Spotify’s Bet on The Joe Rogan Experience Exposes Rift in Audio Strategy

(Bloomberg Businessweek) -- Spotify Chief Executive Officer Daniel Ek signed a more than $100 million deal with Joe Rogan in 2020, presumably because he didn't want to have to worry so much about the music business. Spotify Technology SA has struggled to turn a profit after paying royalties to rights holders—even though the rates musicians take home from each stream are low enough to cause perennial anger. With podcasters, the company could sidestep all that, diversifying into an emerging media market. What better place to start than with Rogan, who hosts the most popular podcast in the world?

Wall Street got right on board. Spotify's stock spiked almost 20% the week it announced the deal, which gave it exclusive access to his hit show, The Joe Rogan Experience. But if the economics of podcasting has the potential to be superior to that of the music business, the medium also comes with its own set of challenges, as the recent flap over Rogan's show has demonstrated.

The issue got serious for Spotify in late January, when Neil Young demanded that the company either remove Rogan's podcast from its platform or pull his songs. “They can have Rogan or Young. Not both,” he wrote in a letter to his record company and management team. Young cited Rogan's history of peddling misinformation about Covid‑19 vaccines on his show, while also admitting he'd never listened to it.

Spotify, which has been grappling with how to police its Covid-related content since the pandemic began, has so far removed more than 20,000 podcast episodes that it saw as including Covid-related misinformation. Rogan's tendency to push the limits wasn't a revelation: The company has already deleted 40 episodes of his podcast. But few people can attract attention like Young can, and his action has inspired other musicians to pull their songs from the platform.

Not all the musicians boycotting Spotify agree on what upsets them. India.Arie abhors Rogan's views on race. The rock band Failure is mad at Spotify for not paying artists enough. Before his complaints about Rogan, Young removed his catalog to protest poor audio quality. Myriad conflicts with musicians have been a part of Spotify's operations throughout its history. The service pays artists a lower rate per stream than most of its competitors and is fighting a court case related to its payments to songwriters.

So far, artist activism has never lasted long enough to do any durable harm. In many cases, musicians don't even hold the rights they'd need to carry out a Young-style boycott; their record labels that do control their catalogs are less likely to take such idealistic stances. On the other hand, many musicians now are becoming less reliant on streaming services, and thus are able to protest without compromising their earnings.

This boycott has dragged on far longer than anyone at Spotify anticipated. It's prompted criticism of Rogan from fellow podcasters as well as Meghan Markle and Prince Harry, the Duchess and Duke of Sussex. So long as the company sticks with Rogan, it will be open to these conflicts. Last year, Spotify employees fumed when he hosted a guest whose comments were deemed transphobic. If you look through Rogan's catalog, you'll find something to offend just about everyone.

Spotify's share price plummeted on Feb. 2 after it reported disappointing subscriber growth in the last quarter of 2021. The company said it was too soon to know whether the controversy was having any impact on its business.

Spotify hosts more than 3 million podcasts, and many of the biggest music services—including YouTube and Amazon Music—host shows with material that musicians may not like. Musicians have been itching for a fight with Spotify, and podcasters are apt to attract listeners by pushing boundaries. Even if Young eventually ends his boycott, his fight against Rogan and Spotify feels like the beginning of a dispute, not the end.

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