Apple Music, a Precursor to the Grammys?

In December, Apple announced its first Apple Music Awards. Billy Eilish took top honors as artist of the year. Apple Music award winners went on to win big at the Grammy’s and Oscars.

Billy Eilish and Finneas performing in Los Angeles, 2019

On December 4th, Apple introduced its new Apple Music awards with a live celebration and global, live-streamed performance by Billie Eilish at the Steve Jobs Theater. Earlier in the year, Apple rebranded its beloved iTunes Store into Apple Music. The new Apple Music Awards celebrate music achievements across five categories. Winners are hand picked and selected by Apple Music editors based on originality, passion for craft with feedback from customer favorites all over the world.

“...artists who boldly defy conventions in the category and who embody a sense of humanity, where listeners are drawn as much to who they are as to their music.”

— Apple

Billie Eilish, first discovered by Platoon in 2018, took the top honor as Global Artist of the Year — something that was repeated when the young musician went on to win top awards at the Grammy’s and Oscars subsequently this year. The awards for both Album of the Year and Song of the Year were chosen based on streaming data and based on what Apple Music customers listened to repeatedly in 2019.

Eighteen-year-old Billy is easy to relate to and her debut album “WHEN WE ALL FALL ASLEEP, WHERE DO WE GO?” that was co-written and produced by her brother, Finneas, became a worldwide favorite and the most played album on Apple Music in 2019. This led to sold out concerts at many festivals from Coachella to Glastonbury, appearing on “Saturday Night Live,” and going on to perform notably at the Grammy’s and Oscars. Billy’s distinctive style and boldness also appeals to a broad swath of people, inspiring new hair styles and outfits across generations. Billy and Finneas’ success is even more remarkable given that they composed and recorded their music at home.

“So 2019 has been one big birthday present.”

— Billy Eilish

“WHEN WE FALL ASLEEP, WHERE DO WE GO?” also won Apple Music’s Album of the Year as the most streamed album of 2019 with more than a billion streams on Apple Music. Billie and her brother Finneas, also shared the award for Songwriter of the Year.

Raking in the Grammy’s

Billy Eilish and her brother Finneas went on to rake five Grammy Award each for Best Album, Best Record, Best New Artist, Best Pop Vocal Album, and Best Song, along with Nominee for Pop Solo Performance.

Billy Elish and Finneas at the Grammy Awards

Lizzo Wins Breakthrough Artist of the Year

Rap and soul singer Lizzo joyful music had already received eight Grammy nominations, including Album of the Year for “Cuz I Love You” prior to her Apple Music award for Breakout Artist of the Year. She went on to win four Grammy awards — Pop Solo Performance, Urban Contemporary Album, Traditional R&B Performance, Song and was nominated for four more Grammy awards — Album, New Artist, Record and R&B performance

Lil Nas X Wins Song of the Year for “Old Town Road”

The most played single of the year on Apple Music, “Old Town Road” became a viral sensation and established Lil Nas X overnight. The artist went on to win two Grammy Awards for both Music Video and Pop Duo/Group Performance and was nominated for four more awards — Album, New Artist, Record and Rap/Sung Performance.

The Apple Music award itself is beautiful with Apple’s custom silicon wafer suspended between a polished glass sheet and a machined and anodized aluminum body.

Spotify Buys Gimlet Media and Anchor - Two of the Largest Acquisitions in Podcast History

The Swedish audio streaming company cemented its presence in the podcasting world by its purchase of Gimlet Media, the content creators for Startup and ReplyAll podcasts, and Anchor, the production and distribution platform

Spotify’s acquisitions came as a surprise to the industry as Spotify has never bought a company focused on creating content such as Gimlet Media nor has it previously expressed interest in the podcast space. Podcasting has however been attracting increasing investment from advertisers, raking in over $314 million in 2017 in the U.S. alone. Spotify’s purchase of Gimlet Media at $230 million, the content creators behind the Startup and ReplyAll podcasts, is the largest acquisition in podcast history. Spotify’s second purchase of Anchor, the production and distribution platform for podcast creators, was for an undisclosed sum. Spotify’s announcement signals the company’s keen interest in the podcast market. Spotify has also shared that the company intends to invest up to $500 million this year alone in the podcasting space.

Spotify has dominated the audio streaming industry, reporting 96 million subscribers and posting its first profit this past quarter of $107 million (€94 million), less than one year after the Stockholm-based company launched its IPO on the NYSE on April 3, 2018.

