I first read about Spotify Teardown from a TorrentFreak story back in 2017, which centered on one of the book’s claims about how Spotify was built on pirated music. Prior to getting proper licensing deals, Spotify simply pulled music available on the Pirate Bay, which understandably isn’t the type of headline a company wants to be thrown around before going public. Spotify contacted the Swedish Research Council (who was funding the research in an effort to shutter the book), which speaks to the company’s concerns with its own self-deluded image. Even still, I don’t think that was the most damaging part of the book.
In my opinion, the most cutting part of Spotify Teardown wasn’t all the original research that went into the book or the claim that Spotify’s business was built on pirated music. Rather, what intrigued me the most was a small section about the company’s early days of investor funding. In 2012, while the company was still in the preliminary stages of entering the United States market, Spotify received a round of funding led by Goldman Sachs with an assist from Coca-Cola (I said it last week, but it obviously makes a ton of sense that Coca-Cola was the first brand to partner with TikTok).
The reason this small bit of news, which was widely reported on, stuck out to me so much while reading the book was because it showed the company’s true interests. Without investment from major music labels, a company like Spotify simply wouldn’t exist, so I’ve always found tech writers that credit Spotify for “saving” the music industry to be stupidly misguided. There is no Spotify without the record industry and its willingness to see this product play itself out. That’s why the Coca-Cola investment shows that Spotify is a company that exists purely to sell advertisements, not to create sustainable careers for artists. Much like TikTok, these platforms are just advertising companies. Spotify Teardown breaks down some companies involved in programmatic advertising:
Supply-Side Platforms (SSPs): Adscale, PubMatic, Rubicon, and YieldLab
Demand-Side Platforms (DSPs): AdRiver and Sociomantic
Ad Exchanges: Admeta, AppNexus, Facebook Exchange (FBX), OpenX, and Yahoo Ad Exchange
Ad Networks: Adkonteskst
Ad Servers: Adtech
Data Suppliers: Seed Scientific and the Echo Nest
Measurement: Moat and Google
Verification: ComScore and Nielsen
The authors compare this system to the stock market and argue it’s intentionally created to be incomprehensible to a normal person. If artists don’t see where they’d fit into this equation, that’s the point. They don’t. This is all information being traded based on user data being collected while playing music on the platform. If one wonders why Spotify is so excited to dive into podcasts, one reason is that the company was never truly invested in music beyond sheer marketing purposes. Spotify Teardown shows a company much like all advertising-support music platforms, where the ultimate customer is Coca-Cola; not music fans nor artists.