Wednesday, May 20, 2020

Spotify pays $100m+ for Joe Rogan podcast, adds $1bn+ to market cap | Music Ally

People often ask how the economics of podcasting work. Well, here’s how they worked for Spotify yesterday. The streaming service announced an exclusive licensing deal with one of the biggest podcasts, The Joe Rogan Experience.

The Wall Street Journal claimed the deal was worth “more than $100 million“, but the ensuing spike in Spotify’s share price added more than $1bn to the company’s market cap.

(We’ll explain our workings here, as it’s not a day-on-day calculation. Just before the announcement yesterday afternoon, Spotify shares were trading at $169.35, and they closed the day at $175.03 – a 3.4% spike adding $1.09bn to the market cap, which closed at $32.55bn.)

Money well spent, seemingly. Rogan’s podcast will be made available on Spotify for the first time at the start of September, alongside other podcast platforms, but at the end of 2020 it will become a Spotify exclusive.

This is (in Spotify’s words) a “multi-year exclusive licensing deal” rather than an acquisition: it’s not like the up-to-$196m purchase of The Ringer, the podcasts and media company founded by Bill Simmons, earlier this year. “It’s just a licensing deal, so Spotify won’t have any creative control over the show. They want me to just continue doing it the way I’m doing it right now,” said Rogan in his announcement of the deal.

Poaching Joe Rogan away from other podcast platforms is a big deal, however. His show has been a fixture in the upper reaches of the Apple Podcast charts in the US and other English-speaking countries, and its YouTube channel (where full video recordings of each episode are published) has 8.4m subscribers and 2.19bn lifetime views. Note: the video version will be exclusive to Spotify too – this news follows a recent report that it was testing video podcasts with YouTube stars Zane Hijazi and Heath Hussar.

“This is a big deal. Like, tectonically big. The actual numbers are hard to pin down, but Rogan has mentioned on the podcast that it reaches about 190 million downloads a month, and the show is, again, widely believed to be one of the biggest revenue-generators in the industry,” is how podcast industry expert Nicholas Quah of Hot Pod News analysed the Joe Rogan deal.

“Honestly, by securing this deal, Spotify has effectively rounded out what has turned out to be a near-comprehensive invasion of the podcast space — it’s genuinely hard to see how Apple, the ecosystem’s incumbent facilitator and rival for podcast dominance by default, can match up against this… or anyone else, for that matter.”

We’ll see. Apple surely won’t be ready to throw in the towel just yet on podcasting; Rogan’s absence from Apple Podcasts and YouTube (apart from promotional clips in the latter case) may open a space for other hosts to emerge; and a “multi-year” licensing deal will come up for renewal, creating potential for a future bidding war.

Still, in thinking about this deal, we keep coming back to that share price, and what it says about how Wall Street views Spotify’s move into podcasting. Music rightsholders may worry about cannibalisation of listening and royalties, and musicians may pale while calculating how many streams they’d need for a Rogan-sized payday.

But if splashing out $100m+ on a single show can add 10 times that amount to Spotify’s value in a matter of hours – fun question: which labels still own Spotify shares, and how much did they make from yesterday’s spike? – the podcasts push will only intensify.

Stuart Dredge


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