On Monday, Spotify held its Stream On event, announcing a flurry of new features including a Hi-Fi version of its service, an expansion into 85 new markets, and touting its influence on the music industry since it was founded in 2006. The audio behemoth’s executives also spent as much time talking about podcasts as they did about music, underscoring how much their focus has shifted to lower-cost content, as a public company under pressure to deliver profits.
After the event, Billboard spoke with Spotify’s vp, global co-heads of music Marian Dicus and Jeremy Erlich and vp, head of marketplace Charlie Hellman to discuss Spotify’s latest music initiatives, what it’s like working at a music streaming service that is no longer laser-focused on music, and the challenges they face as Spotify nearly doubles the number of countries it operates in over the coming weeks.
This interview has been condensed and edited for clarity.
Spotify was founded as a music service. It’s become a much broader “audio” company. Has that changed the resources available to your team on the music side?
Jeremy Erlich: I haven’t felt that there’s been anything that’s kind of slowed us down, quite to the contrary. It’s great to have the podcasting team by our side and have that really develop as a format. And, obviously, the kind of attention that it has brought to Spotify is all positive. The way we look at it from a music side is, it’s purely additive and gives us a really interesting medium to tell more music stories…. Podcasts are relatively nascent, but in the world where you can match the two together or podcasting can tell music stories, I think you really become an even more important tool and platform for artists and for the promotion of their art.
Mirian Dicus: There’s a lot of ways in which the artists that we support on the music side, can naturally and organically fit in on the podcast side. It really makes our audio offering complete when we’re working with artists.
What’s the big priority here as Spotify becomes available in 85 new markets?
Erlich: All markets are priorities used to be my tagline, but we’re especially excited to launch in Africa. I think it’s become such an important cultural center and African music is influencing the world and there are artists that are crossing over. I think when we can tap into these countries and areas that are so influential in music, it’s even more exciting.
As we grow, we’ll work on curating local experiences and have local content eventually in all of these places, but we’ve got to work in the bigger territories where we’re already setting up teams and strategies.
During the event, you mentioned that some of those new markets may have a limited catalog available at launch. Do you expect to get all your licensing deals done and expand that catalog over the next year?
Dicus: At launch, all of the 85 new markets will have our full global music catalog. We’re working continuously for those global rights holders and partners to expand their catalog. We obviously want to get to a place where we’re catalog complete locally, but as Jeremy says, it’s 85 new markets, we’re going to do the best that we can as quickly as we can to get that local catalog to a 100% in all the regions, but the rollout will vary.
Will Spotify roll out both the ad-supported tier and premium tier in each of the 85 new markets?
Dicus: It’s market by market. We’ve just launched in Korea and we launched without the free tier, but it will depend on the market. Obviously, the free tier for us is a huge part of Spotify’s core mission. We try to fulfill that mission across all of the markets, but again, it really depends on our continuing conversation with our local rights holders.
All artists on Spotify will now be able to use Canvas — Spotify’s looping album art feature. What’s the response been from users and artists since the initial reveal in 2019?
Charlie Hellman: It’s just been rabidly used by artists, and it’s been one of the most popular features. It started out as a pretty small-scale test and it’s grown organically since then. We didn’t share this news in the event because we just hit this milestone, but artists have actually now uploaded more than 1 million Canvases to Spotify.
When users see an artist’s Canvas, they’re 145% more likely to share the track, they’re 20% more likely to add it to a playlist, and they tend to rabbit hole and go to your full artist catalog. It’s not only something that feels great, it’s also one of the things that can really help build momentum as you’re getting attention, in an increasingly competitive landscape for so many artists releasing new music.
Is there concern around rolling out data-intensive features like Canvas in new markets that may not have the same data capabilities as the U.S. and Europe?
Dicus: I think we go into every new market and what we like to do is have all of our tools available everywhere, but you’re right, as we go into some markets, we definitely take into consideration what the current climate is. We do that across the board when we’re looking to launch in a market with customized payment methods
While we think that Canvas is a great tool for artists to connect with their fans and we really see a lot of positive engagement with it, if it’s not going to work in that specific market, we’ll slow the rollout. But we definitely have teams on the ground who really know those specific markets, are thinking about sequencing tools for a specific market, and making sure that the experience is really tailor-made for those particular regions.
