Janet Yellen Thinks We’re at a Dangerous Moment

Summary

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Podcast Summary: "Janet Yellen Thinks We’re at a Dangerous Moment"

Podcast: Everybody's Business (Bloomberg & iHeartPodcasts)
Hosts: Max Chafkin & Stacey Vanek Smith
Air date: January 16, 2026
Main Guests: Janet Yellen (former Fed Chair and Treasury Secretary), Ashley Carmen (Bloomberg reporter)

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Episode Overview

This episode delves into the unprecedented pressure on Federal Reserve independence following the Trump administration’s criminal investigation into Fed Chair Jerome Powell. The show features an in-depth interview with Janet Yellen, offering sobering historical perspective, and shifts to a lively analysis of Spotify’s business woes. The hosts conclude with discussion of trending, underrated stories about the intersection of tech, work, and social life.

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Key Discussion Points & Insights

1. Trump, Powell, and the Assault on Fed Independence

[01:06–08:57]

• Trump has been publicly attacking businesses on social media, but his latest focus is unprecedented: Federal Reserve Chair Jerome Powell faces a DOJ criminal investigation, widely seen as an effort to undermine Fed independence and push for lower interest rates ahead of midterms.
• Jerome Powell’s video statement: Strongly repudiates the accusations, highlighting political interference:

  “The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president.” – Jerome Powell [06:41]

What’s at Stake?

• The show clarifies that a president cannot cap private credit card rates or force Microsoft to forgo incentives just via social media posts. Actual policy change requires Congressional action.

• Banks and fintechs are reacting with “gimmicks” (temporary rate caps, corporate pledges) rather than systemic change.

• Trump’s moves are framed as “desperate attempts to control economic forces he cannot control.” – Stacey Vanek Smith [05:50]

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2. Interview: Janet Yellen on Central Bank Independence and Democratic Norms

[08:57–20:42]

Yellen Explains the Principle of Independence

• Fed independence is 'bedrock' for economic stability:
  “When central banks are not independent, inflation tends to be higher and economic performance generally worse. … It’s necessary to take the long view.” – Janet Yellen [09:28]
• If interest rates were forcibly cut to 1%, as Trump demands, inflation would soar, possibly returning the US to the 1970s’ economic instability.

  "If interest rates were held at 1%, we would see inflation move up and it would move up a lot, and eventually we'd be back to something like the 70s.” – Janet Yellen [10:43]

Unprecedented Political Pressure

• No Fed chair in Yellen's experience has faced such intense political targeting:

  "This is a very dangerous thing." – Janet Yellen [11:21]

• The threat of criminal prosecution for policy disagreements is, for Yellen, a red line:

  “When a president weaponizes the Department of Justice and uses pretenses to go after enemies, we're not living in a democracy anymore.” – Janet Yellen [13:34]

• The Fed is designed to be accountable to Congress, not the President.
  “Yes, the Fed should be and is accountable—but not to the president, to Congress… that's where the oversight lies.” – Janet Yellen [14:40]

• Yellen and her contacts within the Fed are deeply disturbed, viewing this as a “mortal threat” to the core function and independence of the institution. [15:47]

Communicating the Crisis

• Most Americans barely understand the Fed’s role, which presents an added challenge:

  “Most people don’t really know what the Fed does… now people know they don’t like high prices, but do they understand how the Fed affects the job market? Not sure. Probably not.” – Janet Yellen [17:38]

Prognosis: Uncharted Waters

• Yellen emphasizes the situation’s unpredictability and the negative “downside risk” seen by other leaders:

  “What I do see is that market reactions matter, public reactions matter. … We have three more years of Trump.” – Janet Yellen [18:39]

• Ironically, the pressure campaign may backfire and strengthen Powell’s resolve to stay on:

  "I think if that was the idea, it goes in the direction of backfiring because his interest in staying probably is higher if he sees the Fed's independence is seriously under threat." – Janet Yellen [20:00]

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3. Spotify’s Turbulent State: Strategy, Artist Relations & Succession

[23:20–36:51]
Guest: Ashley Carmen (Bloomberg)

Dominance and Discontent

• Spotify remains the world’s largest subscription-based streaming platform—central in how artists earn money.
• Despite size, investors are nervous: Stock is down 30% from last summer; price hikes are met with more selloffs.

The Artist Dilemma

• Over 60% of Spotify revenue is paid to “music rights holders,” but artists often see little. Artists frustrated with being grouped into a royalty “pool” with superstar acts and even white noise or AI tracks.

Expansion and Industry “Shenanigans”

• Podcasting and audiobooks dilute music focus; Spotify’s “bundle” maneuver allowed it to cut songwriter royalties by $230 million in one year.
• The hosts liken this disruption in the music industry to what Netflix did to video: upending business models with wide reverberation.

Future Strategies and Identity Crisis

• Recent leadership change: founder/CEO Daniel Ek steps down; two co-CEOs are now at the helm, leading to joking comparisons (“business throuple,” Foundation’s triple emperors).

• "No regrets" is the new driving philosophy — users should feel their time on Spotify is additive, not “doom-scrolling.”

• New revenue streams: “Discovery Mode” lets artists give up a bigger cut for more playlist visibility; exploration into fitness content and a possible super-premium tier.

• Quote:
  “Everything about the way these guys seem to talk about music feels like a bunch of people who aren’t actually that into music… it feels a little bit like an alien trying to understand this other species, which is people who like music.” – Max Chafkin [34:40]

• Spotify (and the internet) have fostered a “global music culture,” giving platforms for regional acts with international breakout, e.g., Peso Pluma and Bad Bunny.

