Can Spotify Out-YouTube Before YouTube Outs-Spotify is the Perfectly Wrong Question

Or, how Spotify realized that its big advantage is when you're not looking at your screen

Welcome back to Halftime, Posting Nexus’ weekly links round up and mini-essay. Today, important stories from Wired, Lightshed Management, Axios, and a recommendation about a killer docuseries on the history of the papacy.

But first…

Data!

1. Super Bowl ads this year are leaning more healthy, and more female oriented. It’s very encouraging to see the NFL build up a stronger female audience over the last few years. Some of this may speak to the Taylor Swift effect, but in general, I’ve noticed that more women in my own friend group are locked into their weekly Sunday games. As a diehard football person (with a very sad team in the form of the Saints), it warms my heart. The healthy food bit? That speaks to overall trends we’re seeing on social and in Google Search trends. “Crunchy” season is here to stay. — (Axios)

2. Who is actually the most popular Pokémon of all time? I love nothing more than a beautiful animated chart, and Dr. Shahin Rostami has built a magnificent interactive graph displaying changes in the most popular Pokémon characters over the years, as seen through Google Search trends. Pikachu is number one, of course — but I was surprised to see who came out in the second spot. — (Dr. Shahin Rostami)

Three Important Arguments

1. Attention — Can Anyone Stop President Musk? — (The Verge)

2. Identity — Buzzfeed seeks to counter right-wing vibe shift. An interesting idea, but I’m unclear on whether people want yet another app to use. Leaning into people’s left-wing identities seems to be the principal governing BlueSky. Does Buzzfeed still have the staying power that it once did? No. Is it a cool brand? No. So will people use a social app when there’s already a populated alternative? Unlikely. — (Semafor)

3. Platform — Spotify is Winning as Competition Fades. Rich Greenfield and the team at Lightshed point out that Spotify’s MAU and subscriber numbers continue to grow even as marketing spend decreases. An impressive feat, and one that speaks to the power of total brand power. More on this in this week’s Halftime thesis below. — (Lightshed Management)

Seven Must Reads of the Week

So much important journalistic work is being published right now, but I especially wanted to highlight the politics, security, and science teams at Wired. The magazine, which really delved into politics last year, has become a go-to source for breaking news, critical analysis, and strong beat reporting. CNN’s Brian Stelter reports this has led to record signups for the publication. Finally, some good news. Today, I want to highlight seven necessary stories from Wired’s teams. Thank you.

1. A 25-year-old with Elon Musk ties has direct access to the Federal Payment System — (Wired)

2. The young, inexperienced engineers aiding Elon Musk’s government takeover — (Wired)

3. Pronouns are being forcibly removed from government email signatures — (Wired)

4. DOGE is still blocking HIV/AIDS relief exempted from foreign aid cuts — (Wired)

5. The damage to federal medical research is already done — (Wired)

6. Under Trump, US Cyber Defense loses its head — (Wired)

7. RFK Jr.’s organic crusade has sparked a weird political realignment — (Wired)

Three Fun Stories

1. Funny One — I am disgusted by Elon Musk’s gaming setup. Chris Person is one of the funniest people on the internet, and his breakdown of Elon Musk’s entire gaming setup, including a deep dive into some pretty grainy images, is phenomenally insightful as it is funny. — (Aftermath)

2. Wild One — Brookhaven VR, the largest game on Roblox’s service, sells to major video game developer. These types of islands and empires stories (more on this below) are going to become increasingly important and frequent at Posting Nexus. Is this the future of game and entertainment development? — (Bloomberg)

3. Endearing One — Bookshop -dot-org is launching an eBook store to take on Amazon. Yeah…just, like, fuck Amazon supremacy? Taking on the corporate giant is punk rock as hell. — (The Verge)

A Movie, a TV show, a Podcast, and a Book

1. Movie — Endurance — (National Geographic)

2. TV show — Pope: The Most Powerful Man in History — (CNN/Max)

3. Podcast — “A Very Bad Pope (Benedict IX)” — (The Popecast — A History of the Papacy)

4. Book — The Ice at the End of the World: An Epic Journey Into Greenland’s Buried Past and Our Perilous Future by Jon Gertner

Halftime Thesis — Can Spotify Out-YouTube before YouTube Out-Spotifys?

Conglomerates that have already achieved monopoly status in one industry racing to become the dominant monopoly in another industry is always an eye-roll inducing battle to watch play out. But that’s where we’re at today in the podcast wars.

Cut it any way you want, there are really only two global competitors for podcast attention: YouTube and Spotify. YouTube has surpassed Spotify in the United States when it comes to podcast consumption, according to an October report from Cumulus Media and Spring Hill Insights, capturing 34% of US listeners-a-share. Spotify sits at half YouTube’s share (17%). Globally, however, data suggests that Spotify is far and away the clear winner with nearly 40% of all podcast consumption, according to a 2024 Edison Research report. Back in 2022, both Spotify and YouTube were tied for first place when it came to preferred podcasting apps, according to The Verge.

