On May 19th, Joe Rogan announced that his podcast, The Joe Rogan Experience, is becoming a Spotify exclusive.
What does this mean?
Starting on September 1st, the podcast will be available on Spotify as well as all other platforms. This includes the video version, although video excerpts will still be made available on Joe Rogan’s YouTube channel.
While the numbers behind the deal were not published, it goes without saying that we are likely talking about hundreds of millions of dollars.
That’s a lot of money. However, I think that Joe Rogan is likely getting ripped off. In this article, I’ll explain why.
The Numbers Behind The Deal
Although it’s being done in the podcasting space, Joe Rogan’s deal with Spotify is nothing but a licensing deal. Historically, while these types of licensing deals have been somewhat lucrative for the media personality, the majority of the profits go to the broadcaster (in this case, Spotify).
As an example, here is a hypothetical breakdown of Howard Stern’s deal with SiriusXM.
Stern is of similar popularity to Joe Rogan, but the difference is that Stern has always been on Sirius while Rogan has always been independent – until now.
Another difference is that we do not actually know how much Spotify is paying Rogan for this exclusively. We do know his rough listener numbers, however. According to this Forbes article, The Joe Rogan Experience has more than 200 million monthly downloads.
Rogan’s podcast is monetized primarily through advertisements. These advertisements are charged on a cost-per-thousand-impressions (or CPM) basis, which means the advertiser gets to charge more as their audience grows.
According to the advertising industry website AdvertiseCast, podcast ad CPMs range from between $18 to $25 for ads that range from between 30 seconds and 60 seconds.
From experience, I know that Rogan’s podcast generally has between 3 and 5 ads, and to be honest, they are usually much longer than 60 seconds – but this is a decent baseline. If we multiply the $18-$25 CPM range by 3-5 ads per episode, we get a total-episode-CPM of $54-$125.
For 200 million monthly downloads, this gives us a monthly ad revenue estimate of $10,800,000 to $25,000,000. This estimate implies that Rogan is making between $130 million and $300 million on ads from his podcast alone.
These are huge numbers, but they are set to drop after Rogan moves into his exclusive agreement with Spotify – which is rumored to be a multi-year deal valued at $100 million. $100 million is a lot of money, but I think Joe Rogan is getting ripped off. He would be better off considering an alternative.
The Alternative
If Spotify is ripping Joe Rogan off, then what is the alternative?
There has recently been a rise in subscription podcasting services where there is a free, ad-riddled version of the podcast and loyal fans can pay a small monthly subscription to receive the same episode with no ads.
Here’s what this could look like for Rogan:
- No Spotify exclusivity contract
- A paid subscription feed where listeners get access to ad-free episodes for $10 per month
- Occasional members-only content
Rogan publishes about 20 episodes per month, which implies he’s got about 10 million active listeners. Let’s say that 10% of his audience signs up for the paid feed, which is another $10 million per month ($120 million per year) in subscription revenue. His ad revenue would only drop 10%, which is still a healthy range of $117 million to $270 million, bringing his total revenue (subscription + ads) to a range of $237 million to $390 million.
Now obviously, these estimates are just that – estimates. They are fraught with error. Still, I think you can easily make the case that no matter how lucrative Joe Rogan’s Spotify deal is, he’d likely be better off creating a paid subscription podcast service.
Final Thoughts
Although the Spotify deal is certainly lucrative, it’s not the best that Joe Rogan can do.
In fact, I think there’s a good chance that he’s getting ripped off. Some back-of-the-envelope calculations indicate that Rogan could pretty reasonably make more money with a subscription podcast service.
If you’re a podcaster looking to monetize your show, keep this article in mind before considering making your content exclusive to a subset of the Internet.
This article is a guest contribution from Nick McCullum
