The Latest: Spotify signs a three-year exclusive licensing deal with Joe Rogan (May 26, 2020)
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THE NEWS
Spotify has signed an exclusive three-year licensing deal worth $100 million for The Joe Rogan Experience. The show is one of the most popular podcasts in the world with more than 190 million downloads per month. The podcast (and its archive), which had previously not been available on Spotify, will be available on the platform starting September 1 and become exclusive by the end of the year.
SO WHAT
Spotify has been investing heavily in podcasting in search of higher margins: Its contracts with record labels limit its profits from music subscriptions, so it’s hoping podcasts will diversify its audio offerings, and subsequently revenue. Though it will not be selling ads against the Joe Rogan Experience (Rogan is sticking with his previous agency, PMM), Spotify is betting that the show being exclusive to its platform will attract new listeners who will go on to become subscribers to its Premium product.
Spotify has used this exclusive-license arrangement in the past to bring fans of specific personalities like Joe Budden and Jemele Hill to its platform, with the hope of making it their new portal for all podcasts. Through these deals, it receives increased ad revenue from the consumption of other podcasts as well as some benefit from reducing churn of existing subscribers.
Spotify’s licensing approach stands in contrast to its acquisitions strategy, which has included big-name podcast production firms Gimlet Media and The Ringer. In those cases, audio content was not made exclusive to the platform whole-sale. Spotify instead focused on incremental ad revenue to help its margins and aimed to acquire new users with “ancillary, exclusive content like Gimlet Academy and extra Reply All episodes” as well as releasing episodes a few days before they were made available on other platforms.
The Joe Rogan Experience exclusivity deal also applies to Rogan’s “vodcasts” — video of podcast tapings — but Spotify will still allow short clips to be posted on YouTube to continue to reach and convert new listeners. Video versions of his interviews on YouTube have been key to discovery, particularly for audiences that don’t already listen to podcasts, thanks to viral clips.
LOOK FOR
What this means for video content in the app, given the news last week that Spotify is experimenting with video podcasts. It may also increase its ability to sign exclusive deals with YouTubers, as it did with the hosts of Mom’s Basement and given that Rogan had explicitly cited YouTube revenue as a reason for not joining Spotify earlier.
Spotify’s video podcast feature partly serves to smooth converting listeners used to consuming podcasts on YouTube. It is also another way of engaging and retaining its audiences: eMarketer recently found that video streaming of audio content has increased markedly while audio-only streaming has declined during the pandemic. Video would also open the door to higher-priced video ads.
How others respond to Spotify’s continued podcast spending. Bloomberg reported that both Apple and Amazon are pushing further into buying original podcasts; Amazon’s audiobook service, Audible, has already purchased shows from comedians Kevin Hart and Tiffany Haddish.