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4. Underrated Stories of the Week

[39:03–43:19]

• Stacey’s pick: Viral Chinese app “Are You Dead Yet?”—a daily check-in tool for urban singles aiming to combat loneliness, garners reflection on technology, isolation, and the need for connection.

  “It says something about urban loneliness and how disconnected we can be.” – Stacey Vanek Smith [39:57]

• Max’s pick: Young people using dating apps like Grindr to find jobs instead of dates, reflecting the tough job market and blurring lines between social, romantic, and professional spheres.
  “A spokesperson for Bumble told Bloomberg looking for job opportunities on their app 'isn’t aligned with our mission and doesn’t create an authentic experience for our community.'” [42:13]

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Notable Quotes & Memorable Moments

• Janet Yellen on Fed principles:
  "The Fed is a thoroughly non political institution. That is the core of who they are. ... President Trump wants the Fed to do what he thinks is best, and he's made clear he is willing to pull out all the stops to try to get his way with the Fed." [11:39]

• On the risk to democracy:
  “...when a president weaponizes the Department of Justice and uses pretenses to go after enemies, we’re not living in a democracy anymore.” – Janet Yellen [13:34]

• On Spotify’s transformation:
  “We are doing something new, we are creating a global music culture.” – Daniel Ek (quoted) [35:00]
  “The no regrets philosophy is that unlike doom scrolling, they want people to leave Spotify and feel like that was time well spent.” – Ashley Carmen [33:07]

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Timestamps for Key Segments

| Timestamp | Segment/Topic | |-----------|--------------------------------------------| | 01:06 | Main show introduction; Trump targets the Fed | | 06:36 | Jerome Powell’s public statement | | 08:57 | Interview with Janet Yellen begins | | 13:34 | Yellen on criminalizing policy disagreement | | 15:47 | Fed staff’s internal reaction | | 17:38 | Communicating Fed independence to the public| | 18:39 | Yellen’s outlook, consequences, and predictions| | 23:20 | Spotify discussion with Ashley Carmen | | 34:40 | Are Spotify execs really into music? | | 39:03 | Underrated stories of the week |

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Overall Tone & Takeaways

• Tone: The episode is a mix of “sobering” (Yellen’s interview, institutional crisis over Fed independence) and “wryly humorous” (Spotify’s identity crisis, bizarre social tech trends).
• Takeaways: This is a rare moment for U.S. economic governance—a “dangerous moment” per Yellen—with the possibility of lasting damage to the independence of key institutions. Meanwhile, seismic shifts continue in how businesses and individuals respond to technological and political uncertainty, from Wall Street to the world of streaming and dating apps.

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Transcript

[Michael McDermott]

At CES. Michael McDermott, EVP of Samsung, spoke with Bloomberg Media Studios about what the company calls its next AI chapter, your companion to AI Living. It's a shift from AI as a feature to AI as a trusted partner in everyday life.

[Chelsea Handler]

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[Max Chafkin]

Welcome to everybody's business from Bloomberg Business Week. I'm Max Chavkin.

[Stacey Vanek Smith]

And I'm Stacey Vanek Smith.

[Max Chafkin]

And Stacey, we've got huge news to talk about the video message heard round the world. The post to end all posts. On Sunday, Federal Reserve chair Jerome Powell hit record, sent a video message to the nation and President Donald Trump in response to to a federal investigation into him and the Fed.

[Stacey Vanek Smith]

Yes, a criminal investigation, in fact. And what I think is really at issue here is the independence of the Federal Reserve. And we have a very special guest to talk about this, former Fed Chair and Treasury Secretary Janet Yellen.

[Max Chafkin]

Oh my God, we got Yellen.

[Stacey Vanek Smith]

We got Yellen. Yes. And she'll talk about the implications of Fed independence and what all of this latest drama means.

[Max Chafkin]

And then Stacey, you're gonna wanna hit pause on the chill beats to write emails playlist that I know you've been rocking out to this morning because absolutely. Ashley K. Is here to talk about the shakeup at Spotify and what it means for that playlist, how that playlist is going to change.

[Stacey Vanek Smith]

Excellent. We also have our underrated stories. Mine is about a new app which is sort of funny, sort of poignant, very revealing about modern life.

[Max Chafkin]

And I'm gonna talk about a new way to get a job on Grindr.

[Stacey Vanek Smith]

Oh my God. So Max, President Trump has been calling out all kinds of different companies and industries on his truth social social media account and the latest one in his sights is credit cards.

[Max Chafkin]

Yeah, it feels like Trump is looking at the polling and we talked about this a little bit in our year end episodes. He's Looking at the polling and he's trying to like kind of frantically do something to get people's attention. And a lot of these somethings are, are sort of putting him in conflict with business interests. And one of these is credit card interest rates. So although it's been sort of reported that Trump like, and Trump himself has said that he capped interest rates at 10%, what he actually did, as he often does, is post on Truth Social capping interest rates at 10%.

[Stacey Vanek Smith]

He can't do that. No, these are, these are companies, public and privately held companies.

[Max Chafkin]

You need a law. On the other hand, what I will say, this is related, I suppose, to policies that Democrats have been talking about for a long time. Elizabeth Warren is a supporter, although a lot of these Democratic politicians have sort of said we'll believe it when, when we see it. Meanwhile, banks are just absolutely losing their minds. This is, they're like J.P. morgan. The big credit card lenders are like super worried.