“For the first time in company history, operating income, net income, and free cash flow were all positive.”

— Spotify, Q4 Shareholder Letter

Spotify has been the industry giant for a long time in terms of subscriber loyalty, although Apple Music has been playing catch up. Apple announced that it had reached 56 million subscribers this past November. Apple has been closing the gap, though Spotify still dominates the market comfortably with a 40 million lead. Nonetheless, the Cupertino giant has three advantages - offering bundling options, thus achieving a conversion rate of 0.64% (as compared to Spotify’s stable 0.24%), paying artists a higher percentage than Spotify and not needing streaming to be profitable.

The two companies have also vastly different approaches to playlists - Spotify’s playlists are driven by algorithms, while Apple’s have what CEO Tim Cook calls “the human touch.” Nonetheless, consumers, by a large majority, have preferred Spotify’s playlists.

Cook insists that playlists generated by computers are lacking. In an interview with Fast Company, Cook explained that a streaming music platform has the potential to offer a sublime music experience.

“Music inspires, it motivates. It’s also the thing at night that helps quiet me. I think it’s better than any medicine.”

— Tim Cook, Apple CEO

In an interview last year with Fast Company, Spotify’s CEO Daniel Ek said that he was confident that the company’s computer-generated playlists, which he calls the company’s “key differentiator” will “defy all the skeptics” in the long run.

“Music is everything we do all day, all night, and that clarity is the difference between the average and the really, really good.”

— Daniel Ek, Spotify CEO

Arguably, Spotify has already won with this strategy, given the popularity of the platform’s playlists. Even its most vocal critics such as Taylor Swift and Jay-Z have returned to Spotify and uploaded their music once again to its platform.

Why Podcasts?

The word “podcast” is literally derived from the iPod. Apple redesigned the Podcasts app and offered more in-depth analytics in 2017. Spotify did not actually consider podcasts a good investment initially given the “poor user experience” as Chief R&D Officer Gustav Söderström said in an interview with TechCrunch.

“The user experience was really poor. There was no 15-second skip. In spite of that, we saw a lot of users listening to podcasts. It was kind of unexpected, and we didn’t really understand why. It turned out people really wanted to have podcasts in Spotify with their music. If you look at radio, it’s not that surprising.”

— Gustav Söderström, Spotify's Chief R&D Officer

However, podcasting’s striking similarity to radio makes it compelling for the company. Spotify CEO Daniel Ek recognized this.

“...people still spend over two hours a day listening to radio—and we want to bring that radio listening to Spotify, where we can deepen engagement and create value in new ways.”

— Daniel Ek, Spotify CEO

Spotify aims to create an avenue where consumers can discover new audio and play it. This includes popular podcasts such as the ones created by Gimlet Media and also producing its own original content using Anchor. Thus Spotify would offer a mix of radio and Netflix-like original content. Now if Spotify can successfully achieve this, the company would become the de facto platform for consumers to discover and produce original audio, thereby attracting and retaining both listeners and creators.

Gimlet Media is a podcast studio with $28.5 million funding, based in New York that is known for its original podcasts such as “Homecoming,” which has now been adapted from a podcast to video for Amazon Prime and for “Reply All” about Internet culture.. Anchor is a podcasting startup that helps anyone record their audio on the go and distribute that audio right from an app on their smartphone or tablet. Anchor raised $15 million in funding, of which $10 million came from GV, Alphabet’s investment branch. After a redesign of their platform last year, Anchor has enabled podcasters to distribute their recordings straight to Spotify, along with other streaming services. Apparently, Anchor has enabled the production of 15 billion hours of content listening on Spotify just in the fourth quarter of 2018 alone.

Spotify’s two large acquisitions - original podcasts and assisting podcasters in creating and launching their podcasts, signal the company’s strong interest in the podcasting world. The ‘Netflix’ model of creating and locking down original content would help in the company’s bottom line instead of having to negotiate royalties and deals with labels. Gimlet Media brings Spotify talent, technology and proven popular podcast models for original content, while Anchor provides hosting and monetization methods. Spotify’s CEO Daniel Elk shared his company’s goals in a press release.

“These acquisitions will meaningfully accelerate our path to becoming the world’s leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience, as well as enhance the Spotify brand.”

