Joe Rogan's new big-money deal with Spotify is undoubtedly good news for Joe Rogan but is it good news for the industry as a whole?
Whilst all those zeros are a sign of the growing value of audio in the digital space it doesn't necessarily mean that the floodgates are about to open and soon line the pockets of every indie podcast producer in the land. Sadly.
But this is more than just a story about one man becoming the highest-paid broadcaster on the planet (yeah, that's BROADCASTER, not just PODCASTER). It's a deal that will shape the road podcasting takes into the future.
Let's start with the deal itself.
In case you aren't familiar with Joe Rogan and "The Joe Rogan Experience", here's a brief bluffers guide: The podcast is a long-form (sometimes up to 4 hours) interview podcast in which bro-broadcaster (Bro-caster?) Joe, sits down with some of the biggest, most controversial and interesting names in the world. He has talked to figures like Bernie Sanders, Elon Must, Alex Jones, Mike Tyson and pretty much any other household name you can think of along with a few of his buddies from the worlds of MMA, Acting and Comedy. It's no-holds-barred interviewing. It's occasionally controversial. Its always honest and, most importantly people like it. A lot of people like it. So many people in fact that it is the number one listened to podcast in the world with an estimated 190,000,000 downloads a month.
There, you're up to speed.
There can be no doubt. That listener number is staggering. A huge volume of invested listeners who come back to this podcast every single month. When you look at that audience reach, suddenly the headline figure paid out but Spotify doesn't seem quite as ridiculous as it may first appear.
"The Ultimate Podcast" ground did some napkin maths on Medium that, maybe optimistically, predicts that Spotify will likely earn back their investment in under 7 months simply by converting Roganites into full-blown Spotify Premium subscribers - and that's not even considering the ad spots and live reads that the platform may have a stake in.
The big picture for me, however, is a longer game. If Spotify can establish itself as a powerhouse of podcast distribution it can also become a gatekeeper for monetisation. With the data and delivery system that they already have in place, they would be able to hit incredibly targeted and specific audience groups with programmatic advertising focused on specific audience types rather than shows listeners. This in itself adds huge value to the product.
With that in mind, it starts to look like a shrewd move from the platform and the City agrees with Spotify's market cap leaping by almost $3million when the deal was announced.
But it's more than that. Its some of the first shots fired in a podcast platform war that could re-shape the industry as a whole.
Obviously, for Spotify to find value in their investment they MUST have the exclusivity they have paid for. Whilst this is a smart idea of the platform (for the very reasons cited above) it might not be a great move for podcasting on the whole.
Convincing people to change their prefered podcast platform is no mean task. As Google Podcasts have discovered with their continued efforts in the space and still small audience share, moving people away from their habitual listening patterns is tricky. If anything is going to force that switch it is going to be claiming exclusivity over a listener's favourite shows. If this bold move by Spotify to do just that does payoff and they begin to chip away at Apples (slowly) decreasing but still dominant 63% (down from 80%) market share then surely they will go after other big-name titles.
If other platforms follow suit then this could massively damage one of the unique and brilliant things about podcasting: choice.
We could potentially see a scenario where both big-name shows and small start-up podcasts both need to pick their battle in terms of platform. Do they want to be available on Spotify... or Apple... or somewhere else? The long-held belief in podcasting is that any show can find an audience as long as it can identify its niche. If you immediately reduce your potential audience upon launch then finding your niche audience suddenly becomes more difficult.
In a platform-exclusive scenario, there would also be a question over the value placed on smaller audience podcasts by these platforms. The value of a big-player podcast is clear... they bring ears. But without a large audience to pull listeners into the platform that can be transformed into paying subscribers or a big advertising value what benefits do the smaller shows bring to the table?
Potentially we could also see a situation where podcast creators have to pay a subscription to the most popular listening platforms (or at least a hand over a revenue share) in order for their podcast to be hosted, and maybe even promoted, alongside other popular shows. Whilst this wouldn't kill the hobbyist market dead it would certainly add another potential barrier to entry for the ever-increasing army of wannabe podcasters around the world.
We've already seen a similar pattern develop in the phone app market with both Google and Apple taking a share of a developers revenue when purchased through the store so why wouldn't podcasting follow suit?
Sure, Spotify is fairly unique right now with its subscription model but exclusivity still has a value to other platforms even if it's just being able to control and sell the advertising space within. For the platforms at least, exclusive shows make a lot of sense.
Whatever the future holds, the message now is clear. This deal, along with the rest of the $600million that Spotify has pumped into their podcast strategy over the last 18 months, has firmly established podcasting as a main-stream media. No longer is it in the shadow of its more mature cousins such as TV, Radio and even Facebook. It is big money and it is big potential.
A potential that Joe Rogan, talking to the NY Times, still thinks is growing:
“Nobody ever thought: We need to gear our entertainment, our media, to people who cook, who jog, who hike, people who drive. Even books on tape can require too much thinking. But a podcast doesn’t require that much thinking at all. You get captivated by the conversation. One of the things about this medium, in general, is that it’s really easy to listen to while you do other stuff.”
As Rogan observes, in an increasingly noisy and busy world, podcasting is finding its own space and this deal is proof that there are still plenty of opportunities for podcasters of every size.
For now, at least, the gates are still open and anyone with a microphone, a laptop and an idea has the potential to turn a dedicated and engaged audience into a multi-million-pound deal.