Spotify renewed its contract with podcaster Joe Rogan this weekend, but with a twist. After nearly four years, “The Joe Rogan Experience” is no longer a Spotify-exclusive podcast.
This may seem like a concession on Spotify’s part, as exclusive deals have long been part of the company’s strategy. Early on in Spotify’s push into podcasting, it acquired popular studios like Gimlet and Parcast. Over time, Spotify made those studios’ shows exclusive, so they were no longer available on any other app — but about four years later, that game plan is changing. Now, Spotify can benefit more from selling ads on these shows than it would from getting listeners to download Spotify.
According to a statement from the Gimlet and Parcast labor unions, this strategy for converting listeners from other podcast platforms has never worked so well. Some shows lost more than three-quarters of their audience after becoming Spotify exclusives.
It makes sense that Spotify’s podcast strategy is changing, because it hasn’t been working. The platform made several acquisitions of podcasting startups worth hundreds of millions of dollars each, and then invested in high-profile deals with big names Barack and Michelle Obama, and Meghan Markle and Prince Harry. The royal couple only did 12 episodes of a podcast, but they are rumored to have been paid 20 million dollars. These poor business decisions have frustrated podcasters, who have watched as the company that was supposed to revolutionize podcasting has gone through three rounds of layoffs in a year.
However, “The Joe Rogan Experience” is a unique part of Spotify’s portfolio (and that’s without even getting you started on the host successive endorsement of harmful misinformation). In 2022, the show had begun 11 million listeners per episode. Since coming to Spotify in 2020, Joe Rogan’s show has been the most listened to podcast on the platform every year. If exclusivity isn’t generating the returns Spotify was hoping for, then it makes sense to try a different approach.
“The real value of Spotify’s relationship with Joe Rogan is being his exclusive ad seller,” he said Multitude Productions CEO Amanda McLoughlin, who manages ad sales for more than 25 podcasts. “Forcing companies that want to buy ads on Joe Rogan’s show to do so through Spotify has to be more profitable than forcing his listeners to use their app. I think they found that out in the first term of the deal and they were willing to let the platform exclusivity go to keep the ad sales exclusivity,” he told TechCrunch.
Over the past five years, Spotify has made itself a one-stop shop for podcast production through acquisitions totaling more than $1 billion. Spotify owns the production process for creating a podcast from start to finish — you can record, edit, distribute and monetize your podcast using technology Spotify bought from Anchor, Megaphone and others companies. In the case of these hit shows, Spotify’s invitation-only automated ad program is particularly relevant because it allows Spotify to take a huge cut of ad revenue.
In the automated ad program, ad revenue is split 50-50 between Spotify and the podcaster. On a show like Joe Rogan’s, that’s a huge amount of money. In the podcast industry, these deals can sometimes be structured to give the talent a head start on ad sales. So it’s possible that Spotify is paying Joe Rogan a lot of money in the short term in hopes that the company will make even more money by cutting ad sales in the long term. Spotify declined to comment on the nature of the deal.
The same reasoning could be followed for other top podcasts that escape Spotify exclusivity, such as “She called her dad.” As host Alex Cooper nears the end of her three-year, $60 million deal with Spotify, she has also signed a new deal that allows her to publish her show on other platforms. However, Spotify retains exclusive rights to the video version of the podcast. Like “The Joe Rogan Experience,” Spotify stands to make more money selling ads on “Call Her Daddy” than retaining exclusive publishing rights.
Cutting exclusivity out of her contract with Rogan could also help Spotify’s reputation, in an odd side effect. Spotify still has to deal with the ethics of taking on a podcaster who rattles off conspiracies and damages its relationship with artists like Joni Mitchell and Neil Young, who removed their music from Spotify in protest (ironically, the spread of misinformation about with the coronavirus by Rogan did not have any tangible effect on Spotify’s business).
Spotify declined to share specific details about its new deal with Rogan. However, a Spotify spokesperson told TechCrunch that it “will handle distribution and ad sales that will optimize future growth.”
Since the podcast was on Spotify, total podcast listening increased by 232%, but that jump could also reflect Spotify’s other extensive investments in the space.
“As a result of this exponential growth we’ve seen, this has attracted a broad range of advertisers fueling 80% revenue growth in 2023 from 2021, including a 45% increase in revenue in 2023 for broadcast,” the company wrote in an email to TechCrunch.
Joe Rogan’s break from exclusivity can not be a good thing for society… but it’s probably good for Spotify’s bottom line.
