Your social media timeline must have been filled with overviews andscreenshots over the past few days. You too may have shared guilty pleasureswith the world. That is understandable. Music is often connected to emotion,and Wrapped allows you to nostalgically look back at that summer hit you couldgo wild on or that comforting song. When those sentiments are wrapped inbright colors and with witty commentary, the temptation is great to sharethem.
What started in 2013 as a prank to please users has become a powerfulpublicity weapon for Spotify. Marketers dedicate case studies to one of thebest examples of viral marketing, advertising where users lend a hand. In2020, Spotify recorded no less than 60 million ‘shares’ on social media onthen 90 million users. And that was only what the company itself couldmeasure. Screenshots are beyond that.
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That great love is somewhat strange in times when large technology companiesare mainly under fire for harvesting and processing deeply personal data,often for advertising purposes. The fact that Spotify largely escapes this forthe time being is mainly due to the – still – fundamentally differentdestination that Spotify gives to its data collection. In the jungle of musicstyles and songs, users expect an algorithm to take them by the hand andpersonalize suggestions. The more data Spotify sucks up to make thatexperience better, the better for the user.
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Spotify is growing strongly, but sees advertising market weakening
The question is how long Spotify can lean on that innocence. Because it has aproblem: since the company was founded in 2006 by the Swedish duo Daniel Ekand Martin Lorentzon, it has not yet made a euro profit. This is due to theflawed business model of music streamers. While paying users pay a monthly feeto listen to music, Spotify must pay a fee to rights holders for each trackconsumed. For example, 70 percent of what comes in immediately flows outagain, especially to the labels.
CEO Ek has made the analysis that the company has to tap into a differentbarrel if it ever wants to become profitable. The new strategy can besummarized succinctly. Spotify no longer just wants to be the world leader indigital music consumption, it wants to dominate in every form of sound,starting with podcasts. And it preys on the associated advertising money.
Spotify has pumped more than 1 billion euros into podcasts in recent years.The streamer bought the media companies Gimlet, Parcast and The Ringer andentered into exclusive agreements with controversial comedian and podcast starJoe Rogan, British (ex-) royals Prince Harry and Meghan Markle and formerfirst lady Michelle Obama.
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Ads in podcasts give Spotify wings
In an interview with Bloomberg TV last year, Ek indicated what he is allabout. “At $18 billion, the US radio advertising market is larger than theentire streaming industry.” According to the CEO, it is only a matter of timebefore the average consumer’s listening behavior shifts from classic, linearradio to on-demand, just as that trend has been for television. Ek counts onadvertising money to follow at that time, to find willing ears that gatheraround Spotify’s podcasts.
Political preference
Then the load of data on which Spotify is stored becomes more than just aservice to the user. The data is the fuel to offer advertisers a morepersonalized ‘targeting’, just as is already the case for, say, Facebook orGoogle.
At first glance, the music you listen to does not seem to reveal much aboutyour personal life. But from listening data things can be deduced not onlyabout someone’s taste in music, but also about, say, their mood, habits orhome situation. Is K3 on repeat? Then you most likely have children. If youhave ten playlists of adrenaline music for the gym, you may be a sports freak.
Adding podcasts makes it really easy to segment interests, even by politicalaffiliation. Then the line between what Facebook, which is maligned forprivacy violations, and the innocent Spotify does becomes very thin. Thequestion is whether users will find it so nice and funny at that time to beconfronted every year in December with what the Swedes know about them,cheerful packaging or not.
Surveillance
Some privacy activists are already looking at the annual Wrapped campaign withregret. “It is a clear example that Spotify’s business model is based onsurveillance,” summarizes Evan Greer of the digital rights association Fightfor the Future in the American weekly Wired. ‘It did an excellent job ofdisguising that as harmless fun. In this way, people not only activelyparticipate in their own spying, they also celebrate it by sharing itextensively and boasting about it to the rest of the world.’
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Spotify users take an active part in their own spying, and celebrate it bysharing their Wrapped extensively. “
Evan Greer, digital rights association Fight for the Future
Privacy-friendly services, such as the messaging app Signal, are alreadytapping into Wrapped’s popularity to underline their own virtues. Signaltweeted a parody of the Wrapped layout, listing the top five most popularcontacts to whom the user had messaged the most this year. It looked likethis:
1. No clue 2. Who knows 3. Profound mystery 4. Absolutely Clueless 5. A secret
Although skepticism is growing, it seems unlikely that Wrapped will be short-lived. Just as people now know that Facebook and Instagram monetize theirpersonal data and continue to use those platforms, the appeal of that annualbrag about your taste in music may continue to prevail over the less pleasant.