[Stacey Vanek Smith]

What's really interesting to me about this is it sort of points to this larger theme of President Trump really trying to get control of the economy again, because as you said, the midterms are coming up and right now I think people are responding to really high prices and really high interest rates on things like credit cards and mortgage loans. And the President can't really control that stuff. The economy is like this wild animal. So I think the President's trying to find any way to like get control of any part of the economy he can right now.

[Max Chafkin]

I mean, the other thing here is like, this is a gimmick. And so one of the kind of most interesting things, you have JP Morgan saying all options are on the table, like they're vowing to fight this. On the other hand, you've had a few credit card issuers, including I believe Bilt, which is like one of those like fintech companies issuing a 10% credit card to sort of like in the kind of mode of like Silicon Valley tech guys, like trying to make Trump happy. But when you look at the kind of like fine print of what this is, it's pretty much the same as those credit card come ons that you often get in the mail where they're like, okay, the initial interest rate is going to be zero percent, but then it's going to go up first three months. And so like built, you know, it's, it's, it's 10% for, I can't remember if it's one year or 18 months, but, but then, you know, it's going to go back up to super high rates. You're sort of seeing similar gimmicks in other areas. Trump did another Truth Social post around the same time, essentially announcing that he had, he had forced Microsoft to like, not take government money for its data centers. And then Microsoft quickly came out with a proposal saying that they are going to pledge to pay for all the electricity they use, like, instead of forcing homeowners to pay via higher rates. They also said that they're not going to try to get tax incentives, which is not exactly the same thing as saying you're not going to take tax incentives. So I think this is one of those cases where you have Trump looking to make some noise, companies looking to please Trump, but also trying not to give away too too much, and Trump.

[Stacey Vanek Smith]

Desperately trying to control economic forces that he cannot control.

[Max Chafkin]

And while we're talking about this, these the sort of wild week of Trump and we haven't even mentioned the two front war in Greenland and Minnesota that appears to be happening as we pod. It has been a roller coaster. Bloomberg Businessweek has an awesome package of stories up right now all about Trump's first year and kind of how everyone should think about what comes next. It's a really great set of stories and you should check it out. Okay, Stacy, this is normally the point of the show where we hear from the person on the street the, the vox populi. And today we've got one, one part of that Fox. And it is, as we said at.

[Stacey Vanek Smith]

The top, this is an important member of the populi, I would argue, Jerome H. Powell.

[Michael McDermott]

This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public rather than following the preferences of the president.

[Stacey Vanek Smith]

So this does not sound really dramatic, but when I heard this, I like completely could not believe it because Trump has been baiting Powell for a year in all kinds of ways, just trying to get him. He calls him too late Powell and all these things. A lot of meanness, nicknames, never responded. But what happened, I guess on Friday, we learned about this on Sunday is that the Justice Department is pursuing a criminal investigation into Jerome Powell and comments he made to Congress about how much a building renovation was going to cost for their Fed headquarters. And he's issued grand jury subpoenas to the Fed.

[Max Chafkin]

Yeah, this is an investigation, as we discussed, many people have suggested is basically just A pretext, just an excuse for Trump to either push Jerome Powell out of the Fed or to make life so unpleasant that he steps down or to kind of put pressure to lower interest rates. All of it, you know, if you're a business person or an economist or a leader of another country, is very, very bad because they. Everyone has sort of agreed in the world that the Fed is going to be independent of political pressure. And we're seeing what is very clearly an attack on that, whatever. Whether you think that attack is justified or not, I guess is a political question, but that attack is happening right now.

[Stacey Vanek Smith]

Well, and the fact that Powell actually said the thing and said this is not about the building renovation, this is just a pretext, that for me was, was wild. That is the closest it's come to, like a clapback.

[Max Chafkin]

This is a holy crap moment. If you are a Fed reporter or a Fed super fan, the holiest of.

[Stacey Vanek Smith]

Holy crap moments, I would argue.

[Max Chafkin]

And we have a former Federal Reserve chair, Janet Yellen to talk about it. Stacy, you spoke to Janet Yellen earlier this week. I cannot wait to hear this interview.

[Stacey Vanek Smith]

Yeah, it was really interesting. She has a really unique perspective. Of course, she used to be Fed chair. She also worked in politics, so she's very familiar with all these worlds. And yeah, here she is. Chair Yellen. Thank you so much for talking with me today. Obviously, there's been a lot of drama around the Federal Reserve and its independence lately. I think most people are aware of the drama. I think what's maybe more difficult to understand is what exactly is at stake. So I'd love to start out very basically just how do you think of Fed independence?

[Janet Yellen]

I guess I see it as kind of the bedrock of US Economic stability. When central banks are not independent, inflation tends to be higher and economic performance is generally worse. And this is because, like a doctor who treats a patient, it's necessary to take the long view, to try to figure out what the right remedy is. And the problem is when a central bank is not independent. Monetary policy is usually set with an eye to political outcomes. And it's a lot more popular to cut interest rates than to raise them. And in the run up to elections, it's not unusual to see non independent central banks cut interest rates. Juice the economy, run the labor market. Hot take right now. Trump says he wants 1% or less interest rate. You know, if they were cut to one, what would happen to inflation if that persisted?

[Stacey Vanek Smith]

So I feel like you would have a better sense of that than I would.