This week’s quarterly earnings calls from both companies highlight just how important podcasting — and video podcasting, in particular — are to the future of their business’ bottom lines.

Google executives told analysts on their call that YouTube was the leading streaming service and podcast app. Including podcasts in prepared statements, setting the tone for the rest of the call, isn’t a random inclusion. By looking at some additional stats, we can why Google executives are boasting about the podcasting power of YouTube, especially following the 2024 election being hailed (or derided) as the “Podcast Election,” via Podwire:

• 40% of podcast listeners prefer actively to watch podcast videos, while 31% prefer audio-only experiences, demonstrating quite a strong preference for video content

• 61% of the younger audiences of 18-34 are especially influenced by YouTube thumbnails, showing preference for this visual element

• Two-thirds of the people who listen to podcasts on a weekly basis state that YouTube, Spotify, and Apple are their to-go destinations when it comes to podcasts

• 55% of YouTube podcast listeners consume the same content on other platforms as they do on YouTube

Activity on YouTube around podcasts is what’s most interesting to me. YouTube, unlike Spotify, is more than just audio. People approach YouTube as a replacement for evening television; they use YouTube for homework research; they socialize with other community members on live streams. For more than half of YouTube podcast listeners to seek out the same content on other platforms while usage increases on YouTube speaks to the core advantage of “islands” that YouTube owns.

Spotify’s executives understand the power this wields for podcasting, which is why in turn, Spotify is investing heavily in video. As Spotify executives noted in November, “We’ve seen shifts in podcast trends across the industry globally, and one of them is that video consumption hours have expanded rapidly — more than 250 million users have watched a video podcast on Spotify, and nearly two-thirds of podcast listeners say they prefer podcasts with video.”

Spotify is following much of what worked for YouTube. This includes a new creator payment system, which incentivizes creators to upload more video content, and will reward high performing creators across audio and video with better monetization opportunities. Called the “Spotify Partner Program,” the specifics are an exact replication of what worked for YouTube more than a decade ago.

If YouTube wants to be Spotify and Spotify wants to be YouTube, both competing for the same audience and therefore the same slice of advertising dollars, the ultimate question seems to be which service can out-do the other by building on proven strategies. My argument, as I’ll outline below, is that both YouTube and Spotify are in a rare position where they are competing less for attention within the same format, but competing more for dominance across different acts of attention: discovery-driven-watching, and loyalty-building-listening.

The Argument for Spotify

Spotify’s biggest advantage over YouTube is that it’s competing for more passive mobile time. Put in a less jargon-y way, Spotify wants to own the time people spend on their phones that isn’t spent looking at their screens. This includes investing in more audiobooks. Time spent on the app increased from an average of 30 million hours per month on average for a daily user to 40 hours. Some of this mentality even makes its way into Spotify’s video plans. Spotify also allows videos to play when the screen is off, something YouTube allows for with some premium videos but not all. Retention, as much as discovery, is key to building a loyal base.

If I had to summarize Spotify’s approach, I’d say that Spotify wants to be to audio what YouTube is to video — and is using video to further along its audio business. Specialized, dominant, and hopeful for creators entering the space. Giving creators the ability to upload their videos, knowing that these videos will also be available on YouTube, isn’t tackling YouTube as the global dominant video app, but allowing Spotify creators to build loyalty within audiences however audiences want to listen.

I think of media (as a whole) abiding by one specific law and playing out within one specific reality. Power laws dictate that the more of something that is available, the greater the share will be given to the top attention commanders. Taylor Swift in music. Marvel movies in theaters. Harry Potter novels in book sales.

Democratizing access to the internet, and giving creators the ability to use large distribution portals to reach audiences, only increased the severity of power laws. eBooks being published on Amazon Kindle, YouTube videos appearing every single second of every single day, and more artists being able to upload their music directly to Spotify means that competition increases and those power laws get more stark. It looks a little something like this (ripped from Michael Tauberg):

Then there’s the specific reality aspect. I call it the theory of empires and islands. Islands are the best way to think about our next iteration of the internet and the content we consume. Creator-led projects in Fortnite and Roblox are capturing more attention every single month. Substack authors flock to the platform to reap the rewards of its recommendation system and active reader base. YouTube is an empire built on the backs of tens of millions of individual creators who operate their own islands inside the walls of digital’s Rome.

Islands are only as prosperous as the larger empire they’re built within, helped by stronger traffic and activity that turn clubhouses into full fledged businesses, ghost towns into prosperous cities. These empires work to keep island owners and their visitors from stepping into other empires, profiting off the activity happening in these distinct colonies. So long as the colonies are fed, people are relatively fine (albeit, not happy) to sit within one spot, to create for one entity.

It looks a little something like this:

I’ll go more into empires and islands theories next week, but I want to mention it here because you can see how it would work for Spotify. By honing in on the ability to better incentivize and monopolize on an activity that YouTube isn’t concentrated on, Spotify can work on innovating new advertising formats, focus on building for specific times of the day (before bed, during sleep, in the early morning), and help creators work within those boundaries. Consider this point from Spotify’s team:

“We’re making it easy for fans to stream their favorite video content in the foreground or background without disrupting the experience — whether they are using Spotify Free or Premium…they can begin an episode while getting ready for the day, watching in the foreground before slipping their phones into their pockets to continue listening in the background as they commute.”

