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  • (upbeat music)

  • - Joe Rogan, one of the world's most popular podcasters

  • is making his show,

  • The Joe Rogan Experience, a Spotify exclusive.

  • This is huge industry changing news.

  • The show hasn't even been available in Spotify

  • up until this point,

  • and the company is reportedly spending

  • potentially more than $100 million to bring it over.

  • This means that if you wanna listen to The Rogan Show,

  • you're going to have to download Spotify.

  • Now, you probably think more of music than podcasting

  • when you hear Spotify's name,

  • but this Rogan deal is actually

  • an essential part of the company's plan

  • to become the biggest name in audio.

  • To understand why,

  • we have to look at the big picture.

  • Spotify made its podcasting ambitions known

  • in 2019 with three acquisitions.

  • Basically back-to-back,

  • it bought two podcast networks,

  • Gimlet Media and Parcast,

  • and a podcast creation company called Anchor.

  • All together, the company spent around $400 million

  • for those three companies combined.

  • Then this year, it also acquired The Ringer

  • and Bill Simmons Flagship show

  • for reportedly around $196 million.

  • The team spent a lot of money all in an effort

  • to lock down some of the industry's top content,

  • committing it to Spotify's library,

  • but Spotify attempted exclusives

  • with big name record releases

  • and the strategy failed years ago.

  • So why is it investing so much in podcasts now?

  • It's about getting people to use it to app.

  • Similarly to how Amazon knows the items

  • people most want to buy

  • and develops its own products around that data.

  • Spotify knows what content listeners search for the most,

  • and that data informs it's purchasing decisions.

  • The company said when it bought Rogan show,

  • that it was one of the most searched podcasts.

  • It needed the show to become the go to place for listening

  • and this is critical.

  • Rogan show is free to listen to.

  • People don't need Spotify Premium to hear or watch it.

  • Instead, they pay with their data.

  • Spotify also doesn't need people to subscribe

  • because it makes money in a more traditional way too.

  • - [Announcer] This episode the podcast

  • is brought to you by stamps.com.

  • This is...

  • We've been sponsored by stamps.com

  • for seven years now.

  • It's amazing-- - There's never been

  • a single podcast company

  • that sells ads, makes content,

  • has a popular podcast player

  • and gives people the tools to create their own shows.

  • Spotify now has all of that.

  • It's just a question of getting people to use it.

  • Big names like Joe Rogan,

  • bring people to the platform,

  • but a large show library keeps them there.

  • Spotify says it has more than a million podcasts available

  • and that during the first quarter of 2020,

  • 70% of shows were created with Anchor.

  • On top of all these acquisitions and deals,

  • Spotify also created new tech for generating playlist

  • and inserting ads.

  • It now algorithmically generates podcast playlists,

  • and launched its own advertising tool

  • called Streaming Ad Insertion,

  • which allows targeted ads to be placed into shows

  • as people listen to them,

  • which again, relies on that critical user data

  • we talked about earlier.

  • And then of course,

  • it launched video podcasts in app,

  • which allows it to sway

  • some of YouTube's popular podcasters,

  • over to its platform.

  • Spotify sees a big opportunity for podcasts because for one,

  • the competition isn't very strong.

  • Apple, the biggest name in podcasting up until now,

  • has mostly left its product alone,

  • letting listeners freely come and go

  • and allowing all creators to upload their RSS feeds,

  • without Apple trying to own any show exclusively.

  • It doesn't make its own shows right now

  • and it doesn't sell ads,

  • which would go against

  • its privacy oriented positioning anyway,

  • Spotify can totally own this space.

  • Even more importantly though,

  • these exclusive podcasts cost Spotify a lot upfront,

  • but they could pay off in the future.

  • Every time someone listens to a song on Spotify,

  • the company has to pay the record labels for that listen.

  • But with podcasts,

  • it deals with the creators directly.

  • In fact, with its exclusive deals and its own programming,

  • it actually makes money off each listen

  • because of the ads it places.

  • Now, I should say,

  • Spotify Premium users still hear ads

  • in Spotify programming,

  • so the company is actually double-dipping

  • with the revenue there.

  • Podcast could be lucrative for the company,

  • which is why although it's spending

  • hundreds of millions of dollars on tools and talent

  • for its platform,

  • it'll likely make that money back.

  • Midroll, another podcast ad network,

  • says advertisers can pay anywhere

  • from $18 to $50 per 1000 listeners.

  • Joe Rogan says his show reaches

  • 190 million downloads per month,

  • meaning he and his team could on the low end

  • be making $3 million in revenue on ads per month.

  • The bigger question is how Spotify's decisions,

  • affect the broader podcasting industry.

  • It doesn't use RSS,

  • so it controls the whole system,

  • including the data,

  • which informs not only its own purchasing decisions,

  • but also its ad targeting.

  • If the technology takes off,

  • we could live in a world in which podcast ads

  • more closely resemble web ads,

  • in that they're targeted to individual listeners.

  • This might be okay with some people,

  • but others might worry about their privacy.

  • Podcast listening data is more sensitive than music,

  • for example, because people listen to nice shows

  • about potentially telling topics.

  • Just as we've seen people on the broader web,

  • make decisions about where they browse

  • or what email or messaging service they use,

  • based on their privacy.

  • The same of might happen with podcasting.

  • Podcasting was once equal across all platforms,

  • but it now seems like there will be two podcasting worlds,

  • Spotify versus everybody else.

  • Hey everyone,

  • thanks so much for watching.

  • Make sure you check out our other big picture episode

  • about how podcasting became as big as it is now

  • and why everyone's talking about it.

  • I hope you're all staying safe and healthy,

  • subscribe to the channel,

  • check out theverge.com,

  • we got you.

  • Alright, bye.

(upbeat music)

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Why Spotify bought Joe Rogan’s podcast

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    林宜悉 posted on 2020/12/02
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