$100M Joe Rogan Deal Positions Spotify to Compete with Apple Podcasts

Apple woke up yesterday comfortably positioned at the top of the looming podcasts wars. By mid-afternoon, the industry was turned upside down. Joe Rogan announced his long-form podcast, the Joe Rogan Experience, will become exclusive to Spotify later this year. The deal is worth more than $100 million, according to the Wall Street Journal. 

Spotify’s groundbreaking past few months, which includes a near $200 million deal to acquire The Ringer, positions it for takeoff. Rogan is digital media’s Howard Stern, whose move to SiriusXM in 2004 is reminiscent of Rogan's. Though, Spotify will inherit a higher percentage of Rogan’s audience as it's offered free; SiriusXM is exclusively available by subscription.

Apple’s lead over the industry isn't going to evaporate overnight. But its market share will continue to decrease following this move. It has already fallen from 80% to 63% in recent years. Apple's 43% to 20% lead over Spotify in unique devices is the key metric to watch. Spotify's commitment to Rogan will cut this gap by also turning a portion of the remaining 37% — web browsers, Google Podcasts, Castbox — over to its platform. Research from a MIDiA report concludes listeners are now more satisfied with Spotify than Apple Podcasts. 

Apple's case as the superior service is rapidly deteriorating. Its appeal is merely the "default advantage," which I wrote about last week in discussing the streaming wars. Apple leads in usage because it was the first known podcast service and comes preloaded on Apple devices. That'll take time to change, but Rogan's show, with a reported listening and viewing base of 200 million, is the difference-maker that'll swing the crucial categories in Spotify's favor.

Usually, powerful tech giants viciously strike back when their turf is stepped on. That might not happen here. There's a belief that Apple is oblivious to the situation. "The main beneficiary of the 'open internet' in the case of podcasting is Apple and they treat it like a long ago conquered colony they forgot about," an audio executive told the New York Times. If this is true, the gap will narrow faster.

Spotify's inevitable growth isn't limited to poaching competitors' listeners. Podcasting is a growing industry in both revenue and consumers. Spotify, with its recent momentum, is the most appealing option for the latter, which is invaluable real estate. 

Acquiring the video version of Rogan’s podcast positions Spotify to innovatively lead in a new era of podcasts. The YouTube page for the Rogan Experience, which will stay active but no longer show full episodes, has 8.41 million subscribers. The interview podcast routinely draws millions of views per episode. May 7's episode with Elon Musk has 13 million views. Their 2018 sit down drew 34 million. And Alex Jones' newsworthy return last year was viewed 20 million times on YouTube. Remember, this is in addition to the show's podcast listeners.

Video podcasts have a unique opportunity to take off. Spotify, like most popular apps, is now available on crystal clear Smart TVs. JRE's large, loyal fan base can watch the podcast as if it’s airing as a television simulcast. Spotify can capitalize in this underutilized area.

Rogan's boost to Spotify's audio and video divisions will make it enticing to continue expanding. If Spotify’s spending habits continue, it can attract sports radio hosts to transition to podcasting. Dan Le Batard would be an impactful signing. Le Batard's following is much larger digitally than on terrestrial radio. While he's still under contract with ESPN, the New York Post reported his future on radio is up in the air. Spotify should also look into the fantasy football realm. Fantasy podcasts consistently outrank mainstream sports podcasts during the fall. Spotify would give one of them the push and promotion the networks have failed to.

Spotify has tried to remain apolitical but there are several political podcasts with dedicated, passionate followings. This includes the Ben Shapiro Show of the Daily Wire, a company that'd be a significant acquisition for a tech giant.

A potential roadblock in Spotify's quest for podcast royalty is if the industry were to follow the approach of the streaming wars. Distributors could do what networks did to Netflix and pull their properties to offer exclusively on their own platforms. iHeartRadio, which has its own app with podcasts, is the biggest domino. Last month, iHeart led all podcast publishers with 201 million streams and downloads. While Spotify's exclusive content would hold up, an a la carte scenario would change everything — again.

Disclosure: Outkick’s founder Clay Travis is an on-air talent for iHeart on Fox Sports Radio.