Spotify revenue could soar €400M from Joe Rogan deal, projects Rosenblatt

Following news of Joe Rogan’s move to Spotify, Rosenblatt analyst Mark Zgutowicz crunched some numbers to assess how much of a boost the deal — which is reportedly worth $100 million — will bring to the streaming service. The Final Round panel discusses.

Video Transcript

JEN ROGERS: And for our call of the day, it is on Spotify. We've gotten Rosenblatt out looking at what's going to happen to Spotify revenue now that they have this exclusive deal with Joe Rogan.

Myles Udland, you go through-- first of all, you've always-- you've always been into Spotify. Even, like, with the IPO, you were-- you were early interested in this, any, like, podcast.

This whole note to me seems to be about, like, how many people watch Joe Rogan on YouTube and are not already on Spotify. Is that fair to say? It's like they're going at the customer-acquisition angle here. Is that what they're looking at?

MYLES UDLAND: Yeah, I think it's-- you know, it's customer acquisition, and it's also the customer engagement. I think-- I think what's so interesting about the Spotify landscape right now is, you know, for most people-- and I think we're all going to be more media inclined than the average news consumer. For most people, they're like, who's Joe Rogan? But all you got to do is look at YouTube, and you look at, you know, his download numbers, and I think you think about his space in the pantheon of podcasters. There's not too many who have, one, been around as long as him, and hardly any-- probably none who have as many listeners and consistent downloaders even to this day.

There has been podcasters who have been there in the past who have kind of had their moment. You know, "The Daily's" come through recently. I think "This American Life" maybe like six, seven years ago was a big event.

But, you know, right now Joe Rogan has kind of created this huge brand around, you know, his podcasts, which are very long, very rambling. They're cut into clips on YouTube. He has an extremely loyal following. A lot of people don't really care for the way he talks about some things, and that's kind of the entire appeal.

And I think that, you know, you look at what the "Journal" reported, $100 million for basically licensing his content-- I mean, you know, Daniel Ek said-- I think it was about five or six quarters ago-- we're looking at acquisitions.

Now they went and bought a couple of different companies. They bought The Ringer. They bought Panoply. They bought Gimlet. But I think Joe Rogan probably provides more immediate value than any of those. He is a company. He's kind of what you want to buy. He's just IP. He's very popular IP, and he owns all his IP, and now Spotify gets a slice of it.

I am sure that a lot of people in his universe right now are very unhappy with this because they liked his independent streak, and they liked that whole, you know, I'm doing this on my own. He wasn't even on Spotify before this.

But to me, as someone looking at Spotify's strategy here, you're paying $100 million to basically get the back catalog and the 2021 and on catalog of someone who has a built-in following. I think makes a lot of sense when you're trying to acquire, you know, more listeners.

DAN ROBERTS: So that's interesting, Myles, that you say you think a lot of his devotees will maybe be disappointed. It's you who loves to say if selling out was once viewed as negative, nowadays it's not. It's cool.

MYLES UDLAND: Absolutely.

DAN ROBERTS: The goal is to sell out. And I think he has devoted-enough listeners that they're agnostic. They don't really care what platform it's on. They'll pay to hear him, which I think is why this is a very good deal for Spotify. They're going to come to Spotify.

And also it doesn't only get them the existing Joe Rogan listeners because, by the way, it's not just that now Spotify will have the new episodes, but after a number of months the entire past library is going to become exclusive to Spotify. So not only do they get his existing listeners, but presumably Spotify hopes that they'll get some new people to come and sign up for the platform because they want to hear his podcast. And they've heard, hmm, there's something happening here. He's supposedly very good. I just don't think they care where he is.

Now I will say there's one other ongoing story right now, podcast media story that I think is connected to this, even though they're very different. And without getting too much in the weeds-- I know that at least Myles read this story, but over at Barstool Sports where there's a very, very successful podcast hosted by two young women about sex, and that's gotten, in just a year, into the top-10 US podcasts.

They were having a dispute. I'll just tell our viewers they can find this story at the "Times." I don't want to get too much in the weeds, but a dispute over, you know, how long their contract is with Barstool Sports. They've gotten big enough that one of the duo wants to leave, supposedly, and thinks we could do something better. We could go to HBO. We could have a show.