[Janet Yellen]

You know, life's Complicated. And things change. I think if interest rates were held at 1%, we would see inflation move up and it would move up a lot and eventually we'd be back to something like the 70s. And what's scary here is that President Trump has openly demanded interest rates of 1% or less. And when you see the tools he's willing to use to intimidate the Fed and its members, red flags should be going off.

[Stacey Vanek Smith]

What has been your take on the increasing political pressure on the Federal Reserve for the last year?

[Janet Yellen]

Well, I'll just say I personally never experienced this and no Fed chair that I've ever interacted with has experienced it. This is a very dangerous thing.

[Stacey Vanek Smith]

What kind of impact does this sort of pressure have on an institution like the central bank?

[Janet Yellen]

The Fed is a thoroughly non political institution. That is the core of who they are. It is focused on doing what's best for the public. I think America is better off for that. And President Trump wants the Fed to do what he thinks is best. And he's made clear he is willing to pull out all the stops to try to get his way with the Fed. Trump's idea that he could remove Powell for policy disagreements and create the precedents for that have not worked. Then. You know, the law does say that individuals on multi member boards who were Senate confirmed, in some cases it can be removed for cause.

[Stacey Vanek Smith]

Right. For cause was what was used with Dr. Lisa Cook.

[Janet Yellen]

That's right. Now we'll see what happens. So far, so good in that the Supreme Court has left her for the time being, occupying a governorship. And I believe it's next week that the Supreme Court is going to hear oral arguments in that case. Now, if the Supreme Court said yes, a president can decide if there's cause now, that would be devastating. It could be used against anyone. So it's very intimidating and really would have a very adverse effect. But Trump decided to go further and to do something that I think would terrify anybody who's in the senior leadership position at the Fed, namely, I don't like your views. And so I'm going to call my friends at the Justice Department and tell them to level criminal charges against you and convene a grand jury and indict you.

[Stacey Vanek Smith]

Yeah. What was your reaction to that?

[Janet Yellen]

Well, I think the same as Powell's, that this is just going too far. Because when a president weaponizes the Department of Justice and uses pretenses to go after enemies, we're not living in a democracy anymore. If that's allowed to happen, it's not easy in the case of the Fed, because the committee that makes monetary policy decisions has 12 voting members. These people are people of integrity. They may have differing views, but they care a lot about meeting their public service responsibilities. They tend to speak their minds and to try to get a majority.

[Stacey Vanek Smith]

I do feel like there is a reasonable argument to be made that the Federal Reserve should answer to the people because its decisions affect jobs, wages, mortgages. What is the danger here? If the Fed is subject to political pressure or becomes more political, what are the stakes?

[Janet Yellen]

So the Fed should be and is accountable, but not to the president, to Congress. Congress established the mandate for the Fed, and the Fed is an independent agency, reports to Congress. So, for example, all these issues about the building and whether or not it was too expensive. The Fed's budget is not set by the President or Russell Vought, but is overseen by Congress. They have a responsibility to look at what the Fed's doing. And I believe that they have asked questions about the building, and I believe that the Fed has provided the information that's been asked for. But that's where the oversight and the accountability lies, and not with the President. And I would be very surprised if Jay Powell lied to Congress, which is what's being alleged.

[Stacey Vanek Smith]

You said that you think this is a dangerous moment. I mean, I assume you've spoken with people at the Fed, too. You spent many years there. You know, a lot of people there. What is the reaction from other people at the Fed?

[Janet Yellen]

I think they're really upset about this, and they see this as a mortal threat to the independence of the institution. And really, the Fed has tried to cooperate to the maximum extent possible with President Trump on things like supervision and regulation. But monetary policy is really sacrosanct, and this is very disturbing.

[Stacey Vanek Smith]

I heard you speak recently on a panel about Fed independence, and one of the issues that came up was the difficulty of communicating this. What's at stake, the importance of the independent Fed.

[Max Chafkin]

The.

[Stacey Vanek Smith]

Do you feel like that's one of the challenges with this issue, or.

[Janet Yellen]

Well, I think if you ask the typical man on the street, I don't think half of the people would know who the chair of the Fed is or what the Fed does. One time when I was Fed chair, I gave the graduation speech at nyu. It was at Yankee Stadium, and a newspaper reporter stationed himself outside the stadium and just accosted some random people who were walking in and asked, do you know who Janet Yellen is and what the Federal Reserve is? So these were all people receiving degrees at this ceremony. You know, there were undergraduates, their MBAs, doctors, the law school, the whole thing. Well, okay, they encountered some experts, you know, and they could have gone on and on about, you know, big policy, but then the typical person said, oh, you know what?

[Ashley Carmen]

You got me there. I really don't know.

[Janet Yellen]

And, you know, I mean, most people go back their lives and this just isn't. They don't really know what the Fed does. And, you know, now people know they're very unhappy about the cost of living, and they know the price level increased 20% over two or three years, and they don't like it, and they don't think life is affordable. But then on the other hand, they don't like high interest rates. And they remember when you could get a mortgage with 2 as the first digit and they don't like 6 or 7 as the first digit. And they're very sensitive to the job market. I mean, they really care a lot about the job market. Now, do they understand how the Fed affects the job market? Not sure. Probably not.

[Stacey Vanek Smith]

How do you see things playing out from now? I mean, certainly this has seemed very shocking, but you have a lot of experience on the Fed. You have a lot of experience in politics. Do you have any idea of how this might play out?

