January 31, 2023

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Joe Rogan, Megan, Spotify exec Don Ostroff on canceling podcast

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Joe Rogan, the freewheeling bro podcaster whose show is distributed exclusively by Spotify, is a magnet for controversy. Earlier this year, COVID misinformation about “The Joe Rogan Experience” and Rogan’s past use of the N-word sparked a backlash among artists and users, leading to a movement to boycott the streamer (which ultimately fizzled).

Out of the millions of podcasts on the platform, Rogan has the single largest audience by a mile. Don Ostroff, Spotify’s chief content and advertising business officer, has nothing but praise for Rogan.

“Zor has the number one podcast in the world, which is saying a lot,” Ostroff said in an interview diversity. “We look at Joe and it’s hard to find anyone who comes close… There’s Joe Rogan, then there’s a really big cliffhanger – and then everyone else.”

Asked if Spotify was worried about alienating advertisers with the Rogan deal, Ostroff said, “His advertisers have been with him for a long time and still remain his advertisers. He has a very loyal group of advertisers even before we arrived.”

The consistently top-rated “The Joe Rogan Experience,” which moved exclusively to Spotify in December 2020, is the marquee title of Spotify’s multibillion-dollar push into the podcast space under Ostroff. It started in earnest in early 2019 with the company’s deal to acquire Gimlet, Percast and Anchor. In 2020, Spotify bought Bill Simon’s The Ringer, and it has made other acquisitions, including ad-tech firm Megaphone, analytics firm Podsites & Chartables, and audiobook company Findaway.

Nearly three years after bulldozing the podcast biz, Spotify has produced a wealth of audio content, including an impressive slate of exclusive and original series. By the end of the third quarter of 2022, Spotify hosted 4.7 million podcasts on the platform in more than 170 markets. Most of these are not exclusive. But many of the best performers are Spotify’s original and exclusive shows: Ostroff noted that six of the top 10 podcasts in Q3 were exclusive or original on the platform.

“We’ve really hit our stride and are finding shows that resonate,” Ostroff said.

On its own platform, Spotify said it has three of the top five podcasts worldwide for 2022: “The Joe Rogan Experience,” Alex Cooper’s “Call Her Daddy” talk show and the scripted thriller “Caso 63” (all languages). Spotify’s No. 3 for the year was “Anything Goes with Emma Chamberlain,” hosted by the popular YouTuber, which will be available exclusively on Spotify in 2023. In the US, four of Spotify’s top five most anticipated new releases of 2022 (ranked based on first-week streams for newly released series) were: Meghan Markle’s “Archetypes,” “Batman Unburied,” “Kim Kardashian’s The System: The Kevin Keith” and “Case 63,” starring Julianne Moore and Oscar Isaac.

“We know we have to make some big changes — and look for podcasts that feel like a big event, not just another podcast that’s out there,” Ostroff said.

One of those swings was with Meghan, Duchess of Sussex, on her Archwell production company’s talk show “Archetypes” with Prince Harry. On the show, which premiered in August and briefly hit the No. 1 spot on Spotify’s charts in several countries, Meghan sat down with guests to dissect the semantics of labels historically applied to women such as “slut,” “ambitious” and “crazy” archetypes that detractors call a vanity project. “K canceled. But to Ostroff, Markle exemplifies the breakout quality that Spotify is pursuing in the audio space.

“We’re looking for creators with unique voices, something advertisers will want to be a part of, but most importantly a loyal audience that follows them,” he said. “These podcasters build communities around the podcast, sometimes around the guests. People know what to expect and they keep coming back.”

Ostroff would not say whether Markle’s “Archetypes” will return for a second season. Additionally, he declined to comment on contract negotiations with Rogan, whose $200 million-plus deal with Spotify is believed to be up for renewal through 2023.

Spotify will continue to scout for more exclusive podcast licensing deals. But, Ostroff said, “there aren’t many of them that are at that level” still on the market.

