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🔉 Spotify’s moderation bind, explained

The Hustle

Don’t forget — tomorrow’s the official launch of our new podcast! For years, Morgan Freeman failed to respond to our requests asking him to be lead host, but we decided to move forward anyway, and we hope you can still enjoy it.

In today’s email:

  • Spotify’s problem: Why owning podcasts is a tricky business.
  • Chart: How Meta’s job board tells its story.
  • Romance scams: Lonely Americans are losing millions.
  • Around the web: Endless art, a cat in a puddle, and more fun internet finds.

Let’s do it.

The big idea
Spotify gif

The business rationale that led to Spotify’s moderation scandal

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 podcasts

In addition to Rogan, the company is buying up the entire industry:

  • Tools like podcast publisher Anchor ($150m) and ad platform Megaphone ($235m)
  • Content like Gimlet Media ($230m), The Ringer (~$200m), Call Her Daddy ($60m), Prince Harry and Meghan Markle ($25m)

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

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
Meta job board chart

Meta’s job board tells its story

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
dating app

(Photo Illustration by John Phillips/Getty Images)

Lonely Americans were swindled out of millions in romance scams

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:

  • They repeatedly promise to meet IRL, but something always comes up
  • The relationship escalates very quickly, even talking marriage without meeting face-to-face
  • They attempt to isolate victims from friends or family
  • They ask for financial info or intimate photos that could be used for extortion

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

4 Trendsters build a business in 60 days

We 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:

  • Jessie Hawkins (Sweet Loot): an ecommerce brand for foragers with scenic shirts and fanny packs on Etsy and Shopify. Foraging bags and kits incoming.
  • Corey Wright (NiFTy Displays): bringing crypto fans the back-lit acrylic frames their precious digital icons deserve. What’s another $80, right? Watch for the drop.
  • Camilo Archuleta (Beeso Box): a biz in a box for the kids, since it’s never too early to start thinking and saving like an entrepreneur. Moms, dads, and young’uns are pleased.
  • Courtney Walker (BLCKCrypto): a future blockchain content hub for the Black community is cooking up its flagship course: a Gumroad course on DeFi. Very hype.

You like that? You like that.

Join Trends for market gaps and the community that slaps.

Your trial costs $1 →
AROUND THE WEB

📘 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
podcast meme

No wonder Spotify’s all-in on podcasts. (Source: Twitter)

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Trends Screenshot

Hey, we see you. You’re out there spreading the gospel of The Hustle like it’s nobody’s business. Seems like you might be ready for a little more…

Get {75 – referral_count} more referrals and we’ll slide you a free subscription to Trends.

And no, this ain’t an ad. We just think you’re the kinda person who would thrive in our top-tier community (it’s usually $299) full of founders, investors, and builders (AKA ambitious, no B.S. business folks like you — and enjoy our premium research and content.

Here’s that link you’ll need:

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dinner with Sam Parr

Well, well. Look who climbed the ladder. We’re so proud.

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Get {1000 – referral_count} more referrals and you’ve got yourself a meeting with Sam Parr, founder of The Hustle. You might recognize him from the My First Million podcast. He loves that you love his good ol’ newsletter, and wants to treat you.

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Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

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