Spotify aims to be a big noise in the world of podcasts
The streaming service is signing up stars, write Hasan Chowdhury and Michael
What’s the secret to gaining almost 10m subscribers on YouTube in 10 years? For Joe Rogan, a commentator of mixed martial arts fights, comedian and former host of hit game show Fear
Factor, it’s hours and hours of podcasts with an eclectic cast of guests – usually smoking marijuana.
Since its launch in 2009, the Joe
Rogan Experience podcast has transformed from a grainy stream on YouTube that was once sponsored by a sex toy company into a media behemoth. Rogan fans come back again and again to watch conversations with everyone from billionaire Elon Musk and magician David Blaine to conspiracy theorists, scientists, comedians and more.
But acolytes of the podcast will soon find their host and his show on a different service. On Sept 1, the Joe
Rogan Experience will make its debut on Spotify, which has secured an exclusive $100m (£82m) licensing deal to host the show. Launched in 2008,
Swedish streaming titan Spotify has already utterly changed the music industry. Now it is making a big play for the wider audio market.
The firm is preparing to make a billion dollar bet on podcasts in the hope of further growing its army of almost 300m monthly active users, almost half of whom are paying subscribers.
Rogan is not the only star to get on board. The app last month debuted a podcast from Michelle Obama, who struck a similar exclusive deal for a series focused on “meaningful” conversations with friends and family.
The company has also gone on a spending spree to acquire smaller rivals. In February, it closed an almost $200m deal to purchase The Ringer, a podcast firm dedicated to all things sports and pop culture. In 2019, it bought Gimlet Media and Anchor for a reported total of $340m.
According to Joseph Evans, head of tech at industry monitor Enders Analysis, one of the big reasons Spotify is getting into podcasts is that expanding its user base grows will allow more advertising.
The service is ad-free for paying subscribers who tune in for music, but Evans points out that bosses are comfortable including ad breaks in much longer podcasts.
“Spotify sees podcasts as a way that they can serve ads to their paying subscribers. I think that’s a big reason they’re actually getting into this,” he says. Among the benefits of signing Rogan is the sheer length of his podcasts, which typically exceed two to three hours – allowing plenty of breaks to be included.
“If you compare a podcast to an album from an artist, there’s an obvious attraction for Spotify,” says Tiernan Kenny of consultancy Access Partnership.
“You’re effectively getting an album’s worth of content added every week versus someone like Taylor Swift – who is relatively prolific – getting out new music every few years.”
Kenny describes Spotify’s bid to devour the podcasting sector as a “smart bet”, comparing it to similar moves by Netflix and Amazon which started out by hosting content from others before producing their own.
In truth, Spotify may have little choice but to focus on podcasts as it battles to become a streaming heavyweight against competition from the likes of Apple and Disney.
At present, it depends on music content owned by a handful of record labels. These companies have a strong negotiating position and can squeeze the app’s profits to zero, according to a research note from Enders.
“Podcasts are different because they’re made by thousands of small producers, so it’s very easy for Spotify to dictate the terms,” says Evans.
It emerged earlier this month that Spotify was also looking to hire a head of audiobooks, suggesting it has big plans in an sector that the publishing world expects to boom post Covid. Spotify has since taken the ad down.
There is a lot to play for in this new market. A report from Deloitte in December suggested that the global market for audiobooks will grow 25pc in 2020 to $3.5bn, while the podcast industry is set to increase by 30pc to $1.1bn. That compares to an existing radio market worth $42bn.
Spotify’s race into podcasts and audiobooks is not without risk. For one, its podcasting gambit could land it in the same tricky debates that have plagued Facebook and Twitter in recent years. Rogan is a divisive character who has drawn criticism over allowing some guests’ controversial views to go unchallenged. “You wonder if they might even need to get to the stage like Twitter and Facebook where they’re putting in fact checks and warnings at the start of the podcast,” Kenny says.
Stephen Paice, a manager at Edinburgh investor and Spotify shareholder Baillie Gifford, is bullish on its long-term prospects but admits that the bet on podcasts is quite a big investment to give away to customers for free. There could be potential to charge an additional fee as part of a package to get access, he says.
Ultimately, the number one goal for Spotify is to continue building a paying subscriber base. Details on the inner workings of Spotify’s Rogan deal are scant, but the streaming giant will undoubtedly have figured it to be more than viable at a $100m price tag.
With millions of Rogan followers set to land, it’s clear that Spotify’s podcast push is just getting started.
Michelle Obama: will host a series of ‘meaningful’ conversations with friends and family