One of Spotify’s high-profile podcast deals — with President Barack Obama and Michelle Obama’s Higher Ground — ended this year, and Higher Ground signed an exclusive first-look deal with Amazon’s Audible. The Obamas were said to be interested in distributing shows on an exclusive basis, seeing Spotify’s terms as limiting their reach. Ostroff declined to comment on Spotify’s discussions with the Obamas, but said, “When we do deals with partners it’s mostly exclusive because it’s a great way to bring people to the platform.”

This fall, Spotify canceled several podcasts for the first time, dropping 11 shows, in what unions said was a rip-off of podcast employees that led to the company laying off at least 38 workers. Ostroff previously spent most of his career at The CW, UPN and Lifetime and such cloying routines on the TV programming slate.

“It’s definitely a matter of the television business being underperforming and reinvesting in new content”. This year Spotify “was able to take a step back, then we made some very difficult decisions that we’re going to cancel. It was just an exercise that we didn’t do,” he said, adding, “We’ll do it regularly.”

The company is constantly developing new podcasts. Ostroff compares Spotify Studio’s project, spanning a wide range of formats and genres, to cable TV. Ringer focuses on sports and pop-culture podcasts; Percast delves into true-crime, screenplays and interview shows; And Gimlet creates long-form narratives and exploratory cores.

Ostroff sees particular promise for scripted entertainment in podcasts, which he says “have been underdeveloped.” Following the popularity of “Batman Unburied,” an alternate Batman/Bruce Wayne origin story co-produced with DC, Spotify has lined up “Harley Quinn and the Joker: Soundmind,” starring Christina Ricci as Harley Quinn, Billy Magnussen as the Joker and Justin acted Hartley as Batman for 2023.

Spotify Originals falls under its Talk Studios team led by Julie McNamara, who oversees partnerships with studios like DC Comics, Jordan Peele, Kardashian and Markle, and major talent and studios like Gimlet, Percast and The Ringer. Spotify’s exclusive podcasts fall under the Creator Content and Partnerships Group, led by Max Cutler, which manages exclusive licensing deals with Rogan and other creators.

Ostroff noted Spotify’s recent award wins for its audio content. Markle’s “Archetypes” won Pop Podcast of the Year at the 2022 People’s Choice Awards; Other Spotify shows nominated in the category are “Armchair Expert with Dax Shepard” and “Call Her Daddy” (as well as Emma Chamberlain’s “Anything Goes”). In addition, “Call Her Daddy” won Best Podcast at the 2022 Streamy Awards, and the Spotify original series “Jemele Hill Is Unbothered” won two NAACP Image Awards earlier this year.

Still, Spotify has yet to see a financial return on podcast play. In 2021, the company’s podcast business will generate about 200 million euros in revenue, up 300% year over year, CFO Paul Vogel said at the streamer’s investor day presentation in June. But the podcast segment had a negative gross margin of -57%, according to Vogel — and he said losses are projected to be even higher in 2022, when Spotify expects to peak in red ink. Over the next five years, Spotify believes podcasts could achieve a potential gross margin of 40%-50% over the next five years – even higher than its 30%-35% gross margin target for music.

Ostroff, without commenting on specific podcast financials, said, “Obviously podcasting is still a new business for us. It’s still an investment business.”

Aiming to boost ad revenue, Spotify continues to pitch Madison Avenue on the unique features of its listening platform, including its Streaming Ad Insertion (SAI) technology. When Spotify first got into podcasting, marketers didn’t accept it as a “typical advertising medium,” says Ostroff. The company recently commissioned a study from neuro-marketing firm Neuro-Insight that Spotify says is the largest audio study of its kind. Neuro- According to the Insight study, which tracks brain activity to measure user engagement, Spotify Audio outperforms other media including traditional radio (34% more engagement), social media (+27%), TV (+23%) and digital video. (+9%).

Meanwhile, Ostroff sees a “huge opportunity” to increase engagement with podcasts through video versions of his shows. He said that Alex Cooper wanted to do more videos for “Call Her Daddy” (previously produced by Barstool Sports) with guests including Hailey Bieber and Julia Fox – and according to Ostroff, his shows with videos delivered twice as many viewers as those with audio only.

“Obviously, we’ve learned a lot in the last three years,” Ostroff said. “And we have more coming down the pike.”

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