Landing the podcasting TV host came at a price. But the move lessens the music streamer’s reliance on labels and opens ad opportunities.
Spotify Technology SA has long purported to be the next Netflix Inc. Signing Joe Rogan in a deal that could earn the podcaster more than $100 million helps the music streamer start to deliver on that promise.
The Stockholm-based tech firm has a stubborn problem: For every dollar in revenue the music streaming giant earns, it sends 65 cents straight to the record industry.
The royalties that Spotify pays the labels, publishers and artists cap its earnings potential. That’s only fair: Without the musicians, the company wouldn’t exist. But it also means that, for all the superficial similarities between Spotify and Netflix as subscription services offering an endless supply of content, Spotify’s business model is less robust.
If Netflix pays, say, $30 million to make a new season of a drama like Ozark, that cost doesn’t increase if it attracts more eyeballs. Media Rights Capital, which produces the show, makes the same money from Netflix irrespective of whether the audience is 5,000 or 50 million.
