How Joe Rogan Fits Into Spotify’s Plan for Podcast Supremacy
Spotify is adding another prized asset to its growing list of podcast properties. The music streaming platform acquired the exclusive rights to The Joe Rogan Experience podcast and video-cast, which will debut on Spotify on September 1. Reports indicate the deal carries an exclusivity fee of more than $100 million, but financial details were not disclosed by either party involved.
The Joe Rogan Experience: with about 190 million monthly podcast downloads and an additional 10 million views through video-casts, Joe Rogan Experience is one of the largest podcasts in the world. JRE averages about 18 podcasts per month, ranging in length from 1 to 5+ hours, according to SunTrust Robinson Humphrey.
What it Means for SPOT: The deal puts Spotify in a position to increase its subscriber base and listener hours, and advance its data trove for its ad tech offering.
Impact: SunTrust Robinson Humphrey conservatively estimates “JRE should be a low-single-digit lift to 2021 total MAUs (~2%), subscribers (<1%), revenue (~2%), and gross profit (~2%).” STRH has a BUY rating and $167 price target.
Keeping an eye on margins: Wells Fargo Securities emphasizes that SPOT “remains a stock whereby investors are focused on gross and operating margins.” The firm says the deal would push SPOT back on its path towards 30% gross margins. Wells Fargo Securities has an UNDERWEIGHT rating and $130 price target.
Spotify’s recent acquisitions: Spotify has spent about $636 million on podcast assets since February 2019. Wells Fargo Securities estimates those properties will generate about $95 million in revenue in 2020.
Podcasting opportunity: Podcast advertising revenue is forecasted to exceed $1 billion by 2021. About half of the U.S. population has listened to a podcast at least once, according to Interactive Advertising Bureau.
Don’t Sleep on iHeartRadio: “If SPOT is the platform play, IHRT is the content play,” according to Wells Fargo Securities, which calls iHeartRadio its top audio idea. The firm estimates around $100 million in podcast publishing revenue this year, and points out that “IHRT also has some of the best margins in the industry.”
iHeartRadio acquired Stuff Media for $55 million in 2018. The podcast network is the publisher of HowStuffWorks and is behind shows such as Stuff You Should Know and Funny or Die.
