Spotify has a bit of a problem.
Okay, Spotify (SPOT) actually has several problems, from people who complain that its signature podcast “The Joe Rogan Experience” is a clearing house for misinformation about covid-19 and the host’s anti-black racial slurs to songwriters and artists who complain that they can’t live on the royalty rates that the Swedish service offers.
The company has weathered the Rogan controversies with no significant impact. And it has long pushed back on the second charge, saying that it gives "roughly" two-thirds of revenues to music rights holders. CEO Daniel EK insists the streaming industry isn’t in a place where it can afford to pay more.
But while it’s understandable that musicians who feel they are underpaid have little sympathy for the service, it's also true that the company operates with very thin margins in a field in which it has no price control. Even as it generated $11.4 billion in revenue last year, it still had a loss of $38.8 million according to its fourth-quarter earnings report.
Spotify Doesn’t Make Money From Music
To compensate for the low rates of return on music, the company has branched out in recent years, from spending lavishly on Rogan to acquiring podcasting platforms such as The Ringer and Gimlet and Anchor, all while working on a plan to reduce costs and raise its margins.
Spotify's buying spree shows no signs of slowing down anytime soon, even if its latest move shows the company is now considering options beyond podcasts.
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What Has Spotify Purchased Now?
Ever since The New York Times purchased the game Wordle for an undisclosed (but rumored to be more than a million) amount, there’s been a gold rush to create the new hot viral game.
Now Spotify has gotten in on the action by purchasing the music trivia game Heardle for an undisclosed amount. This is the first time the company has purchased a game.
The game allows music fans to guess a song based on the opening notes, and are given six tries and opportunities to play up to 15 seconds of the intro. So if you’ve ever wanted to flex your "name that tune" persona, this game is for you.
When the answer is revealed, the song is then linked to Spotify. The thinking here, from Spotify’s perspective, seems to be that Heardle can act as a music a discovery tool that keeps superfans engaged while also drawing in more casual mobile game fans.
“We are always looking for innovative and playful ways to enhance music discovery and help artists reach new fans,” said Jeremy Erlich, global head of music at Spotify. “Heardle has proven to be a really fun way to connect millions of fans with songs they know and love and with new songs and a way to compete with their friends as to who has the best musical knowledge.”
As of now, Heardle is expected to remain a standalone website, and there are no current plans to incorporate it into the app in the immediate future.
As noted by Stereogum, there are a number of fan-created, artist specific games on the site, including those for Vampire Weekend and Taylor Swift. It’s unclear what will happen to those.