[Janet Yellen]

You know, I think we're in uncharted territory. What I do see is that market reactions matter, public reactions matter. My sense is that Secretary Besant and others see this as a huge mistake with a great deal of downside risk. I think a lot of people saw Powell's short statement and were really impressed with his integrity and see him as a person who has the interests of America at heart. And even if they don't understand monetary policy, I think they see him as somebody one should look up to and is defending the public interest and consistently has. But we, we have three more years of Trump and.

[Stacey Vanek Smith]

Yeah, and only a few more months of Chair Powell.

[Janet Yellen]

Right. Although Chair Powell could stay on as a governor. It's. It's awkward.

[Stacey Vanek Smith]

Is that at the root of this? Because it seemed like a strange attack at a moment where his appointment is almost up as Fed chair, not as Fed governor.

[Chelsea Handler]

Yeah.

[Janet Yellen]

You know, Powell's not said if he's going to stay or leave after his term expires, and maybe Trump is trying to pressure him into leaving. Yeah, I think if that was the idea, it goes in the direction of backfiring because his interest in staying probably is higher if he sees the Fed's independence is seriously under threat. Maybe somebody had the misguided notion that this is a good way to pressure Powell to leave, but I think this is widely viewed now as something misguided that has been akin to shooting oneself in the foot.

[Stacey Vanek Smith]

Well, Dr. Yellen, thank you so much for your time and your thoughts and I really appreciate it.

[Janet Yellen]

My pleasure.

[Stacey Vanek Smith]

Foreign.

[Michael McDermott]

How do you shift AI from being a flashy feature to a trusted partner in consumers everyday lives on the ground at CES Bloomberg Media Studios? Asked Michael McDermott, EVP of Samsung. Our 2026 vision is built around an AI companion. It understands you and responds intuitively. This intelligence works quietly in the background across TVs, home appliances and mobile devices. By putting AI at the center of everything we do, we're simply improving everyday life for everyone everywhere.

[Chelsea Handler]

I have some very exciting news. I am always looking for companies to support that are ethical. And let's be honest, the phone companies we've all been stuck with are not that this is Chelsea Handler from Dear Chelsea. You know I travel constantly and supposedly I have international free roaming on Verizon. Yet my phone bills are still 300, 400 and even $500 a month. It makes zero sense. So I switched to a company with actual ethics, Noble Mobile and they pay you for staying off your phone. The more you unplug, the more money you save each month and the most you'll ever pay is 50 bucks. Unlimited coverage when I need it, cash back when I don't. It was started by people I know and trust. So if you trust me and want to join my mission to stop being a phone addicted zombie, come along. Go to noblemobile.com Chelsea right now and try it for just 10 bucks. That's noblemobile.com Chelsea running a business is.

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[Stacey Vanek Smith]

So in just 20 years, Spotify has gone from this place where you could just stream songs like Low by Flow Rider. I understand that's one of your favorites.

[Max Chafkin]

Well, it came out around the time Spotify launched, so it was one of.

[Stacey Vanek Smith]

Those songs that is unfair.

[Max Chafkin]

I and many others were jamming to in 2008 when Spotify started offering services.

[Stacey Vanek Smith]

But Spotify, of course, has grown a lot since then. Now it's like sort of this audio, video, everything platform. Now when you open up the Spotify app, there's music, but there's also videos and podcasts and podcast videos and audiobooks and even this AI DJ called DJ X.

[Max Chafkin]

Yes, I think a lot of people are confused about what Spotify is at this point. Musicians hate it for the most part.

[Stacey Vanek Smith]

The everything platform.

[Max Chafkin]

Investors, I would say their mood is kind of concerned. The stock has fallen about 30% since last summer. And on top of all of this, you have the longtime CEO Daniel Ek, who is the co founder of the company, stepping down amid a bunch of controversies. You had these ICE recruitment ads, this back and forth over Joe Rogan. He also invested in a. I'm not making this up. An AI military drone company called Helsing. No relation to Van Helsing, I think. Although, are we sure that. Anyway, Bloomberg's Ashley Carmen, who's a reporter here, has a wonderful story in the latest issue of BusinessWeek. Looking at Spotify's sort of weird succession plan and also asking just what is this thing? What are we actually doing when we're opening the app? And Ashley's here now. Hey, Ashley.

[Odoo/Nathan or Odoo/Karen Moscow]

Hello.

[Max Chafkin]

I think we all kind of know the answer to this question, but I think it'd be helpful for you to just lay out how big a deal Spotify is within music at this point. Like, how big is it? How much does it dominate the music.

[Ashley Carmen]

Industry so globally for subscriber count? So this isn't counting like free people on YouTube, just to be clear, because YouTube is massive, of course, but globally, on a subscription basis, Spotify's the largest music streaming service. So it is wildly important to how musicians make money and live in this world.

[Stacey Vanek Smith]

How is their stock down 30%? Because, like, everybody's stock is up so much. They're the globally dominant. Like, what is going on today?

[Ashley Carmen]

Thursday, they just announced that they're going to actually raise prices in the US to $13 a month for a Single year.

[Max Chafkin]

Oh, investors are gonna love that.

[Ashley Carmen]

So, yeah, I'm not. I haven't gotten a chance to see how the stock has reacted.

[Max Chafkin]

Oh, it's down 2.6% as we moderated today.

[Ashley Carmen]

Oh, really?

[Stacey Vanek Smith]

Why is everybody so down on Spotify? It seems like they're kind of.

[Ashley Carmen]

The big question that's basically haunted Spotify since its inception is that it pays over 60% of its revenue out to music rights holders. So for years, and literally since, as.

[Stacey Vanek Smith]

In the musicians, the artists, we say.

