Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.

Exclusive podcasts have lost their appeal for Spotify chief Daniel Ek, and Joe Rogan’s new deal is just the latest example

In 2020, Spotify trumpeted its exclusive signing of star podcaster Joe Rogan to a three-and-a-half-year deal reportedly worth more than $200 million, calling it a “major addition” to its podcast lineup. Excited by the news, investors sent shares of the streaming company up 19% in just a few days.

But last week, when Spotify announced its re-signing of Rogan, the company sang an entirely different tone about the exclusivity of what is one of its most listened to podcasts. Under the new agreement, The Joe Rogan Experience will now also appear on competing streaming services. Spotify’s message: exclusivity is no longer the holy grail it once was.

The reason for the turnaround? Spotify is not Netflix, according to Spotify CEO Daniel Ek.

When Spotify launched its podcasting business in 2019, many people mistakenly thought it would be a “global exclusive effort similar to Netflix,” he said during the podcast conference call. company results last week. Netflix, of course, has invested billions of dollars in creating exclusive films and series for its streaming platform in an effort to attract new subscribers.

The perception that Spotify is following a similar strategy is partly driven by its headline-grabbing exclusive deals, Ek said. In fact, Spotify hasn’t prioritized exclusive deals, he said, and is now moving away from them altogether.

At the same time as it announced sharing Rogan’s podcasts with other services, Spotify announced it would do the same with Alex Cooper’s high-profile comedy and relationships show, Call her daddy.

Spotify has tried various distribution strategies for its podcasts, including exclusives created by independent artists or its in-house studios, and non-exclusive licensing deals. And while the exclusives have been a “net positive,” according to Ek, they haven’t been as big of a boon for the company as expected.

The problem was limiting these flagship podcasts to just Spotify’s audience, according to Brian Mulberry, client portfolio manager at Zacks Investment Management. In addition to selling subscriptions, Spotify makes money by selling ads during podcasts, with audience size a factor in determining price. By forcing consumers to use its app to listen to exclusive podcasts, Spotify limited the potential audience, and therefore the advertising revenue it could earn from the shows. Licensing other services may also incentivize users to use Spotify’s own app for its bonus offerings, like video extras, polls and question-and-answer features, Mulberry said. Fortune.

The company wants to reduce the minimum upfront guarantees it pays to podcast hosts — often huge, as was the case with Rogan — and emphasize sharing revenue from any advertising with them. Such deals reduce the financial risk for Spotify if the show fails.

“That’s the route we’re looking at for more and more of our deals,” Ek said. Although the details of how revenue is split with specific hosts are not public, Spotify has already earned a 50% commission on revenue from ads that podcast hosts play to listeners during their shows.

Under a new deal with Rogan, who broadcasts conversations with friends and celebrities, some of which have gotten him in trouble, Spotify will sell and distribute ads for the podcast, according to the Wall Street Journal. The deal reportedly includes a revenue sharing agreement with Rogan based on advertising sales. It is unclear whether Spotify has the same conditions for Call her daddy, although the company would retain the rights to the video version of the podcast, which is not the case for Rogan’s show.

Over the past year, Spotify has loosened its grip on other once-exclusive podcasts that were among the top-performing shows of 2023. They include comedy and lifestyle shows Anything goes with Emma Chamberlain, an interview podcast featuring celebrities called Armchair expert, and research-based myth-busting series Science vs.

At the same time, Netflix is ​​also moving away from its exclusive strategy. After a few years of traditional studios refusing to license their content to Netflix in order to create their own streaming properties, they are shifting gears following massive losses, which has helped expand Netflix’s library.

New arrivals to Netflix include hits like Suits, which garnered massive engagement for Netflix last year and inspired a spinoff show for rights holder NBCUniversal. “Sometimes we can add more value to the studio’s intellectual property than they can,” co-CEO Ted Sarandos said on an earnings call last month. The company also added a cheaper subscription option with ads as a revenue stream, which is similar to what Spotify does. Even if Netflix isn’t abandoning its exclusive offerings, the move signals a broader industry awareness that exclusivity isn’t always king.

Double down

Over the past two years, Spotify has only made a profit for one quarter and faces pressure from shareholders to cut costs. Last year, ad sales contributed $1.68 billion, or 16%, to Spotify’s total revenue, with podcast ad revenue growing “in a healthy double-digit range,” the company said in its results press release without giving details.

Last year, Spotify lost a total of $575.7 million. But the podcasting business is close to break-even, according to Ek, and he expects the segment to turn a profit in 2024.

“We doubled down on deals that worked and we pulled out of a lot of deals that didn’t work,” he said on the call. Those that didn’t work out appear to include podcast deals with the Obamas, Prince Harry and Meghan Markle, with whom Spotify parted ways in 2022 and 2023, respectively.

Although ad sales are a key factor in Spotify’s revised strategy, Ek highlighted the company’s relationship with creators as the driving force during the earnings call.

Exclusivity was not what the podcast hosts wanted. “The creator obviously wants to be on many different platforms and wants to have as wide an audience as possible,” Ek said, adding that Spotify’s new strategy allows it to both increase its ad revenue and satisfy its talent.

“Spotify is already, in many cases, the No. 1 podcast player,” he said. “Exclusivity makes sense when you’re a small player trying to grow. When you’re a bigger player, the incremental value of exclusivity is much less than that of aligning with talent.

Gn En bus

Back to top button