Why Did Spotify Pay So Much for Joe Rogan’s Podcast?

He’s in the money. Photo: Michael S. Schwartz/Getty Images

It was the deal that shook the podcast world. On Wednesday, music-streaming giant Spotify announced that it was acquiring the exclusive rights to Joe Rogan’s podcast — consistently one of the most popular (and controversial) over the last several years — for the princely sum of
$100-plus million. On the latest Pivot podcast, Kara Swisher and Scott Galloway discuss why it made sense for Spotify to pay so much and what the purchase means for the future of a medium.

Kara Swisher: Pivot won two Webby recognitions for Best Business Podcasts: the people’s choice and the actual judging. Which means the fancy people like us and the real people like us. But at the same time we’re getting this award, Joe Rogan signs a multiyear licensing deal with Spotify and gets allegedly $100 million.

Galloway: We got $100 million. Oh no, wait, that’s the guy who sold to Spotify.

Swisher: He didn’t get a Webby, but he got the $100 million. What the hell, Scott? What is going on?

Galloway: You and your awards. That’s not putting food on my table. Let me just say I got three. But anyway …

Swisher: Seriously, talk about this. What’s the deal? What is our future? What is the future of podcasting, et cetera, et cetera, et cetera?

Galloway: This is a big deal, and it reflects a couple interesting trends, some old, some new. The old trend it reflects is that advertising sucks and anyone with any money is figuring out a way to opt out of advertising.

Swisher: But there’s advertising on Rogan’s podcast. There’s going to continue to be advertising on it. You know that, right?

Galloway: I know.

Swisher: So it doesn’t suck that badly.

Galloway: If you’re lucky in podcasting, you get ads at a CPM of $20 or $30, meaning that for every thousand people that show up, an advertiser will pay 20 bucks. So that’s two or three cents. This is what media has been doing forever — media thinks that you’re just a fucking loser, in the sense that you’re willing to endure this shit for two or three cents. What technology has done is it’s liberated consumers, who’ve said, “You know what? I’ll pay 12 cents to avoid advertising on a podcast. I’ll pay 40 cents to avoid all the advertising on Modern Family.”

So you have this emerging industry — not even emerging — emergent industry that has said, “We’ll figure out a way to use technology, to get a credit card to an app store on Apple TV, or Amazon Prime or Hulu, whatever it is, or a video on demand that says, “All right, would you
rather …” There’s so much margin in this because we’re only getting 11, 20, 49 cents of money to pelt bullshit at you, telling you you have restless leg syndrome, that if we can figure out a way to charge you a buck or two bucks, there’s margin for the technology players, the carriers, all kinds of stuff. Rogan was making around $30 million bucks a year, supposedly, and he found somebody who said, “Okay, we’re going to liberate your users from this ad-supported ecosystem.”


Twice weekly, Scott Galloway and Kara Swisher host Pivot, a New York Magazine podcast about business, technology, and politics.

Swisher: But it’s going to continue to be free — he’s just coming off of YouTube. It’s not going to be behind a wall. It’s a licensing deal — he’s not an employee of Spotify, which is not going to produce it. So it’s a little different. I thought it was their Howard Stern moment, but it’s not that. It’s just that it will bring in maybe more advertisers to Spotify, which is not his focus, and at the same time push people to premium, because I think the catalogue will be there. I think that’s what they’ll put behind the wall — the catalogue.

Galloway: I think they’ll end up with one ad-supported model or a model for seven or ten minutes, and then you have to pay for the full thing. I would be shocked if within three years Joe Rogan isn’t behind a wall and the only way you access Joe Rogan is to be a subscriber to Spotify. That’s where the money is. Every dollar they get in advertising is worth X, every dollar they get in subscription is worth 3-to-6X. There’s just so much incentive to move shit behind a wall.

Swisher: What’s hardest for Rogan here is coming off of YouTube. I’d love to have known the behind-the-scenes situation on that. YouTube didn’t really push to hold him in some way. He had to have been in extensive talks with them, presumably, because he’s been a mainstay on there. They’ve got lots and lots and lots of creators on YouTube, and Spotify is cherry-picking this one off. What does that say about podcasting?

