News May 21, 2020

Spotify’s Joe Rogan podcast deal is huge, but artists should be pissed

Senior Journalist, B2B

Evolve or die is the mantra for any tech company. Spotify, with its 130 million “paid” subscribers, has been quietly repeating this line for years.

When the streaming giant tapped Joe Rogan for a blockbuster podcast deal worth an estimated US$100 million over several years, Charles Darwin would have tipped his hat.

That’s sweet evolution.

For a chunk of cash, Spotify took another leap into the content business, and grabbed the biggest fish of them all. Joe Rogan isn’t your Average Joe. He’s no fish either. He’s an orca, an alpha in the podcasting ocean.

A UFC “colour commentator”, Rogan brings his combative nature to the Joe Rogan Experience, one of the most popular podcasts on the planet which smacks-down almost 200 million downloads each month.

The podcast will be re-homed on Spotify from September 1. Sometime later in the year, Spotify will be the only place you can hear Rogan in full flow.

For its wager, Spotify will hope to add millions more users, convert some of those to paid subs, and keep its digital foot on the throat of Apple Music, YouTube Music and its other rivals.

In the three months ending March 31, Spotify added six million paid subscribers and moved to 286 million total monthly users. The 300 million milestone is in sight. With Rogan on board, Spotify’s suits will be greedy for 350 million.

The artist community has reasons to be fearful; a bigger focus on podcasts for Spotify means a lesser focus on artists, editorially and algorithmically.

For his podcast licence, the media personality just got paid the equivalent value of over 26 billion streams, wrote Tom Gray, director at U.K. royalties, music copyright and licensing society PRS for Music.

Joe Rogan just got paid the equivalent value of over 26 billion streams for a podcast license. #BrokenRecord
— Tom Gray #BrokenRecord (@MrTomGray) May 19, 2020

There’s also evidence to suggest podcasts are cannibalising music streams. A U.S. study by NPR and Edison Research published last year suggested that the growth of “spoken-word audio” is indeed eating into that precious time for tunes.

Based on a survey of more than 4,000 consumers, the split shifted from 80/20 (music/podcast) in 2014 to 76/24 in 2019.

Spotify is smitten with podcasts. During a conference call with analysts, company co-founder and CEO Daniel Ek admitted Q1 2020 was the streamer’s biggest-ever quarter for podcast creation. Expect that trend to continue.

Spotify’s gamble immediately paid off, with stock in the company closing up at $189.80 on Tuesday (May 20), a whopping gain of 8.44%, adding more than one billion dollars to its market cap, which is currently at $35.29 billion.

Whether that figure will correct in the days ahead, that’s for the markets to tell us.

So, for now, Spotify is making money. Rogan is making money. Music rightsholders are less than amused. It could be suggested that the only thing to placate artists at this time would be to reinvest the money gained from the increased market cap back into artists via higher streaming rates. Musicians are the lifeblood of the company after all.

Spotify will argue Rogan will build its user numbers. But this deal just alienated mid-tier artists everywhere, and it could be the first of many, unless Spotify uses this growth to reinvest in them.

Evolution can be brutal.