[Ashley Carmen]

Rights holders because I'm sure you've been privy to these conversations around, like, owning your masters.

[Max Chafkin]

We've talked about this with Taylor Swift.

[Stacey Vanek Smith]

But I thought very famously, artists said that they got no money from Spotify.

[Ashley Carmen]

Well, so this is kind of another. I would call it, honestly, a little bit of a misconception, because, again, just the way the music industry has historically worked, someone is getting paid. Like, Spotify does literally pay over 60% of their revenue to music rights holders. However, depending on your deal with your record label or whatever it is, you are maybe not actually retaining the lion's share. Now, there is a frustration from artists around the idea that they are in a pool against Taylor Swift or Drake, or maybe even you have white noise creators, for example, or you have AI generated music, for example, that are all coming out of that same royalty pool historically. So artists are saying, what the heck are we doing here? I'm a real human. I'm trying to make a living off of my art. I feel like the cards are stacked against me, basically.

[Max Chafkin]

Well, and they're also doing the thing that many websites have done, which is, like, kind of get in between to different counterparties. Like, lots of small businesses have complained, like, Google is, you know, sort of getting in the way of our customers or whatever. It's kind of the same thing with Spotify, where, like, you don't have this kind of direct relationship with fans.

[Ashley Carmen]

Right. But then there is this more general kind of, I guess, suspicion of Spotify.

[Odoo/Nathan or Odoo/Karen Moscow]

Of.

[Ashley Carmen]

All right, we thought you guys were a music service. Now you're getting into podcasts. This stems from a few years ago. They spent over a billion dollars to get into podcasting. Then they branched into podcast.

[Stacey Vanek Smith]

They bought Gimlet.

[Ashley Carmen]

They bought Gimlet Studios.

[Max Chafkin]

Yeah. And signed Joe Rogan for.

[Ashley Carmen]

They signed Joe Rogan. They've done a lot of moves in that space, and that was just audio podcasts. So now they're also doing audiobooks. They're pushing into video podcasts. And so you have this environment where people are like, Wait a second. What's actually up with Spotify? Like, we thought you cared a ton about music, and now we see you focusing on these other verticals. There's also been a couple moves that have given Spotify some advantage over the music industry. We have a analyst calling it quote, unquote, contract shenanigans. So there was this really big dust up when Spotify introduced audiobooks to the app. Sometime later, they were able to start classifying their service as a quote, unquote bundle. This became incredibly controversial. Tax purpose. Well, under a contract, that is, that dictates how they pay music publishers and songwriters. Classifying yourself as a bundle means you pay significantly less in royalties to songwriters and publishers. I believe in the first year. The National Music Publishers association said that it cost songwriters and publishers around $230 million in royalties in that first year.

[Stacey Vanek Smith]

I mean, everything Max says is true, but also Spotify has kind of taken down the barrier to entry for music. Like, if you're a tiny band or an independent musician, you can also have get your music out there on Spotify in a way that would have been really, really difficult 20 years ago. I'm curious if, after looking through the story and reporting on it, if overall you feel like Spotify has been like a force for good or a force for evil in the music industry.

[Ashley Carmen]

So the context of when Spotify started up 20 is it wasn't the CD era, it was the piracy era. Like, if you look at the riaa, which is the Recording Industry association of America, if you look at the revenue that they were bringing in in the us the music industry as a whole, it absolutely cratered during the piracy era. So Spotify was able to really kind of resuscitate the music industry in a way. And so there's now this bigger question of, okay, we're paying $13 a month for all of the world's music. Yeah, when maybe you used to pay $13 for one CD. So fundamentally there's this question of, well, should we be paying more for music, actually? And that's more what the music industry right now is really focused on. They're like, great, you got people paying, but we still think you're really undervaluing what music should cost.

[Stacey Vanek Smith]

This seems a lot like Netflix and like, a lot of the issues coming up around, like, video streaming services. You know, there were the movie studios and they used to make all of their money through people going to theaters or buying, like, video cassettes or DVDs or whatever it was. And then it's completely turned the whole business model of movies on its head, the streaming services and no one really knows what to do with it. And it's like shaken the foundations of that industry. It seems like obviously the same things happened in the music industry.

[Ashley Carmen]

It definitely required a recalibration.

[Janet Yellen]

Right.

[Ashley Carmen]

So it's a totally different rollout strategy for your albums. You're doing pre saves for example, rather than having people like pre, I guess pre order. I can't remember, did you pre order CDs back in the day? I don't even know.

[Max Chafkin]

I don't think that was very common. You went to freaking Tower Records and lined up and you know, watch the. Yeah, you stood in line.

[Ashley Carmen]

But it has definitely also now caused kind of this rethink of how do we actually make more from our fans like we used to. And so that's why you see this big focus on live. Live is one of the most fundamental parts of the music business at this point. And also we see rising costs there and I think that's been a complaint on the consumer side. You also see a refocus on vinyl. Now the music industry loves to talk about quote unquote super fans and, and Spotify was. We reported that they were. They're working on a super premium tier that would cost probably upwards of $20. I asked the CEOs about that and they were like, we're not going to roll something out unless it's really good.

[Max Chafkin]

I think we need to get to this leadership change and this very strange. I almost thought of it as like a business throuple at the Spotify headquarters with Daniel ek, the longtime CEO who's stepping down and the two new co CEOs, Nordstrom and Suderstrom, which is funny, it's like north stream and south stream in Swedish. It almost sounds like a fake thing They've like been sharing. It reminded me, Ashley of foundation where you have the three emperors and you know, it's just very strange what's happening sort of leadership wise at Spotify. Cause in a lot of ways, reading your story, they have a plan. Although it really sounds like a company that doesn't quite know what it is or where it's going.