— Daniel Ek, Spotify CEO

In 2018, an Edison Research Infinite Dial report on podcast listening trends shared that 26 percent of people in the U.S. listen to at least one podcast each month and that listeners tune into seven podcasts a week on average. Spotify’s CEO Daniel Ek shared in the public announcement of the two acquisitions, that his company would apply “better discovery, data, and monetization to creators.”

“These companies are best-in-class and together we will offer differentiated and original content. Gimlet and Anchor will position us to become the leading platform for podcast creators around the world and the leading producer of podcasts.”

— Daniel Ek, Spotify CEO

Spotify is clear on its ambitions to be the world’s largest and most popular audio streaming company for both music and non-music audiences. The company intends to spend up to $500 million for similar acquisitions in 2019, as shared in its Q4 shareholder letter.

“Based on radio industry data, we believe it is a safe assumption that, over time, more than 20 percent of all Spotify listening will be non-music content.”

— Daniel Ek, Spotify CEO

Podcasting Attracts Strong Investments

Podcasting has been attracting strong investments in recent years. Betaworks Ventures, an early venture capital firm, invested in both Gimlet Media in 2014 and Anchor in 2015. Betaworks Ventures partner Matt Hartman explained in a blog post why he considered podcasting a lucrative investment.

“We saw early data around podcasts having a bit of a resurgence before Serial (a popular podcast) launched. That data, combined with the increasing battery life of iPhones and an increasing amount of connected cars on the road, led us to think there was an opportunity for internet-powered audio. This, combined with the quick growth of smart speakers, solidified our conviction that people would consume more and more audio content.”

— Matt Hartman, BetaWorks Ventures Partner

In 2015, Scripps media company bought Midroll Media, the digital media company in Los Angeles known for its original podcasting and ad network. Midroll also acquired Stitcher, the popular audio hosting platform. Last year in the fall, iHeartMedia purchased Stuff Media, a podcast content company. Apple reportedly was in talks to purchase iHeartMedia in December.

These acquisitions reveal that the demand for podcasting is only growing. With Spotify’s two acquisitions, the company now has a complete podcasting solution from discovery to creation, distribution and monetization. This bold move demonstrates the company’s ambition to become the world’s most popular audio platform from music to on-demand audio for listeners, podcasters and advertisers.

In its Q4 shareholder letter, Spotify revealed that it was ready to spend up to $500 million for similar podcasting M&A activity in 2019.

“Growing podcast listening on Spotify is an important strategy for driving top of funnel growth, increased user engagement, lower churn, faster revenue growth, and higher margins.

We intend to lean into this strategy in 2019, both to acquire exclusive content and to increase investment in the production of content in-house. The more successful we are, the more we’ll lean into the strategy to accelerate our growth, in which case we would update guidance accordingly.”

— Spotify, Q4 Shareholder Letter

Spotify, without a doubt, has some serious podcasting ambitions.

Apple Music Offers 50 Million Songs on American Airlines

Apple Music subscribers can benefit from access to over 50 million songs, playlists and music videos on domestic American Airline flights equipped with Viasat satellite WiFI without Wi-Fi purchase.

“Our guests want to make the most of their time when flying us. That’s why we’re investing in faster Wi-Fi, a variety of entertainment options, and why we’re so excited to introduce Apple Music to more of our customers. Providing customers with more ways to stay connected throughout each flight is one way to show we value their business and the time they spend with us.”

— Janelle Anderson, VP Global Marketing, American Airlines

American Airlines is the first commercial airline to offer exclusive access to Apple Music through complimentary inflight Wi-Fi. To connect, just open the complimentary inflight Wi-Fi and open Apple Music. Listen to your library, the Beats 1 Global Livestream or curated playlists. Sit back, relax and enjoy your flight. applemusic.com/americanairlines

““For most travelers, having music to listen to on the plane is just as important as anything they pack in their suitcases. With the addition of Apple Music on American flights, we are excited that customers can now enjoy their music in even more places. Subscribers can stream all their favorite songs and artists in the air, and continue to listen to their personal library offline, giving them everything they need to truly sit back, relax and enjoy their flight.”

— Oliver Schusser, VP, Apple Music

Apple Music subscribers can enjoy exclusive content access such as in-depth artist interviews and live music via Beats 1 global airstream. Apple continues to grow Apple Music with new acquisitions such as Platoon in London. Customers who do not have Apple Music subscriptions, can sign up during the flight and receive free access for three months. Apple Music is now available on iPhone, iPad, Apple Watch, Mac, Apple TV, PC, Android, CarPlay, HomePod, Sonos and Amazon Echo.