Trying to compete with a bigger, stronger, and more creator-focused platform like YouTube along the same rules that YouTube dictates, engaging by their rules of engagement, the worse off you are as a competitor. Spotify executives know they’re not going to compete with YouTube on a one-to-one level. Jordan Newman, head of Spotify’s Content Partnerships, told Business Insider that “this isn’t a zero-sum game,” adding that “most sophisticated platforms are multi-platform, and they’re optimizing their content for the platform in which it appears.”

YouTube allows podcast creators to break up their longer episodes into segments, which tap into traditional SEO marketing, and reach wider audiences. But if Spotify can be the offscreen home to those listeners, and build loyal audiences, it’s a long-term win for Spotify.

The question is…

Is YouTube the One True App?

A nagging thought in the back of my head, making itself more pronounced with each new data point I come across, is that getting people to do something on another platform that they already prefer doing on one specific site is exceptionally difficult. Getting people to watch TV that’s not on Netflix. Getting people to buy books off a site that’s not Amazon. And, in this case, getting people to move over to Spotify if they’re listening to podcasts on YouTube.

We don’t need to spend much time talking about YouTube’s big advantage because it’s so obvious. It is the sun in our digital solar system. Instead, I want to focus on why YouTube is leaning into podcasts now, despite the platform being a podcast home for the last seven years, and despite the level of controversy it brings, from creators like Joe Rogan and Lex Friedman to Andrew Schulz and Adin Ross. Actually, the answer is as simple as the sentiments that Alphabet C.E.O. Sundar Pichai and Chief Business Officer, Phillipp Schindler, put out on the company’s recent earnings call: “YouTube makes multi-year investments to tap into shifting consumer behavior,” Schiller said. “The current surge in living room viewership directly reflects years of work to build the right products and partnerships.”

Schiller also announced that audiences watched more than “400 million hours of podcasts each month on living room devices alone.” Choosing to highlight the living room not once but twice when talking about podcasts and YouTube’s winning strategy isn’t a random turn of phrase. Those same executives didn’t exactly delve into their AI business (outside of highlighting a strategy) because that’s not a winning game yet. Podcasts, and specifically podcasts in the living room, are a winning bet Google executives want investors to pay attention to right now.

Many of you have likely seen this chart from Nielsen’s monthly gauge report, but I wanted to highlight it once again in the context of podcasts.

YouTube is one of the only platforms that has seen consistent growth in time spent with streaming in the United States on TV sets. It maintains the largest share — 11.1% of all time spent with streaming television, as of December 2024. Netflix, which remains the largest subscription streaming service, but records about 66% of the same audience size. The Roku Channel and Tubi, the largest free ad-supported streaming platforms, have about 18% of YouTube’s size. YouTube executives are aware that mobile viewing is leaning toward platforms like TikTok and Instagram, but there is a strong case for YouTube as the dominant entertainment streamer globally for people relaxing at home.

You can see some of this mentality in smaller details or other acquisitions. Algorithmic recommendations on YouTube favor longer form content, which encourages creators to produce videos 20 to 30 to 60 minutes in length. Google acquired Sunday Ticket for YouTube TV, bringing a direct-to-consumer option to the largest sport in the United States where audiences spend the most time each week. Every minute that YouTube maintains on living room sets gives the company a stronger hold on specific advertising formats. Desktops are already dominated; mobile is tightly competitive. YouTube Shorts maintains the smallest KPIs when compared to TikTok, Reels, and YouTube’s longer form videos. It’s not that YouTube isn’t competing in the space — being integrated into the larger video ecosystem is still an advantage — but it’s not the version of the mobile dominant space that YouTube needs.

Naturally, YouTube execs aren’t saying they don’t want to play in the mobile podcasting space. The company introduced a proper RSS feed last year to make podcast organization more manageable. YouTube Premium allows for offline listening and viewing. But whereas Spotify sees its potential in being the dominant source of noise for listeners who can’t look at their screen all the time, YouTube sees its position as being the go-to app that viewers open the second they turn on their televisions. Both YouTube and Spotify want to compete in each other's spaces, but understanding where they have a competitive advantage and where they don’t will help us to better understand moves they make and, more importantly, moves they don’t. TV sets are a win for YouTube. Mobile is a win for Spotify.

I don’t think YouTube needs to out-Spotify before Spotify out-YouTubes. Nor does Spotify need to out-YouTube YouTube first to be a winner in the space. What these teams seem to understand is there are two complementary — not competing — attention spaces in media: one that requires eyeballs and one that doesn’t. Being able to provide for both wants and needs, but understanding the difference in approach and helping creators navigate that space, is what leads to each company winning.

Bluntly, folks: these realizations are great for these guys and, like, monopolies. In turn, that’s pretty terrible for us.