Spo­tify aims to be a big noise in the world of pod­casts

The stream­ing ser­vice is sign­ing up stars, write Hasan Chowd­hury and Michael

The Daily Telegraph - Business - - Technology Intelligen­ce -

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

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