Marquee (Spotify’s sponsored recommendation tool) and Discovery Mode (a product that lets artists and labels influence personalized recommendations) in exchange for lower royalty rates) were both controversial and criticized by people within the music industry when they first launched, with many calling them payola. When you expand those types of features, are you concerned about an increased backlash?
Hellman: Ultimately, we’re talking to artists and labels every day, and our product development is determined by their needs and their goals. And what we’ve heard over and over pretty recently is needing better tools to compete for attention. A lot of it comes down to the proof being in the pudding of the results that you get back from tools like this.
Listeners who see a Marquee are twice as likely to save the music, and saves are super important in this streaming era. That’s really the moment where you convert a listener from being a casual listener to, now it’s in their library, they can binge and repeat listen and develop a fan relationship that can translate to, God-willing, touring when it comes back, and merch and other kinds of revenue. The fact that it can drive a leading metric like save is huge. Marketers who spend their money across a number of different channels have told us that it’s the most effective way for them to put promotional dollars behind a release. And for that reason, we’ve continued to invest in it, iterate it to be even more powerful for customers. And that’s really what ultimately led us to decide to expand it geographically to additional territories later this year, as well as expand it to self-serve buy.
Our principle is anything that is powerful and showing promise, we want to make sure that it is self-serve accessible so that all labels, big and small, all sorts of artists teams can have access to it.
How much are you learning from Marquee? Are the algorithms improving on what Spotify is surfacing for users as you learn from more people using Marquee?
Hellman: Absolutely. One of the things that we’re learning from Marquee is just how stiff the competition is for listeners’ attention. In a lot of cases, listeners are interested in an artist, and they would love to hear their new release, but with so much new content coming out every week and still competing with all the content that’s ever been released in the platform, is just increasingly difficult to stand out from the noise.
One thing that is really powerful about Marquee is that it really commands the user’s attention and that can be really effective in cutting through that noise, cutting through that competition, and helping to increase the amount of people that are listening during week one. If our algorithms see fans responding positively to that release in week one, that’s when the personalization system really takes over and starts adding that to more playlists like Discover Weekly and Daily Mixes, and kind of gets the snowball rolling. Getting off to a great start can really have an impact beyond just the streams that are garnered in the first week.
Spotify announced it was launching a high-fidelity version of its streaming service that would offer CD-quality audio. How long have you been working on building a Hi-Fi version of Spotify?
Erlich: It’s something that’s been in the works for a while, but the timing had to be right and we felt that that time is now. It’s definitely one where, both from the creative community and our users, there’s a high demand for.
When Hi-Fi launches be supported on third-party speakers like Sonos?
Dicus: We have those relationships with the speaker manufacturers through Spotify Connect, it’s really just about enabling Spotify Hi-Fi with those same partners. It’s something that has been in the works for a while and all of us audiophiles are really excited about it.
Erlich: Our goal is always ubiquity when we launch something new, it’s never kind of there on day one, but I think what you’ll see when we do launch is the number of partnerships that have been put in place is pretty impressive.
With Radar — Spotify’s program to highlight and promote emerging artists — will the focus shift to the new markets Spotify is launching in this year?
Erlich: Absolutely. The ambition for us anywhere is to really support and develop local talent and local cultures. That’s always the foundation of our businesses in any country. Radar, I think is a bigger spotlight on that. We want to have Radar programs everywhere, where we’re selecting and elevating what we think are some of the best and most promising talents locally, and then give them the pathway to develop globally. Maybe it won’t be on day one, but I think if you look 12 months after launch, they’ll be some form of Radar program in every single one of our territories.
As Spotify becomes available in over 170 countries, is there a fear of global music becoming homogenous as artists around the world aim to top the same charts on the platform?
Erlich: Not really. I think music consumption generally remains quite local and local culture is what’s most important in the very large majority of countries. And I think every country has its own source of pride. But we never want to water down culture by being global. Our whole tagline in the music team is to be “more local and more global at the same time.” What we mean by that terribly redundant sentence is we want to have local cultures develop and then we want to give pathways for the best of local to be enjoyed on a global level.
Where I think Spotify actually does a tremendous amount of benefit to local cultures versus the reverse is that you can now have a world where a Lous and the Yakuza coming out of France is enjoyed all over the world really quickly and much faster than that’s ever happened in history, the same with K-pop or Tones and I.
I genuinely believe we’ve had a positive influence on the development of local culture and the path to the top for anyone in any language doing it their way.