Done with the days of throwing millions at anyone with a microphone and a few Instagram followers, Spotify is taking a new approach to its podcast business.
Driving the news: Joe Rogan has reached a new multi-year deal with Spotify that will distribute The Joe Rogan Experience — the world’s most popular podcast — across all major audio platforms, the latest move in the company’s shift away from keeping its shows off of rival platforms.
- Rogan's deal — which is worth up to US$250 million — also includes a revenue-sharing agreement based on ad sales, similar to a deal recently signed by fellow Spotify host Trevor Noah.
- The deal comes just a week after Spotify signed a similar US$60 million pact with Alex Cooper’s Call Her Daddy podcast.
Why it’s happening: Spotify learned the hard way that having exclusive rights to big-name shows doesn’t necessarily translate to profits.
- Spotify spent more than US$1 billion on exclusive podcast deals with big names like Kim Kardashian, the Obamas, Prince Harry, and Meghan Markle and grew its podcast revenue by 20% from 2021 to 2022.
- But that growth didn’t make up for the cost of Spotify’s expensive deals — CEO Daniel Ek called podcasting a drag on margins — and the company pivoted to a strategy of cost-cutting, leading to a slew of cancelled shows and layoffs.
Why it matters: Rogan’s new deal is in keeping with Spotify’s focus on profits over growth, with the host’s earnings tied to the show's ad revenue, which will likely increase with wider distribution on other platforms.
- Spotify executives say that the company will look to renegotiate similar deals with its top talent to distribute shows across all major platforms.
Bottom line: Spotify abandoning the exclusive model is a win for listeners who will now be able to listen to their favourite shows for free on their platform of choice.—LA