Spotify forced to defend multi-million pound Harry and Meghan podcast deal

Spotify has defended its multi-million pound podcast deal with the Duke and Duchess of Sussex, insisting the pair will boost revenue because they are “box office” names.

The comments came as senior executives from Spotify, Apple Music and Amazon Music were grilled by the Digital, Culture, Media and Sport Select Committee about the economics of streaming.

Musicians and songwriters have regularly complained that the royalties they receive from streaming services are too low.

But Spotify has paid Harry and Meghan - who will not return as working royals - a reported £18 million to produce and host podcasts. So far, one episode has aired which saw their son Archie make his broadcast debut.

Commentators have speculated that Harry and Meghan will have to draw in large audiences if they are to justify the lucrative contract their production company Archewell Audio signed.

Asked about the deal with Meghan and Harry, Horacio Gutierrez, head of global affairs and chief legal officer for Spotify said podcasts have a “completely different set of economics” compared to the music side of the business, but that investing in podcasts benefited music consumption on the whole.

“Like a lot of our services, there is a market for certain talent because they command a certain amount of consumption,” he told MPs.

“We don’t get to negotiate directly with artists the way we negotiate with podcasters or people who create podcasts so the structure of that market is very different.”

He added: “The product is valued based on how many users it can attract, how many streams it will attract, which in turn determines how many advertisers are willing to advertise on the podcast which determines the economic opportunity, there’s a market that’s emerging for talent in that regard.”

FILE PHOTO: Annual Commonwealth Service at Westminster Abbey in London
Spotify was asked about its podcast deal with the Duke and Duchess of Sussex.
REUTERS

Mr Gutierrez did not go into detail about the couple’s but said they’re weren’t “doing it for free”.

Asked if the couple were regarded as “box office”, Mr Gutierrez replied: “Yes. In terms of the talent that goes into podcasts, yes.”

When asked by Steve Brine MP whether Harry and Meghan have saved the music industry, Mr Gutierrez responded: “That seems a bit premature.

“They’re not the only act that we’ve signed, we’ve signed dozens of those and we’ll continue to do that.”

Representatives from the three companies were also quizzed on the impact of Google-ownedYouTube, which has the ability to make more content available for free.

Pressed on the matter, Elena Segal, global senior director of music publishing at Apple, said it is “challenging to compete with free”.

“It’s always been challenging whether it’s been legitimate or illegitimate,” she said.

The Duke and Duchess of Sussex: Prince Harry & Meghan Markle

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“It’s challenging to compete on an unlevel playing field.

“They (YouTube) don’t necessarily have licences for all of the music that they use and they don’t need to.

“And even when they do have licences, the amount they pay, because of the way their business model works and the way the tariffs work is less.”

Earlier this week, Harry and Meghan plugged their podcast as they featured briefly in a Spotify video which also has appearances from former US president Barack Obama, veteran rock star Bruce Springsteen and pop star Justin Bieber.

In the Spotify Stream On video, Meghan, who is sat on a sofa next to Harry, says: “We’re using podcasting to drive powerful conversations.”

Harry continues: “That inspire, challenge, and educate.”

Former actress Meghan, dressed in a sleeveless dress, adds: “We created Archewell Audio to make sure that we can elevate voices that maybe aren’t being heard, and hear people’s stories.”

Harry then says: “And the biggest part of this is trying to create this community of where you can share. We encourage everybody else to then share their own vulnerabilities within that safe space.”

Referring to the Stream On online event, the Spotify website says: “During Stream On, we’ll explore the power of audio, the journey of creation, and the opportunities ahead for millions of creators and billions of fans around the world.

“You’ll hear from a number of speakers, from global artists to Spotifiers to world-renowned storytellers.”

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