The Amazon Music app on a smartphone, on a wooden background.
Photo: Amazon

Amazon, the Spotify killer

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Good morning! How many crypto commercials did you count during the Super Bowl? We lost count after four, but Coinbase definitely won the whole thing with its QR code ad. And the crypto ad bonanza is only just beginning.

Also, have you checked our latest manual yet? It's a deep dive into the proptech industry — and if you've bought, sold, built or even shopped for a home recently, you know just how fast things are changing.

I’m David Pierce, and I’m currently tearing through “The Always Sunny Podcast,” which is almost as much fun as the TV show.

Alexa, play podcasts

In the last couple of weeks, a lot of people have found themselves Googling things like "best music service not Spotify." Things like #deletespotify have trended repeatedly. All of Spotify's competitors should send Joe Rogan a gift basket, really. But if users do leave Spotify, where will they go?

It's easy to see streaming as a two-horse race. There's Spotify and there's Apple Music. And then, way down below, there's Tidal and Deezer and Pandora and SoundCloud and YouTube Music and SiriusXM and countless others.

But Amazon might be the company to watch in the audio wars. For starters, it's already bigger than you think:

  • Amazon Music owns 13% of the music-streaming market, according to Midia Research. That puts it in third, behind Spotify (31%) and Apple (15%). But Amazon is growing faster than either one. YouTube Music is actually the fastest-growing service on the market, but it's not quite as competitive as Amazon Music yet.
  • Amazon has also been making a string of deals to bring podcasts to the platform. Just last week, it made a deal with Guy Raz to publish episodes of "How I Built This" on Amazon a week before they're available elsewhere. It made similar deals with podcasts like "SmartLess" and "My Favorite Murder.”
  • It's interested in buying Audioboom, Sky News reported this weekend. Audioboom makes shows like "F1: Beyond the Grid" and "Dark History." And, of course, it paid a reported $300 million for Wondery in 2020 and acquired the hosting and advertising platform Art19 last year.
  • Amazon spent a total of $13 billion on content last year, and while most of that is video, it's up $2 billion from its 2020 spend. Amazon's serious about being a media company in general.

Amazon has a big advantage here: It doesn't really need to make money from audio. As Spotify and others are finding, the economics of the audio business are rough and not getting easier. But Amazon seems to treat Amazon Music like it does Prime Video: a good service on its own, but a killer one as part of a Prime subscription.

Audio suits a lot of Amazon's needs, actually:

  • Amazon Music integration is a reason people buy Alexa speakers, and music in general is the main reason people use them. And like Microsoft bundling Teams to destroy Slack, Amazon can bundle Music with Alexa and make inroads practically anywhere. Even Spotify's Daniel Ek admitted that Spotify was "not that differentiated" and was struggling to make deals with hardware partners. Alexa will help Amazon get a lot of those deals, which become wins for Amazon Music.
  • Amazon's also a fast-growing advertising business, and audio ads are a fast-growing business.
  • And, of course, as the creator economy continues to boom, Amazon wants musicians and podcasters to use its tools to sell stuff, like Twitch streamers already do. It’s already experimenting with this, like in December’s Kanye West concert where viewers could preorder his merch right through the Amazon Music app.

And then there's Audible. Audible is a wholly separate thing from Amazon Music, which obviously started with audiobooks but more recently has added podcasts to the platform and funded its own "Audible Originals," which are just, well, podcasts. It wouldn't take much to combine Audible with Music, and maybe even Prime Video, for a pretty powerful media subscription.

The big question here: Is audio a business or a feature? Spotify, Clubhouse and others are betting it's a business. Apple's betting it’s a feature, better off rolled into something like an Apple One subscription, more of a marketing engine than a profitable enterprise on its own. And Amazon's clearly in the feature camp as well: Music can bring people into its other services, get people inside of Amazon's universe and put its tools a click or voice command away anytime you have headphones on.

Streaming execs have always told me that people don't really switch music services. Your service gets to know you, the recommendations get better, you understand the interface, you build a library and the switching costs get too high given that it's all the same music everywhere you go. (I’ve been on Spotify for a decade for this exact reason.) That's why moments like the Rogan controversy matter so much: They make people shop again. And Amazon's surely hoping millions of Prime subscribers discover they already have access to a pretty good music service.

