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The hottest American celebrity drama of the moment does not involve sports or Hollywood but soundproofed audio booths. Joe Rogan, podcast provocateur, announced this week he would take his act to Spotify. Terms were not disclosed but the package was reported to top $100m. Other podcasters will take note. The 20-something women behind wildly popular and risqué Call Her Daddy podcast are already off air as they feud with bosses at Barstool Sports over their deal.
The annual podcast advertising revenue pot was not expected to exceed $1bn until next year. But fast growth has led to a series of pricey acquisitions by media incumbents for start-ups such as Gimlet Media and Sticher. Land grabs now have shifted to the talent behind the microphone in the hopes of not only attracting more ears but a durable business model.
While most podcasts are available across platforms such as Apple, Mr Rogan’s will become exclusively available on Spotify, which has nearly 300m total users with roughly half that premium subscribers who pay for higher service. Mr Rogan’s audience is loyal. The bet is that they will make the leap to Spotify and that the subsequent uptick in ad and subscriptions dollars will make the $100m investment worthwhile. As for Mr Rogan, his vast influence came from his ubiquity on YouTube and other free platforms with a large audience. He will be hoping that his influence will not fade when moved to Spotify (or that $100m is worth the diminution).
Spotify is spending heavily to attract new listeners. In the first quarter, it reported user growth, including subscriber growth, had grown 30 per cent but free cash flow had turned negative. The company has also just spent more than $200m for The Ringer, a sports platform from internet personality Bill Simmons. The investment is appreciated and Spotify’s shares are up by nearly a third this year. For the few podcasts that stand out, top talent is commanding top dollar. How favourable the economics of distributing pricey talent will be remains to be proven.
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