It's actually a good thing for Spotify that Joe Rogan's podcast is no longer exclusive

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Spotify renewed its contract with podcaster Joe Rogan this weekend, but with a twist. After almost four years, “The Joe Rogan Experience” is no longer a Spotify-exclusive podcast.

This may seem like a concession on Spotify's part, as exclusivity has long been part of the company's strategy. Early in Spotify's journey to own podcasting, it acquired popular studios like Gimlet and Parcast. Over time, Spotify made these studio shows exclusive and unavailable on other apps. But nearly four years later, that strategy is changing. Now, Spotify might make more money selling ads on these shows than trying to corner listeners into downloading his Spotify.

according to statement According to Gimlet and Purcast unions, this strategy of converting listeners from other podcast platforms has never worked. Some shows lost more than three-quarters of their audience after being switched to Spotify exclusives.

It makes sense that Spotify's podcast strategy would change because it wasn't working. The platform acquired several podcasting startups worth hundreds of millions of dollars each and then invested in big-ticket deals with big names like Barack and Michelle Obama, Meghan Markle and Prince Harry. Although the royal couple only produced 12 episodes of one podcast, they are rumored to have been paid more than $20 million. These bad business decisions have frustrated podcasters who have seen the company that was supposed to revolutionize podcasting make three layoffs in one year.

However, the Joe Rogan Experience is a unique part of Spotify's portfolio (and it's no wonder the host has repeatedly championed harmful misinformation). In 2022, the show had approximately 11 million viewers per episode. Since arriving on Spotify in 2020, Joe's Logan show has been the most listened to podcast on the platform each year. If exclusivity doesn't bring him the benefits Spotify expected, it makes sense to try a different approach.

“The real value of Spotify’s relationship with Joe Rogan is that we are his exclusive ad seller,” said Amanda McLoughlin, CEO of Multitude Productions, which manages ad sales for more than 25 podcasts. I am. “Forcing companies that want to buy ads for Joe Rogan's show through Spotify must be more profitable than forcing his listeners to use their own app. “I think they realized that and decided to give up platform exclusivity in order to maintain ad sales exclusivity,” she told TechCrunch.

Over the past five years, Spotify has established itself as a one-stop shop for podcast production through acquisitions totaling more than $1 billion. Spotify owns the production process of creating a podcast from start to finish. Recording, editing, distributing, and monetizing podcasts can all be done through technology that Spotify has purchased from companies like his Anchor, Megaphone, and others. For these blockbuster shows, Spotify's invitation-only auto-advertisement program is especially relevant as it allows Spotify to get a significant cut of the advertising revenue.

With the Auto Ads program, ad revenue is split 50/50 between Spotify and the podcaster. On a show like Joe Rogan, that's a huge amount of money. Within the podcast industry, these agreements are sometimes structured as giving talent an advance payment for advertising sales. So Spotify may be paying Joe Rogan a lot of money in the short term in hopes of making more money in the long run from a cut of ad sales. Spotify declined to comment on the terms of the deal.

The same logic could follow for other top podcasts that are breaking free from Spotify's monopoly, such as “Call Her Daddy.” As host Alex Cooper approaches the end of her three-year, $60 million contract with Spotify, she has also signed a new deal that will allow her to publish her show on other platforms. However, Spotify retains exclusive rights to the video version of the podcast. As with “The Joe Rogan Experience,” Spotify could make more money by selling ads on “Call Her Daddy” than by retaining exclusive publishing rights.

An odd side effect of terminating exclusivity from the Logan deal could also be a boost to Spotify's reputation. Spotify still has to wrestle with the ethics of taking on podcasters who tout conspiracies and damage relationships with artists like Joni Mitchell and Neil Young, who have had their songs removed from Spotify in protest (surprisingly). , Rogan's spread of coronavirus-related misinformation had no tangible impact on Spotify's business).

Spotify declined to provide specific details about Logan's new deal. However, a Spotify representative told TechCrunch that it will “handle distribution and ad sales to optimize for future growth.”

Since podcasts were distributed on Spotify, overall podcast listens have increased by 232%, an increase that may also reflect Spotify's other broader investments in the space.

“This rapid growth we've seen has attracted a wide range of advertisers and resulted in an 80% increase in revenue from 2021 to 2023, including a 45% increase in 2023 revenue for programming. ,” the company said. he wrote in an email to TechCrunch.

Breaking away from Joe Rogan's monopoly may not be good for society…but it's probably good for Spotify's bottom line.