[Janet Yellen]

So.

[Ashley Carmen]

Yes. So Alex and Gustav, the two new co CEOs, were formerly co presidents. So this has been kind of in this structure for a little bit. But Daniel was the sole CEO. Now Daniel's becoming executive chairman. He says that he's still going to be really involved in like he loves to say the zero to one step where he's like high level ideation and making sure, we can get off the ground with certain ideas and then Alex and Gustav are really in charge of ensuring this business makes sense for investors and such. But yeah, I think again, there is this just fundamental question of what's next? How do you continue if you're Spotify, how do you carve back some margin? Because anytime I cover Spotify earnings, the main thing we're looking at is their margin. And so this is really the fundamental question for Spotify now. Their driving philosophy moving forward is this idea of quote, unquote, no regrets. And what I thought that was just.

[Stacey Vanek Smith]

Like the tattoo everybody got in college.

[Ashley Carmen]

So the no regrets philosophy is that unlike doom scrolling, they want people to leave Spotify and feel like that was time well spent. I don't regret that. I just listened to music, listen to an audiobook, listen to a podcast, whatever it is.

[Stacey Vanek Smith]

That dirty feeling you do when you've been scrolling on TikTok for an hour.

[Ashley Carmen]

Exactly. They want people to feel like this is additive to their life. And one thing we had in the story, that's a little scoop, is that they are also looking at fitness content now. So as a ripple effect of them getting into video podcasts, YouTube creators are starting putting their videos there too. They've also launched, which we didn't get into in the story, but it's called Discovery Mode, which is this idea that artists give Spotify essentially a 30% cut on their streams if they opt into this program. It basically surfaces their songs in an algorithmic playlist, and then if that promotion works, Spotify takes a 30% cut. So they're finding all of these little ways to just. And I think that's what's adding up to some of the frustration we're seeing in the music business.

[Max Chafkin]

Do these guys hate music? Ashley, because I have to say, reading your story, there are a few little hints that made me wonder. Everything about the way these guys seem to talk about music feels like a bunch of people who aren't actually that into music. There's another little detail in the story which is great, which is that the co CEOs have a playlist that is made for them every month so that they can understand what it is that people are listening to. Which again, feels like a little bit. It feels a little bit like an alien trying to understand this other species, which is people who like music.

[Ashley Carmen]

I can't pretend to know what's in their hearts. So I will say Alex. So he's the one that gets the playlist made. To be fair to Alex, you know, the playlist is some deep cuts that if you're not really up on music, like, you're probably never heard of these groups.

[Janet Yellen]

So he.

[Ashley Carmen]

And if it is his job and they are CEOs, it is hard to keep up with music.

[Max Chafkin]

There's a line from Daniel Ek, and I think this is part of how Spotify is sort of defending itself or making its case to artists where they say, we are doing something new, we are creating a global music culture. And I'm kind of curious, Ashley, like, whether you buy that or really what it means.

[Ashley Carmen]

So outside of the Spotify lens, I cover music regularly. And one really good example of this is regional Mexican music, or Musica Mexicana, which is regional Mexican music. If you go down to Mexico, you will hear regional Mexican music. But Peso Pluma is a really good example of an artist who just blew up a couple years ago. And if I hear it when I walk in Brooklyn, I hear it all the time. Granted, Brooklyn is like a melting pot and yada yada. But like, you're hearing these artists who literally the name of their genre is regional, yet they are finding audiences around the world. And sure, back in the CD era, maybe you were crate digging or you were in the CD shop getting the wrecks from the people behind the counter, but I think that would have required some real trusted curation or listening to.

[Stacey Vanek Smith]

Like pirate stations or something like that.

[Max Chafkin]

Or quote, unquote, world music, which was a big thing in the 80s and, you know, influenced a bunch of mainstream musicians. But it's different because you're. You're right, Ashley. You've got playlists that will have a bunch of K Pop and then Bad Bunny and a bunch of artists of different styles who are all basically pop music now, but in very different ways.

[Ashley Carmen]

Well, and I think Latin music is a really good place just to look because again, Bad Bunny, he raps, slash, sings entirely in Spanish. He's headlining the super bowl this year. Spotify likes to take credit for it. We can't just say it's Spotify, but the Internet, the idea that people can more easily receive culture from further away, I do think has changed what we actually consume.

[Chelsea Handler]

I have some very exciting news about an ethical phone carrier I just switched to. This is Chelsea Handler from Dear Chelsea. Forget about all these other phone companies, Forget about Verizon, forget about AT&T, forget about T Mobile. There's this new carrier called Noble Mobile, and they actually pay you to stay off your phone. You can earn real money, up to 20 bucks back every month just for putting your phone away. If you're like me and you're tired of feeling controlled by your phone, social media, or just disgusted by those screen time alerts, this is the answer. Go to noblemobile.com Chelsea and try it for $10. That's noblemobile.com Chelsea running a business is.

[Odoo/Nathan or Odoo/Karen Moscow]

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[Janet Yellen]

Daybreak is your best way to get informed first thing in the morning, right in your podcast feed. Hi, I'm Karen Moscow.

[Odoo/Nathan or Odoo/Karen Moscow]

And I'm Nathan.

