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Joe Rogan's blockbuster deal with Spotify is the streaming giant's biggest signal that it wants to dominate podcasting. Here's what it means for other show personalities and advertisers.

Joe Rogan
  • Spotify has acquired Joe Rogan's popular podcast and will exclusively host his content and sell ads.
  • Podcasting execs and ad agencies see the deal as Spotify's biggest bet on podcasting and say it could set a precedent for how other platforms court big stars.
  • Some worried that the move signals the end of independent podcasters and could pose problems for advertisers that like to buy podcast ads simultaneously across many shows.
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Spotify's deal with comedian and media host Joe Rogan solidifies its dominance in podcasting and shows how quickly the small but growing industry is being locked up by big media companies.
The top podcaster is taking his show to Spotify in a licensing deal that The Wall Street Journal pegged at more than $100 million.
The tie-up is the latest example of how Spotify is willing to pay for big acquisitions to move further into podcasting. The streaming giant acquired Gimlet Media and Anchor for $340 million last year and purchased Bill Simmons' sports media property The Ringer for $200 million earlier this year.
"In the broader entertainment space, big bold personalities are a way of legitimizing the platform," said Alain Sylvain, founder and CEO of Sylvain Labs, a brand consultancy, which has Spotify as a client. "Think of Howard Stern and XM radio. Or Jay-Z and Tidal — no one thought about it until he put his catalogue there."
Spotify is aggressively trying to steal podcasting share from market leader Apple, said Danny Weisman, media director at ad agency Noble People. Apple consumes 60% of the podcast market while Spotify makes up 10%.

Spotify has 'an ambition to scale podcast advertising'

Podcast advertising is a small but growing industry. According to eMarketer, the podcasting advertising market will hit $1 billion in 2021, up from $479 million in 2018.
The Rogan deal offers Spotify a chance to boost its non-subscription revenue. The company is well known for charging higher ad rates than other platforms, Weisman said.
"Spotify's business is predicated on streaming music, and it's not as lucrative as if they own the content itself," he said. "They have an ambition to scale podcast advertising."
Spotify will make Rogan's podcast free for listeners and sell mid-roll ads in shows as well as work with podcast sales firm PMM that has long handled Rogan's advertising deals.
Up until now, Spotify's pitch has split its podcast advertising into two products, said Stephen Smyk, SVP of podcast and influencer marketing at ad agency Veritone One. One format sells sponsorships and ads inside all of a show's downloads, including downloads outside of Spotify. The other is an ad-insertion tool that advertisers use to target people listening within Spotify. With Rogan's show moving exclusively to Spotify, Spotify will be able to sell a larger chunk of ads.
One of the bigger challenges for Spotify's advertising ambitions is to maintain the high-quality, native ads that hosts read during programs. The promise of programmatic audio advertising is that it helps advertisers scale ads across programs but some marketers worry that will water down their messages.
"Podcasts require its own ad model — it can't be sold on demographics or scale," said Judy Shapiro, CEO and founder of engageSimply, an adtech firm that works with media companies to package content based on topics that advertisers buy programmatically. "If you go down the CPM road, it will devalue what is an emerging, exciting ecosystem."

The deal offers Spotify an opportunity to drive subscriptions and ramp up in video

Beyond advertising, bringing Rogan to its platform also gives Spotify a big new audience to market its subscriptions to, and it could lure more creators with similar deals.
And if Spotify's past moves are a guide, it could make new Rogan content that's subscriber-only. Noble People's Weisman speculated that Spotify will eventually put his show behind its subscription-based program Spotify Premium, which costs $9.99 a month.
"They paid a lot, but it gives Spotify more listening and top of funnel because you bring in more listeners and they may become paying subscribers," said Erik Diehn, CEO of podcast company Stitcher.
Meanwhile, Spotify has tried its hand at video advertising several times in recent years, but those efforts have not stuck. Noble People's Weisman said that Rogan's 8.5 million YouTube subscribers could help Spotify ramp up its move into video.
YouTube is fundamentally a video company, but there's been a rise of creators like Rogan that straddle audio and video. Podcasters increasingly tell Stitcher they want more flexibility in ad formats, such as the ability to sell host-read on YouTube as they do on podcasting platforms, Diehn said.

The deal worries podcast purists

Of course, there are a lot of big ifs to this deal: Will it bring in the volume of listeners and subscribers Spotify hopes? Will Rogan court controversy that Spotify comes to regret? Will Spotify censor his provocative show?
Then there are the questions for other podcasters. Will it get harder to stand out?
For now, the deal has caused some handwringing among podcast purists who prefer wide availability of shows that defined the early days of podcasting and while messy, helped grow listenership.
"There's something about the open, accessible nature that's fueled its growth so far," Diehn. "There have been so many ways to find podcasts, which made it a hindrance early on. Deals like this signal an end to that. Increasingly we're going to have a world where podcasts are partitioned because the podcasts available on each service are going to start to narrow."
SEE ALSO: Meet the 29 power players of podcasting who are pushing original audio production forward as the industry surges toward $1 billion in ad revenue
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