— David Pierce (email | twitter)

On the calendar

The dawn of the tech union

What are the key drivers at play leading tech workers to form unions? What does this mean for employers? How can companies better adapt to the needs of their workers? Protocol’s Anna Kramer will chat with tech unions about their needs, companies about their strategies at the bargaining table and labor experts about how workers and employers can best collaborate at 10 a.m. PT on Feb. 22. RSVP here.

A MESSAGE FROM ESRI

The global nature of business makes tracking your company's operations trickier than ever before. Overseeing supply chains and an international, dispersed workforce is tough. Maintaining visibility over all aspects of your operations is even tougher. The changing norms of business make location services no longer a "nice to have" but a "need to have" — and at the forefront of the geospatial intelligence revolution is Esri.

Learn more

People are talking

New Peloton CEO Barry McCarthy said he's hoping the company stays independent:

  • “There are lots of other things I could be doing with my time that are quite lucrative than hanging out with a business that’s about to be sold.”

Somnium Space’s Artur Sychov said virtual real estate is just a fraction of the metaverse:

  • “It will stay in the spotlight and be relevant for a certain period of time, but I don’t think we’ll see the hype because virtual land costs something only if it's useful to people.”

Stacy Spikes said MoviePass is eyeing the metaverse:

  • “You don’t need fake popcorn; you don’t need tomatoes; you don’t need other things that are in [the metaverse]. And that’s where we’re looking at it.”

Delivery Hero CEO Niklas Ostberg apologized after shares of the company sank:

  • “I’m truly sorry for all shareholders! 😔 I’m in your boat … We will work even harder to prove our investment strategy is going to pay off.”

Elon Musk blamed the “fun police” for the recall over Tesla’s “Boombox” feature:

  • “The fun police made us do it (sigh).”

Coming this week

Gartner’s Security & Risk Management Summit starts today. The event covers leadership, digital risk management and tech and architecture.

ProductCon starts Thursday. The conference includes talks on the biggest trends in product management.

The Deep Learning Summit also begins Thursday. The hybrid event will feature speakers from Pinterest, OpenAI, Zoom, Lyft and others.

In other news

The tech needed to build Mark Zuckerberg’s metaverse isn’t here yet. And not only that, we’re years away from even knowing how to build it.

Peter Thiel is becoming a political powerhouse. The New York Times has a good read this morning on Thiel's rise within Republican circles, and the candidates hoping he'll help them win this year.

Apple’s retail workers are getting a raise, sources told Bloomberg. Some salespeople, Genius Bar technical support staff and senior hourly workers are getting raises ranging from 2% to 10%.

Booking.com is cutting almost 3,000 call-center jobs. The Booking Holdings unit had also laid off about a fourth of its workforce during the height of the COVID-19 pandemic.

Playboy wants to build a mansion in the metaverse. It’s already launched thousands of NFTs, and is looking to compete with OnlyFans by creating its own social network called Centerfold.

Cisco offered over $20 billion to buy Splunk, sources told The Wall Street Journal. The companies aren’t in active talks over the deal, the sources said, but Splunk’s shares jumped after the WSJ’s report. Bloomberg then reported that the discussions fell apart weeks ago, but since appears to have deleted its story.

Call it crypto, and they will come

Coinbase, Crypto.com and others used Super Bowl ad spots to bring their crypto messaging to the masses. Coinbase certainly got its message across with a bouncing QR code commercial that captured everyone's attention; the code linked to a promotional page on Coinbase's site. That is, until the site crashed under the pressure of so many people. The company had to throttle traffic for a few minutes to get everything back up and running.

Was paying $6.5 million for a commercial whose popularity crashed the company's site worth it? It would seem so: Coinbase would have to convert just 0.04% of viewers to break even, according to some math.

A MESSAGE FROM ESRI

The global nature of business makes tracking your company's operations trickier than ever before. Overseeing supply chains and an international, dispersed workforce is tough. Maintaining visibility over all aspects of your operations is even tougher. The changing norms of business make location services no longer a "nice to have" but a "need to have" — and at the forefront of the geospatial intelligence revolution is Esri.

Learn more

Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.

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