone involved.
Amazon Music’s terms for podcasters only exacerbate rather than solve this obstacle of music rights, which I think will balloon over time if Amazon Music and Audible do eventually merge into a single app and business model. My general question here is: How much interest from the big-tech world will it take for the music-rights landscape around podcasts to progress beyond the same way it’s worked for decades?
4. Censorship (?)
This is the aspect of Amazon’s Content License Agreement that has raised the most criticism from the podcaster world and attracted the most media coverage.
According to the agreement, podcasters may not “include advertising or messages that disparage or are directed against Amazon or any Service.” Again, it’s worth reiterating that this kind of policy is not completely unique to Amazon. Spotify’s podcast terms similarly state the platform does not allow for “advertising and/or sponsorship messages targeted against the Service,” nor for “paid advertising for any competitive music or audio streaming services.” But unlike Amazon, Spotify does not explicitly use the verb “disparage” in its agreement language.
Given the coverage that’s already out there, I don’t have much commentary to add on this specific issue, aside from two points:
- The above policy reiterates to me how Amazon is looking to add podcasts to grow its core business much more than to “serve” the podcast community as an open distribution channel.
- In general, platforms that include podcasts have to make clear decisions about content moderation, in the same way that Facebook and YouTube do for user-generated content. In the context of Spotify, I recently framed this as a decision of whether to be more like Netflix or more like YouTube, in terms of more hands-on versus hands-off levels of content moderation and quality control. No platform is neutral and no platform will approach this issue in exactly the same way, which is an important point for podcast creators to keep in mind as a company as notorious as Amazon enters the ecosystem.
Amazon did not respond to my request for comment by press time.