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Audio streaming war competitors as Succession characters
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Every Monday, I write an original long form analysis combining current events, business strategy, and pop culture.
Every Thursday, I try to bring in a guest writer to share something 1) highly relevant to Not Boring, 2) that they know way better than I do.
Today, Sid has a piece for us that only he could write, seamlessly weaving Spotify and Succession. We picked a fortuitous day for this piece. Spotify is trading at all-time highs, having broken $200 for the first time yesterday, and just announced an exclusive podcast with the one and only, the Shotcaller, Kim Kardashian West.
Let’s get to it.
🚨 Spoiler Alert 🚨 If you haven’t watched all of Succession, this post contains spoilers. But how have you made it through this whole quarantine without watching Succession??
🎧 If you prefer listening to reading, you can listen here: Streaming Succession (Audio Edition)
Succession, HBO’s hit comedy-drama, is ostensibly about the struggle for power within the fictional Roy family. The family’s patriarch, Logan, built and leads Waystar Royco, a media conglomerate with strong Fox Corporation vibes. After Logan falls ill, a battle ensues within the family and without over his … succession.
Kendall Roy, the second eldest son and the heir apparent to the media empire, quickly moves to grab the power, but he oversteps. When Logan returns to full health, he is vindictive and cautious of Kendall’s every move. Logan’s other children – Connor, Shiv, and Roman – are fearful of their dad, but each makes his or her own power play.
People love Succession, because the show has everything: family drama, boardroom backstabbing, affairs, takeover attempts, and even murder. Most importantly, it inspired this video of Kermit dancing to the show’s theme song:
Succession works on multiple levels.
On the surface, Succession is about one family’s battle for control of a media empire.
One level down, it starts to look like a dramatized version of Fox’s Murdoch family.
We’re going one level beneath that though. I’m here for you today because there’s a violent succession battle underway for our ears. This essay will look at how the audioverse imitates Succession’s main characters. Art imitates art imitating life.
You probably have a rough idea about what’s going on in the music industry. Packy recently wrote about it in Earshare and Spotify Calls Him Daddy, and Brett Bivens and I recently wrote about it in Spotify’s New Customer. To make sure we’re all listening to the same track, here’s a quick rundown of the music industry’s past 100 years.
The old way of doing things - record labels signed artists and owned the rights to their catalogs, and made a lot of money bundling and selling CDs - was well-established and worked for decades. Then suddenly, with the internet, Napster and Limewire let people pirate music for free. The record labels lost a lot of money. Then Apple kind of saved the day with iTunes, unbundling albums and allowing customers to buy songs for $0.99 each in exchange for ease of use and relief from the threat of being sued.
In 2011, Spotify launched in the US and bundled again, offering all the songs for $9.99 per month. The tech giants - Google, Apple, and Amazon have kind of hung around the edges - each has a music platform, massive distribution, and the desire to own everything, including audio. To do so, they are willing to bring their distribution might and functionally infinite resources, and treat Spotify like a second-class citizen on the platforms they control (Android, iOS, and Alexa, respectively).
And now, there’s a new kid in town: Bytedance’s TikTok, combining the resources of the tech giants with the ruthless execution common in Chinese startups.
Each of the players in music is a lot like a character in Succession. Let’s take a look:
Kendall Roy // Spotify: Both are trying to get out of the shadow of what came before them.
Logan Roy // Legacy music labels: Both have built massive fortunes and are holding on the reins of power. For now...
Connor Roy // Apple: Both are enjoying the spoils of the work that’s been done before them and are comfortable with the status quo.
Roman Roy // Google: Both have tons of potential, but continue to fumble. Ultimately, they both underperform.
Shiv Roy // Amazon: Both have other passions, but feel compelled to play in this space.
Tom Wambsgans // Deezer/Tidal/Luminary/Etc…: Not a serious threat but trying adorably; we don’t need to mention them again.
Cousin Greg // Clubhouse: Everyone’s favorite new player in the competition. The more time you spend with them, the more you feel like they will succeed.
Stewy Hosseini // TikTok: They’re after all of it. They want to own the distribution and engagement of all audio and video.
Spotify is Kendall: the heir apparent, full of tenacity and willingness to do whatever it takes to gain real market power and take its rightful place atop. Just as Kendall is the main character in Succession, Spotify is at the center of our story. And for Spotify, it’s chaos at home and invasion from abroad.
Logan is the music labels, the old guard with the keys to the kingdom.
The music labels / Logan aren’t the only players against whom Spotify / Kendall are facing off. Before we get to the main battle, let’s meet the other players.
Connor is Apple. As the eldest son, the top spot was at some point Connor’s to lose. And he wants to lose it. Just like Apple’s easy transition into Apple Music was built on the work done by the iPod, iTunes, and iOS, Connor enjoys the spoils of all the hard work done by others. He’s got his gated walls at Austerlitz where he can continue to do his own thing as long as he’s got a good relationship with his dad. As long as Apple doesn’t anger the music labels, they will be allowed to play in their gated hardware-enabled walls of iOS. And despite Apple’s early lead in podcasts, they don’t care about winning that market.
Roman is Google. Roman’s occasional intelligent move in the show is akin to Google’s latent power. Google has made some investments in audio, but too often, they have suffered from diffused focus and an overall disinterest in the space. With the resources that Google has – $117B of cash on hand as of Q1 2020 – and the upbringing that Roman had, they should both be able to do better. Just like Roman, Google is known to mess up when it comes to things outside their core competency of search and advertising. Just like Google, Roman needs to leverage his social muscles more. Ultimately, both Roman and Google are underdelivering on their potential.
