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| The big idea | |||||
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The business rationale that led to Spotify’s moderation scandal |
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You’ve probably heard the news. Last week, rock legend Neil Young gave Spotify an ultimatum: He would take his music off the platform if it continued to host the Joe Rogan podcast. Ultimately, Young and other notable artists — Joni Mitchel and Nils Lofgren (Bruce Springsteen’s guitarist) — pulled their catalogs from Spotify and its 380m+ users. Why?Rogan’s long-form podcast — which Spotify acquired for $100m — has been accused of spreading covid misinformation. This isn’t the first Rogan x Spotify controversy: Company employees previously tried to have the comedian removed from the platform over comments about transgender people. So far, the streaming service has backed its big-dollar talent and — in light of the latest scandal — will now add “content advisories” to podcasts that potentially have covid misinformation. Spotify has spent huge on podcastsIn addition to Rogan, the company is buying up the entire industry:
Spotify is going all in on podcasts because it’s a different business model than its music offering, which pays out huge sums to artists and record labels. Per Motley Fool, Spotify’s gross margin has plateaued at ~25% because artist royalties are “variable costs [that] scale every time” more people use the product (AKA listen to music). By creating a podcast platform…… and building a dynamic audio ad marketplace, Spotify’s gross margins can get up 40%. Netflix famously executed a similar strategy by making its own content instead of licensing from studios. But — as we’ve seen over the past week — owning content can create a moderation headache. In response, Rogan apologized to Spotify for the fiasco and said he’s a fan of Young and Mitchell. He also offered a potential change: “If there’s anything that I’ve done that I could do better, it’s having more experts with differing opinions right after I have the controversial ones.” We have a feeling this story isn’t over just yet. |
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| SNIPPETS |
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Sounds unsustainable: Instant delivery startups are giving away so many free items to bring on new customers that some are reporting losses as big as $20 per order. #ecommerce-retail Elon’s singalong: Tesla launched TeslaMic, an in-car karaoke microphone that is only available in China for now. #clean-energy Robot takeover: Phantom Auto, which builds remote-controlled forklifts, raised $42m in hopes of helping solve the logistics labor shortage. #emerging-tech Boom times: Tech companies raised $621B in 2021, up more than double than 2020. #fintech-crypto IPO in reverse: Citrix software, the original maker of GoToMeeting (which it sold to LogMeIn in 2017), agreed to be taken private through a $16.5B buyout. #big-tech MFM: Sam and Shaan discuss whether Alex Hormozi, an entrepreneur who has made $72m in 5 years, is a legit businessman or a fake guru. #mfm |
| That’s so Meta | |||||
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Meta’s job board tells its story |
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It isn’t easy bringing a 68k-person social media company into the metaverse. The 1st step involves literally renaming yourself Metaverse (Meta for short). The 2nd entails hiring talent. On Meta’s job board, there are now 6x+ the jobs listed for Oculus than for Messenger, Instagram, and WhatsApp combined. Looking deeper, AR/VR roles comprise 21% of all jobs listed. Just 1.6% are in advertising tech. Bottom line: Meta is eyeing a future with less Facebook, Instagram, and WhatsApp, and much, much more… Meta. |
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| Bad Romance | |||||
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(Photo Illustration by John Phillips/Getty Images) |
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Lonely Americans were swindled out of millions in romance scams |
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Talk about a bad breakup: In the 1st 3 quarters of 2021, Americans lost $343m+ to romance scams, per an analysis by Atlas VPN. That’s more than all of 2020, in which Americans reported $304m in romance scams to the FTC, up 50% from 2019. What’s a romance scam?According to the FBI, it’s when a scammer uses a bogus online persona to build a relationship with someone they later con out of money. Romance scammers typically lurk on dating sites or social media to find victims, and may be part of a criminal organization. Common targets are lonely or vulnerable people over 50, often women. Scammers establish trust and affection, then ask for money — perhaps for medical or legal fees, debt, or travel expenses. And they usually want it via some less traceable means, like gift or reload cards, transfers, or crypto. Some common red flags:
Why the boom in romance scams? One theory: the pandemic. People have a good excuse for not wanting to meet in person and have been more isolated than ever. A recent study found 36% of Americans are feeling “serious loneliness.” Btw: Some scammers are brazen enough to do it in person, like John Meehan — subject of The Los Angeles Times’ “Dirty John” series — or Derek Alldred, who, per The Atlantic, scammed 12+ women out of ~$1m. |
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| TRENDS |
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4 Trendsters build a business in 60 daysWe loaded 4 community members with $2.5k cash and $1k in Fiverr credits to launch a new project in public (for a $10k grand prize). The Trends “Give a Buck” builders:
You like that? You like that. Join Trends for market gaps and the community that slaps. |
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| AROUND THE WEB |
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📘 On this day: In 1884, The Oxford Dictionary was published. Today, it would take a single person an estimated 120 years to type all 59m listed words. 🔉More Spotify: For a full breakdown of the streaming platform’s business and how it “controls attention”, check out the latest Trapital essay. 🖼️ Art: Artist Pablo Andrés Pozo has created a seemingly endless piece of art called “Past Lives.” Watch him zoom out — and out and out — here. 🍎 Useful: CORE is a collection of 207m+ open-access articles and research papers from around the world. 👻 That’s interesting: This website catalogs dead malls — malls with high retail vacancy rates — across America. 🗣 How to: Remember small talk around the water cooler? If you miss it or feel awkward about it, here’s a guide to relearning how to do it. 🐈⬛ Aww: And now, a cat plays in a puddle. |
| Meme of the day |
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No wonder Spotify’s all-in on podcasts. (Source: Twitter) |
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Business and tech news in 5 minutes or less
In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.
Data shows where markets are headed.
And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?