[Michael McDermott]

Each morning we're up early putting together the latest episode of Bloomberg Daybreak US Edition.

[Odoo/Nathan or Odoo/Karen Moscow]

It's your daily 15 minute podcast on.

[Michael McDermott]

The latest in global news, politics and international relations.

[Janet Yellen]

Listen to the Bloomberg Daybreak US Edition podcast each morning for the stories that.

[Ashley Carmen]

Matter with the context you need.

[Michael McDermott]

Find us on Apple, Spotify or anywhere you listen.

[Max Chafkin]

Stacey, it's that time. It is time for the underrated stories of the week. What do you have?

[Stacey Vanek Smith]

All right. Mine is a little bittersweet, but it is an app that has gained enormous popularity, especially in China. And the app is basically a check in app for single people living in cities. And it's kind of like a not dead yet app. And you have like a, it's literally.

[Max Chafkin]

A not dead yet app. The app is called are you dead?

[Stacey Vanek Smith]

Yes. It apparently translates to are you dead yet? This is the name of the app and you designate like your, your emergency contact. And every morning when you wake up, you check in with the app and say, I'm up with this. I'm up, I'm around. I'm still here. I'm on the right side of the soil, and it pings your. Your contact person. And then if you don't ping it, it sends an alert to your contact person.

[Max Chafkin]

This is so bad.

[Stacey Vanek Smith]

I feel like it just says something about urban loneliness and how disconnected we can kind of be.

[Max Chafkin]

Although in some ways it seems a little bit dystopian. There does seem to be something healthy about every morning, confronting your own mortality and making sure that you are aware that life is short and precious and you should make the most of it.

[Janet Yellen]

I agree.

[Stacey Vanek Smith]

I agree. It is also a little maudlin, but it's the story that I read, and I've been thinking about a lot about what it says about our culture and technology and kind of how isolated we become and how we kind of need these connections. Now. That is my. That is my underrated story of the week.

[Max Chafkin]

All right, so my underrated story is also kind of depressing, but in a totally different way.

[Stacey Vanek Smith]

It's not bittersweet.

[Max Chafkin]

It maybe it's bittersweet. This is the headline from Bloomberg just a couple weeks ago. Quote, tough job market has people using dating apps to get interviews. And this is about hand.

[Ashley Carmen]

I don't know if.

[Stacey Vanek Smith]

If that says worse things about dating or the job market.

[Max Chafkin]

This is about how young people, I think largely young people, are so desperate to find jobs that instead of in addition to using normal channels to find jobs, applying LinkedIn. LinkedIn, indeed. Or whatever, they are turning to hinge Grindr, basically all the apps to try to network professionally. This story is very funny, partly because the apps themselves really don't like it.

[Janet Yellen]

Why not?

[Stacey Vanek Smith]

Isn't, like, a user a user?

[Max Chafkin]

Well, I don't know. I mean, wouldn't you be a little disappointed if you thought you had made a nice romantic connection with somebody and then they just started hitting you up for, like, so job.

[Stacey Vanek Smith]

I noticed a job posting at Bloomberg. Yes, and.

[Max Chafkin]

And didn't we go through a whole me too movement all about that? Blurring these lines is really bad. Maybe I missed something.

[Stacey Vanek Smith]

Yes, but during that movement, we were in a job boom. And right now, the unemployment rate for workers between 20 and 25 is, like over 9%. So you gotta do what you gotta do.

[Max Chafkin]

Okay, what's funny here is all's fair.

[Stacey Vanek Smith]

On love and apps.

[Max Chafkin]

Okay? So apparently the different. Different apps have different attitudes toward this. Grindr seems fairly open to this. The other apps want to be very clear that they are there for sex, not for work. A spokesperson for Bumble told Bloomberg looking for job opportunities on their app, quote, isn't aligned with our mission and doesn't create an authentic experience for our community. And I understand what they mean.

[Stacey Vanek Smith]

It's funny to me though that they're coming out and being like, listen, like we are a pure app. We are supposed to be about mindless generic hookups, not finding a job. Like what? What universe are we living in when the CEO's authenticity, the integrity of our.

[Max Chafkin]

Company, authentic connection, authentic experiences.

[Stacey Vanek Smith]

Stacy oh well, job's an authentic experience. An authentic experience that pays your gas bill, which is more than I can say for most hookups. Guess it depends on the hookup.

[Max Chafkin]

It all depends on the app.

[Stacey Vanek Smith]

This show is produced by Stacey Wong and Jasmine J.T. green. Magnus Henriksen is our supervising producer. Sam Rogich handles engineering and Dave Purcell fact checks. Special thanks to Jeff Muskus, Julia Rubin, Charlie Gorvin and Maria Lang. If you have a minute, please rate and review the show. It really means a lot to us. And if you have a story that should be our business, send us an email. Everybody's bloomberg.net that is everybody's with an [e-mail] thank you for listening and we'll see you next week.

[Chelsea Handler]

I have some very exciting news about an ethical phone carrier. I just switched to this is Chelsea Handler from Dear Chelsea. Forget about all these other phone companies. Forget about Verizon, forget about AT&T. Forget about T Mobile. There's this new carrier called Noble Mobile and they actually pay you to stay off your phone. You can earn real money, up to 20 bucks back every month just for putting your phone away. If you're like me and you're tired of feeling controlled by your phone, social media, or just disgusted by those screen time alerts, this is the answer. Go to noblemobile.com Chelsea and try it for $10. That's noblemobile.com Chelsea.