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Spotify CEO: Some 2022 Investments Were A Mistake

Industry professionals, investors, and listeners alike are wondering the same thing: Were Spotify’s substantial investments in 2022 a mistake? 

Maddy Troy

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Spotify reported its Q4 2022 earnings this morning revealing some financial growth points in the wake of the recent layoffs that cut 6 percent of Spotify’s staff. Most notably, the revenues from subscriptions and ads were both up double digits year over year. 

Where is the disconnect happening and why?

Industry professionals, investors, and listeners alike are wondering the same thing: Were Spotify’s substantial investments in 2022 a mistake? 

On this morning’s call, Spotify CEO Daniel Ek answered, “No… and yes.”

Ek explained that the year 2022 was a mixed bag for Spotify. User growth is way up, new app features made Spotify stand out against competitors, and long-term investments are already having a short-term impact. 

On the flip side, he just laid off six percent of his staff. Ek noted he may have over-invested in some areas relative to market uncertainty in 2022. 

Spotify reached 200 million paid subscribers, making it the first music streaming service to reach that number. In the coming quarter, they plan to reach the goal of 500 million monthly users. Jacob Kastrenakes of The Verge reported on the call this morning;

“Ek reiterated again and again that the company would be reorienting around “speed and efficiency.” The reorg? Speed and efficiency. The goal for 2023? Speed and efficiency. The biggest thing holding Spotify back? Speed and efficiency. (I counted 12 “efficiency” drops between Ek and CFO Paul Vogel just in my notes from the call.)” 

In the wake of this, the CEO said he requires more help at the top of the company. Ek is reframing the top structure at Spotify to work more closely with Alex Norstrom, Spotify’s chief business officer, and Gustav Söderström, Spotify’s chief product officer, Ek said, “materially [this will ] mean we’ll have more brains thinking about these things … to make decisions faster because that’s honestly one of the biggest blockers.”

There are many variables at play for Spotify. Some elements of their business model are working incredibly well, and some need restructuring and attention from more “brains”, as Ek says. The progression of Spotify will stay on our radar in 2023.

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Media Business

Instreamatic Launches New AI Tool for Audio Ads

This includes details like the listener’s location, time of day, type of app or platform they are using, the type of activity engaged in while listening, and even the local weather.

Maddy Troy

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Instreamatic, a company providing audio advertising and marketing products powered by artificial intelligence, has launched a new AI product called Contextual Audio Ads.

By using generative AI, the tool creates a synthesized voice for use in the commercial production process. With the use of the existing ad, hundreds or even thousands of personalized variables can be generated and stitched into the copy.

This includes details like the listener’s location, time of day, type of app or platform they are using, the type of activity engaged in while listening, and even the local weather.

For example, a Contextual Audio Ad created for a particular listener could start with “Good morning, hope you’re enjoying your podcast on this rainy day in Chicago. I just wanted to let you know about an incredible sale happening today.”

This may feel like a breach of privacy for some listeners, but advertisers are eager to try the technology. Currently, the Contextual Audio Ad product is being tested with creative agencies in the U.S. and the UK, according to Podcast News Daily.

“Instreamatic’s Contextual Audio Ads are better at capturing listeners’ attention because they speak precisely to that listener’s context and needs in the moment,” said CEO of Instreamatic Stas Tushinskiy.

It is unclear if listeners are required to opt-in to the Contextual Audio Ad tool in order for brands to leverage their personal data in order to be served personalized ads created by the AI.

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Media Business

Franklin News Foundation Names Jerry Lyles VP of Syndication

“Our expansion of America’s Talking Network podcasts to terrestrial radio has also occurred ahead of schedule.”

Maddy Troy

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Jerry Lyles, an industry leader with experience spanning four decades has joined the Franklin News Foundation as the organization’s first vice president of syndication and distribution.

Lyles has spend is career helping newspapers, radio, TV, and news media sites grow and expand their print and digital offerings. Lyles is now responsible for expanding Franklin News Foundation’s partnerships with media partners.

Franklin News Foundation President Chris Krug said, “Franklin has experienced significant growth over the past three years… Our team has built dozens of relationships across all platforms, and we are certain that having Jerry in this role will ensure we are able to deliver the highest level of service to our existing and new partners.”

Lyles will have responsibility over external relations for The Center Square newswire, Illinois Radio Network, and America’s Talking Network, all of which are positioned for significant growth over the coming years. Lyles has gained experience through is work for various media outlets, including Publishing Group of America, Athlon Sports, Parade Magazine, Dobie Media, TownNews (now Blox Media), AHM Publishing, and most recently, The Daily Wire.

“I have admired the service-oriented approach that Jerry took when we worked together in the newspaper industry,” said Krug. “Our expansion of America’s Talking Network podcasts to terrestrial radio has also occurred ahead of schedule.”

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Media Business

The Messenger Shuts Down Grid News After Purchase

Maddy Troy

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Grid News, the D.C.-based digital news startup sold last week to Jimmy Finkelstein’s new media startup The Messenger, will shut down Monday afternoon.

Last week, The Messenger said it would acquire Grid, and as part of a deal with Abu Dhabi-based investment firm International Media Investments (IMI).

The acquisition follows co-founder and president/CEO Mark Bauman stepping down last year during a time of internal confusion over the direction of the business. His leadership role was never re-filled.

The Messenger is reportedly evaluating what to do with Grid’s products, it is likely that Grid’s branding will not live on, a source told Axios.

Grid’s roughly 50 employees were told last week that the site would be shut down, The Messenger’s team is now interviewing Grid staffers for roles at the company. While The Messenger plans to retain as much of Grid’s editorial staff as possible, it is still unclear whether Grid’s co-founder and executive editor Laura McGann will stay on. 

The Messenger plans to maintain Grid’s newsletters, but it’s not decided if its podcast, “Bad Takes,” will continue, a source told Axios.

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