Spotify just signed another massive podcast deal
In the last 18 months, Spotify (NYSE: SPOT) has pushed to expand its platform from a music streaming service to all types of audio. Podcasting has been a major focus and has led CEO Daniel Ek to acquire companies like Gimlet, Anchor, Parcast and The Ringer, as well as sign exclusive deals with big names like the Obamas.
Spotify’s latest deal could accelerate the growth of its podcast audience. The Joe Rogan Experience is coming to Spotify and will be platform exclusive by the end of the year. It’s a blow to Apple, which sports the most popular podcast listening app.
With The Joe Rogan Experience With over 190 million downloads per month, Spotify is expected to see a flood of podcast traffic start to arrive as Rogan begins telling his listeners that this will soon be the only place they can find all of his content.
An exclusivity with an established audience
Spotify’s new deal with The Joe Rogan Experience has the potential to have the greatest immediate impact of any of its podcast offerings so far.
Spotify bought several media companies with integrated audiences including The Ringer and Gimlet, but that didn’t make existing podcasts from those companies exclusive. During this time, he’s created exclusive podcasts with big names like Amy Schumer and Joe Budden, but these personalities don’t have established podcasting audiences.
The exclusive license of The Joe Rogan Experience combines these two factors – integrated audience and exclusivity – which should lead to a significant increase in interest in the podcast section of Spotify.
People are looking The Joe Rogan Experience. “The Talk Series has long been the most searched podcast on Spotify,” the company said in a press release. This is despite the fact that the show is not even on Spotify’s platform yet.
That said, all Spotify can hope for from the deal is for the podcast to attract new listeners. It still has to show them the value of its platform compared to its competitors like Apple. Highlighting exclusive content or a differentiated listening experience will be the key to lasting appeal to listeners.
The Value of Podcast Listeners on Spotify
Spotify’s growing investments in podcast content and technology are based on management’s belief that listening to podcasts drives “usage, engagement and retention on both Ad-Supported and Premium”, such as he wrote it in his first quarter letter to shareholders.
Spotify also says it is seeing an increase in the conversion of free users to paid users. So while he might not earn ad revenue on most podcasts today, he can still benefit financially from the increased listening on his platform. (Note: It is not clear whether Spotify will receive ad revenue from ad sales of The Joe Rogan Experience.)
Longer term, Spotify also has the potential to increase its share of ad sales from podcasts, both those it owns and those it simply hosts. The company unveiled Spotify Podcast Ads earlier this year, which uses its streaming ad insertion technology to dynamically insert ads into podcasts instead of relying on the same ads serving every listener. The technology has the potential to increase average ad prices for podcasters, and Spotify would be able to take a percentage of sales from each podcast that uses it.
For now, Spotify is still very focused on building its audience. Nineteen percent of its 286 million monthly active users listened to podcasts in the first quarter. This number is steadily increasing, but still has a long way to go.
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