Joe Rogan, the freewheeling bro podcaster whose show is exclusively distributed by Spotify, is a magnet for controversy. Earlier this year, COVID misinformation on “The Joe Rogan Experience” and Rogan’s past use of the N-word triggered a backlash among artists and users, leading to a movement to boycott the streamer (which ultimately fizzled out).
Rogan also is, by a mile, the single biggest listener draw out of the millions of podcasts on the platform. Dawn Ostroff, Spotify’s chief content and advertising business officer, has nothing but praise for Rogan.
“Joe has the No. 1 podcast in the world, which is saying a lot,” Ostroff said in an interview with Variety. “We look at Joe and it’s hard to find anyone who comes close… There’s Joe Rogan, then there’s a really big cliff — and then everyone else.”
Asked whether Spotify was concerned about alienating advertisers through the Rogan pact, Ostroff said, “His advertisers have been with him for a very long time, and still remain his advertisers. He has a very loyal group of advertisers, even before we came in.”
The consistently top-ranked “The Joe Rogan Experience,” which moved exclusively to Spotify in December 2020, is the marquee title in Spotify’s multibillion-dollar push into the podcast space under Ostroff. That kicked off in earnest in early 2019 with the company’s deals to acquire Gimlet, Parcast and Anchor. In 2020, Spotify bought Bill Simmon’s The Ringer, and it has made other acquisitions since including ad-tech firm Megaphone, analytics firms Podsights and Chartable, and audiobook company Findaway.
Nearly three years after bulldozing its way into the podcast biz, Spotify has built up a hefty tonnage of audio content, including an impressive slate of exclusive and original series. As of the end of the third quarter 2022, Spotify hosted 4.7 million podcasts on the platform in more than 170 markets. The vast majority of those are nonexclusive. But many of the best performers are Spotify’s original and exclusive shows: Ostroff noted that six of the top 10 podcasts in Q3 on the platform were either exclusives or originals.
“We really have hit our stride and are finding shows that resonate,” Ostroff said.
On its own platform, Spotify said it had three of the top five podcasts globally for 2022: “The Joe Rogan Experience,” Alex Cooper’s “Call Her Daddy” talk show and 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 become exclusively available on Spotify in 2023. In the U.S., Spotify also had four out of top five most-anticipated new releases of 2022 (ranked based on the first-week streams for newly released series): Meghan Markle’s “Archetypes,” “Batman Unburied,” “Kim Kardashian’s The System: The Case of Kevin Keith” and “Case 63,” starring Julianne Moore and Oscar Isaac.
“We know we have to make some big swings — and look for podcasts that feel like a big event, not just another podcast that’s out there,” said Ostroff.
One of those swings has been with Meghan, the Duchess of Sussex, with talk show “Archetypes” from her Archewell production company with Prince Harry. In the show, which premiered in August and briefly took the No. 1 spot on Spotify’s charts in several countries, Meghan sits down with guests to dissect the semantics of labels historically applied to women such as “slut,” “ambitious” and “crazy.” Detractors have dismissed “Archetypes” as a vanity project. But to Ostroff, Markle exemplifies the breakout quality Spotify is pursuing in the audio space.
“We are looking for creators with unique voice, something advertisers would want to be part of, but most important have a loyal audience that follows them,” she said. “These podcasters create community around the podcast, sometime around the guests. People know what to expect, and they keep coming back.”
Ostroff wouldn’t say whether Markle’s “Archetypes” will be returning for a second season. In addition, she declined to comment on deal talks with Rogan, whose $200 million-plus deal with Spotify is believed to be up for renewal at the end of 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 — came to an end this year, and Higher Ground inked an exclusive first-look deal with Amazon’s Audible. The Obamas were said to be interested in distributing the shows on a nonexclusive basis, seeing Spotify’s terms as restricting their reach. Ostroff declined to comment on Spotify’s negotiations with the Obamas, but said, “When we do deals with partners most of those are exclusive because those are a great way to bring people onto the platform.”
This fall, Spotify for the first time canceled several podcasts, axing 11 shows, which the unions repping podcast employees said resulted in the company laying off at least 38 staffers. Ostroff previously spent much of her career at the CW, UPN and Lifetime, and in TV such culling of the programming slate is routine.
“It’s really just a matter of course in the television business to look at shows that are underperforming and reinvest that into new content,” Ostroff said. Spotify this year was “able to take a step back, then we made some very difficult decisions about shows that we were going to cancel. It was just a practice we had not done,” she said, adding, “We will do that on a regular basis.”
The company is in constant development on new podcasts. Ostroff compares Spotify Studios’ projects, spanning a broad range of formats and genres, as akin to cable TV. The Ringer focuses on sports and pop-culture podcasts; Parcast delves into true-crime, scripted and interview shows; and Gimlet produces longer-form narrative and investigative originals.
Ostroff sees particular promise for scripted entertainment in podcasts, which she said “has been underdeveloped in the medium.” Following the popularity of “Batman Unburied,” an alternative origin story about Batman/Bruce Wayne produced with DC, Spotify has lined up “Harley Quinn & The Joker: Sound Mind” starring Christina Ricci as Harley Quinn, Billy Magnussen as the Joker and Justin Hartley as Batman, for 2023.
Spotify Originals fall under its Talk Studios team led by Julie McNamara, who oversees partnerships with major talent and studios such as DC Comics, Jordan Peele, Kardashian and Markle, as well as studios Gimlet, Parcast and The Ringer. Spotify’s exclusive podcasts fall under the Creator Content and Partnerships group led by Max Cutler, which manages the exclusive licensing deals with Rogan and other creators.
Ostroff cited recent award wins for Spotify’s audio content. Markle’s “Archetypes” won top pop podcast of the year at the 2022 People’s Choice Awards; other Spotify shows nominated in the category were “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 earlier this year Spotify original series “Jemele Hill Is Unbothered” picked up two NAACP Image Awards.
Still, Spotify so far hasn’t seen a financial payback on the podcast play. In 2021, the company’s podcast business generated nearly €200 million 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 the losses were projected to be even higher in 2022, when Spotify anticipates the red ink to peak. Within the next five years, Spotify believes podcasts can achieve potential gross margins of 40%-50% within 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 for us is still a new business. It’s still an investment business.”
In looking to bulk up its ad revenue, Spotify continues to pitch Madison Avenue on the unique attributes of its listening platform, including its Streaming Ad Insertion (SAI) technology. When Spotify first entered podcasting, marketers had not embraced it as a “general advertising medium,” Ostroff said. The company recently commissioned a study from neuro-marketing firm Neuro-Insight for what Spotify said is the largest audio study of its kind. According to the Neuro-Insight study, which tracked the brain activity of users to measure engagement, Spotify audio outperformed other media including traditional radio (34% higher 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 its shows. She said Alex Cooper wanted to do more video for “Call Her Daddy” (previously produced by Barstool Sports) with guests including Hailey Bieber and Julia Fox — and, according to Ostroff, her shows with video have delivered twice the audience compared with those that are audio-only.
“Obviously, we’ve learned so much over the past three years,” Ostroff said. “And we have more coming down the pike.”