Spotify has signed a slew of headline grabbing, multimillion-dollar deals for podcasts from Joe Rogan, Kim Kardashian and sportscaster Bill Simmons — but the music-streaming giant won’t likely see a return on its investment, reports The Ny Post citing a media analyst.
This spring, Spotify shelled out nearly $200 million for Simmon’s popular sports podcast firm, “The Ringer” and more than $100 million for the exclusive rights to Rogan’s “The Joe Rogan Experience.” Last month, it inked a buzzy deal with Kim Kardashian West for an original podcast on criminal justice reform, as well as a deal with DC Comics for a slate of original scripted podcasts based on their superheroes.
But despite the volume of original programming, Juenger said Spotify’s podcast unit won’t “generate much earnings,” and downgraded its stock to “underperform” on Monday.
“It’s tantalizing to draw a parallel between Spotify moving into exclusive, original podcasts with Netflix’s successful move into exclusive, original TV series and movies,” Juenger said. “The situations, however, are not analogous in at least one very important way – consumers don’t have to pay for a Spotify subscription in order to listen to the exclusive podcasts. They just need to download the app. In that way, it’s exactly the opposite of what Netflix did.”
Unlike Netflix, which costs $8.99 a month for its most basic membership, Spotify is free with ads and $9.99 a month without ads. Juenger explained that had Netflix followed Spotify’s playbook, i.e. making its hit shows free in hopes that consumers would subscribe to watch non-exclusive, reruns that the market would have “heavily punished” it.
Further complicating matters for Spotify is the competitive landscape. Unlike Netflix, Spotify has real rivals with big bucks that aren’t likely to allow the Swedish firm to grab massive market share.
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