Shiv is Amazon. They’re perfect mirrors of each other. Cunning? Check. Competent? Check. Cool, Calm, and Collected? Check. Check. Check. But do they Care? Maybe not. Shiv is confused about what she wants -- mirroring Amazon’s inability to commit to music. They have displayed competence through Alexa, but audio has never been their core offering. Just like politics was Shiv’s first preference, retail is Amazon’s first priority. Similarly, Amazon dabbles in audio, but only to the extent that it serves the core business.
Cousin Greg is Clubhouse, Silicon Valley’s buzziest new app. Just like Cousin Greg, Clubhouse is unique, and at first, misunderstoor. The more time you spend exposed to either, though, the more powerful and inevitable they feel. Both are bound to be successful, liked, and supported by the big boys – Greg by his grandfather and Logan; Clubhouse by a16z and their $100M valuation.
Clubhouse after it closed a $100M Series A led by Andreessen Horowitz
Stewy and Sandy are TikTok. Looming over all of this are the exceptionally talented outsiders at TikTok. Just like Stewy and Sandy – private equity players who are looking to take over the company and get rid of the family’s control of the firm – in the Succession universe, TikTok "after the whole thing." Interaction, discovery, engagement – they’ve got it all and want more. They’ve gotten the most important shareholders (users) to go along with them - people discover music on TikTok and then make it popular on Spotify. In music, whoever has the ear of the customer is a real threat to the established players. Like Stewy and Sandy, TikTok smells blood, and is circling while the family does battle with itself, waiting to strike.
TikTok smelling their sweet-sweet engagement numbers
The key question of Succession, though, is whether Kendall will have what it takes to succeed his dad, to overtake him while carrying on his legacy. Kendall’s underdog status and Logan’s looming disapproval is uncannily similar to the dynamics between Spotify and the music labels.
In Season One of Succession, Logan tells Kendall, "Without me, you are nothing." And he was right; Logan controlled Waystar Royco. Spotify faces a similar threat from the music labels, because the music labels still own the one thing everyone wants: the back catalog, all the songs that their artists have ever recorded. The back catalog is extremely important. People don't just listen to Drake's Chicago Freestyle from 2020, they also listen to Trophies from 2014. If labels pull their back catalog from Spotify, the listeners go away, and the company goes out of business.
Just like Logan can threaten to turn the company over to Shiv, Roman, Connor, or even an outsider, instead of Kendall, the music labels can theoretically decide to work with Amazon, Google, or Apple to the exclusion of Spotify. Because the labels are playing all of them off of each other, Spotify and its competitors pay the labels more than 50% of their revenues.
Spotify after realizing it has to pay labels more than 50% of its revenue for all streams.
But backed by a growing army of listeners and its role as curator, Spotify is attempting to flex its muscle. Just like Logan wants to turn the company over to Kendall, even if he could hand over the reins to one of his siblings, the labels can’t really thrive without Spotify. Spotify is where most of the listeners are, and more are heading.
Like Kendall, Spotify is pushing its advantage in its own boardroom coup: its extension into podcasts. Kendall acquired Vaulter — ”a brand name and a bit of content is kind of the whole game.” Spotify acquired The Ringer and Gimlet Media. Spotify believes that podcasting will give them enough sway that we (shareholders / listeners) will vote with them. But Logan's and the music labels’ reach is extensive. Spotify is fighting an uphill battle in the fine print. Under the current agreement, Spotify pays labels a percentage of revenue from not just the music streams, but also from podcasts listens.
The two will have to do battle at the negotiating table to determine who gets paid for what, but for now, the two are treating each other with respect, just like Kendall showed his dad respect in this Rap Caviar-worthy gem:
Both Spotify and Kendall exist in an ecosystem in which family and rival are two sides of the same coin. Since Logan, Shiv, Roman, Connor, and Stewy all own a significant portion of the voting shares in Waystar Royco, Kendall cannot make a move without their permission. Spotify’s existence is defined by a permission-based innovation model. Since Spotify doesn’t own most of its own supply, they are dependent on others.
People surprise you, though. The music labels didn’t think a Swedish company led by a thoughtful, friendly CEO could be a killer. Logan didn’t think that Kendall could be a killer, either.
After a whole season – ahem, decade – of playing as an underdog, Spotify is done living under the shadow of the labels. It's ready to be a killer (app).
In May 2020, Spotify announced an exclusive deal with Joe Rogan. Rogan is for Spotify what Pierce Media was for Waystar Royco – exclusive content that helps differentiate the product while making it too big for anyone to touch. Just like Kendall convinced a stubborn Pierce family to sell, Spotify convinced a staunchly independent Rogan to come behind Spotify’s walls. In both cases, an extraordinary amount of money was involved. As an encore, just yesterday, Spotify signed another huge exclusive, this time with Kim Kardashian West.
In one fell swoop, Spotify announced to the world that it is serious about the podcasting space, had committed the resources to execute on its plan, and is ready to take its rightful place.
Just like Succession, the dust has not yet settled for this chapter of the audio industry. Spotify’s Joe Rogan signing was just the dramatic conclusion to one season, and the opening scene of the next. Kendall and Spotify have both proclaimed publicly that they’re ready to fight. Logan and the music labels are holding on to their empires with everything they’ve got. And a whole host of players are waiting in the wings, ready to pounce on any misstep.
As for me?
Big thanks to Dan McCormick for being the unofficial but consistent Not Boring editor.
If you liked Sid’s comparison of the audio streaming players and Succession characters as much as I did, you can subscribe to Sunday Snapshots here.
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