Galloway: The bigger thing here is that the most valuable companies in the world that are worth between $800 billion or $1.3 trillion, ranging from Facebook — which by the way, just hit an all-time high — to Apple, Amazon, and Google — these guys effectively have said, “Okay, the key is selling more search words, more handsets, and more paper towels.” The way they can do that is through emotion and loyalty to their platform, their operating system, their devices. So they went into the business of strengthening or cementing that emotional connection by creating video content and buying in music. All of these things are very powerful.

The thing about podcasting is that when you’re in people’s ears, you do create a pretty strong relationship. Every podcast yesterday went up in value 20 percent or 30 percent, or even 50 percent, because just as nine women can’t have a baby in a month, there’s certain podcasts, including ours truly, that have built a following that no matter how much money they have, they can’t build it overnight. Yesterday, you saw every big tech company and Spotify pull out their pencil and say, “What podcasts do we want to be in?” Because they’re going to start snapping them all up. Even Spotify — they spent a hundred million dollars, supposedly, but their stock went up $1.4 billion on the move, so they’re like, “Okay, let’s go do this a hundred times.”

Swisher: Well, it’s not going to work a hundred times. He’s a special character. There are a couple podcasts that are really big like his, and controversial — he attracts a lot of attention.

Galloway: Every podcast in the top 100 just became an acquirable enterprise asset yesterday. Before that, everyone was cocking their head and saying, “Well, it’s a great world for podcasts. We’ll see.”

Swisher: Who are the players? Who are the buyers? Who should we expect phone calls from, Scott? And lovely bottles of Champagne?

Galloway: Well, obviously Spotify, but first and foremost: Apple, Amazon, and also Google. They try to get people more attached to their Amazon show, to Alexa, to Apple Music, to Amazon Music. What’s interesting about the Rogan deal is that you could see Spotify trying to figure out a video offering that pushes him up.

Swisher: That’s the interesting part, the video offering.

Galloway: Agreed. When I play Shawn Mendes, it plays the lyrics automatically. You could imagine that when you start playing a podcast, it would start showing the video of it, maybe even some charts to help illuminate what the podcast is about. But podcasting is another one of those categories that has a niche audience — but Netflix has shown the power of the long tail. So I think any podcast in the top 100 is probably potentially an acquisition target now.

Unfortunately, what it’s going to do is the best podcasts are probably going to get bought for an irrational price and it’s going to leave all the other guys who’ve built great podcast businesses, all the carriers, the Wonderys, those guys — unfortunately, Vox — they’re going to have to pay even more to retain top, award-winning talent. Because the guys with the big pockets who could monetize it elsewhere are showing up in the future on every podcast.

Swisher: What number are we on the list?

Galloway: What number are we? Well, I saw, we’re big in the United Arab Emirates. The UAE and Argentina — those are our biggest markets. We’re like in the top 30, and everywhere else we’re in the top 200 in terms of podcasts.

Swisher: I like that you look at our charts. I don’t look at our charts.

Galloway: No, I’m obsessed with affirmation. I don’t like people, but I’m desperate for their affirmation.

What do you think of this? Kara, if there is a queen of podcasting, you’re it. What do you think?

Swisher: I think it’s interesting. I think I was very early to understand this. I think I kicked myself that I didn’t take more advantage of it, because I had the initial insight that was correct.

Galloway: How long have you been doing podcasting?

Swisher: Five years. When people talk about “Podcasting is over,” I think they’re idiots. I’m like, “Fine. It’s over, get out,” that kind of thing. I’m noticing the fan base is fascinating. I literally walked down the street and …this week, I had four joggers ask, “Kara, where’s Scott?” It’s really interesting, and it’s not like they love me. It’s that they love it. They love the product.

Galloway: No, they think you’re their friend. There’s something very intimate.

Swisher: Yes, they love the product, and I think we have a good product. So I’m very bullish on this. Scott, you and I will be in this dysfunctional relationship until the end of time.

Galloway: But the medium, the emotional connection you make when you’re in someone’s ears and you’re just talking over an extended period of time and not using tricks to try and say, “And next up the person who killed JFK,” or whatever it is, or you’re not trying to create rage for a click. That intimate, calmer relationship — basically, big tech has discovered that’s another way to cement the relationship so they’ll order more handsets and paper towels.

Pivot is produced by Rebecca Sananes. Erica Anderson is the executive producer.

This transcript has been edited for length and clarity.

Why Did Spotify Pay So Much for Joe Rogan’s Podcast?