And the reason these stories are connected is, you know, personalities these days in media, some of them, get big enough that they decide they're bigger than their media platform. And in some cases that's true. In some cases it isn't, and people eventually find out, unfortunately, that they weren't bigger than their media parent.

Now, of course, in Joe Rogan's case, he wasn't on a pre-existing platform. He had his own podcast. He was independent, as you said, and you could access it on Apple. You could access it at other places. Now he's going to be exclusive to Spotify, but I think it's an example where the personality is bigger than the platform. And as a result, I think people will listen in wherever he goes.

MYLES UDLAND: Yeah. No, I was just going to make the point that you ended up making, which is that it depends where you start. I mean, I think, look, the three of us could all sit here and say, oh, you know, we're on Yahoo Finance, decent-sized platform. How many followers do we have? Could we break out and go on our own?

Maybe you could, but the reality is we're a product of the Yahoo Finance platform, whereas Joe Rogan started, you know, on his own operation. He built that audience on his own, breaking out. And you see it regardless of whether it's sports media, business media, political media. People who are at, you know, name your big brand and leave, that can work. It's often a more perilous and less successful, I think, venture than it would seem.

But-- but-- maybe that's going to change now. I think there-- I think there's a real possibility that that might be changing just because, guess what? Being in the regular media, not that great of a business, obviously. There's been, like, 40,000 media layoffs in the last two months because of coronavirus. Clearly there are structural issues with our, you know, kind of industry's business model.

DAN ROBERTS: And when you say that some people can leave their existing platform and some can't, Bill Simmons is an interesting example. And I think, you know, the jury's out or it depends on whom you ask, but some would say that these past few years of his career have shown that he wasn't bigger than ESPN. Others would say no.

MYLES UDLAND: He sold his company to Spotify for $200 million. I think he-- I think he wins that one.

JEN ROGERS: And that brings me to my point.

DAN ROBERTS: [INAUDIBLE]

JEN ROGERS: But my point about this is when I read that Rosenblatt note, and I get-- Wells Fargo does have a more tepid reaction to this deal-- is that Joe Rogan might actually be worth more than $100 million. Like this-- when you look at this note, if indeed they are right about how many people the overlap is and how many customers they're going to get out of this, he could be worth more than $100 million to Spotify easily.

MYLES UDLAND: I think he's worth definitely more than that, but when-- I mean, it's like I don't know how many people he has working for him, but it's probably not more than 10. So you want to do the ownership stake, blah, blah, blah. Like, so this is probably worth at least $70 million to Joe Rogan himself, probably more. I think he's probably good with that. I'd certainly be good with that even if I were as successful as Joe Rogan.

And so I think you can get an individual proprietor, quote, unquote, "on the cheap" because you don't have to buy tons of overhead and tons of, you know, other IP that if, like, Spotify bought-- if Disney bought Spotify, let's say, or Disney buys, you know, company X-- Disney buys Marvel, right? That comes with a lot of extra stuff, and so you're actually paying a premium. Maybe that's a bad example because of, you know, the way it worked out--

JEN ROGERS: Yep.

MYLES UDLAND: --but you know what I'm saying. You know what I'm saying.

JEN ROGERS: Yep. I know what you're saying. I think he should have consulted us, and we might have been able to get him, like, another $25 million out there.

MYLES UDLAND: And there's no bankers' fees either, right? So you do get a-- it's easier to buy someone when there's no bankers.

DAN ROBERTS: And, guys, one last note on Spotify and its podcast moves. Myles, maybe you would disagree, but as we mentioned, this isn't the first big Spotify podcast move. Bought Gimlet. Bought The Ringer, which is largely a podcast business these days.

But I would argue, you know, up until this with Joe Rogan, none of those maybe were as huge and as splashy a moment. And now I think there are a lot of people who may have missed those moments who now snap to attention and realize, oh, Spotify's really trying to, you know, hitch its wagon to the podcast industry right now.

JEN ROGERS: All right, fun conversation.

MYLES UDLAND: None of us have a podcast either.

JEN ROGERS: Moving on.

MYLES UDLAND: None of us have one. What is going on?

JEN ROGERS: We can't figure it out. We're sitting here too long. We should be taping this like Joe Rogan.