November 30, 2021

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Joe Rogan, Spotify and the podcast revolution

In less than a decade, podcasts have developed from media curio into big business. A pair of recent developments demonstrate just how big that business is starting to become. 

The number two podcast in the US struck a $100 million licensing agreement this week with Spotify. The hosts of the nation’s number one podcast, meanwhile, are embroiled in a very public contract dispute with the controversial founder of the private equity-backed company that helped launch their show to fame.

The first bit of news demonstrates Spotify’s commitment to dominating the podcast space. And both speak to the growing power of podcast stars, who are using their voices, their minds and a microphone to generate seven-, eight- and even nine-figure fortunes.

The continued maturation of the podcast industry is one of 11 things you need to know from the past week:

  Joe Rogan is now a $100 million man. (Douglas P. DeFelice/Getty Images) 1. Audiophiles and audio files You may have first encountered Joe Rogan as a standup comic, a sitcom actor, a martial arts analyst, or the host of television’s “Fear Factor.” But since launching “The Joe Rogan Experience” in 2009, he has been best known as a podcasting pioneer, building a rabid fan base on the strength of his sprawling conversations with a diverse collection of guests about everything from politics to extraterrestrials. 

And before long, the only place those fans will be able to get their fix is Spotify. The audio streaming service continued a recent string of podcast investments this week by signing an exclusive deal with Rogan for the show’s back catalog and its future shows. All told, the package reportedly could be worth more than $100 million. 

Earlier this year, Spotify agreed to acquire The Ringer, a pop culture site and podcast network led by Bill Simmons, another early podcasting star, reportedly for nearly $200 million. In 2019, the company paid a total of about $400 million for the Gimlet Media and Parcast podcast networks as well as Anchor, which makes podcast development tools. 

Taken together, the moves mark a massive bet by Spotify on the utility of having a stable of exclusive podcasts under its control. That’s in stark contrast to Apple, which has taken a largely hands-off approach to its own highly popular podcasting platform. 

So far this year, “The Joe Rogan Experience” has been the second-most popular title on Apple’s podcast charts, according to Podcast Insights. The top spot is occupied by a relative newcomer to the scene, and one that this week highlighted a different aspect of podcasting’s evolution: “Call Her Daddy,” a sex and culture podcast owned by Barstool Sports, a red-blooded digital media company backed in part by The Chernin Group. 

The New York Times has the full account of the show’s strange saga. The short version: Since launching “Call Her Daddy” in 2018, hosts Alexandra Cooper and Sofia Franklyn have turned into online superstars. In April, they abruptly stopped airing new shows, sparking a wave of rumors and cryptic Instagram posts. Last weekend, Barstool founder Dave Portnoy published a tell-all podcast on the “Call Her Daddy” feed detailing his negotiations with the duo over a new contract.

It seems to have resulted in a split. Late Friday night, Cooper announced on YouTube that she had reached an agreement to go solo with Barstool and take over “Call Her Daddy” by herself. 

The economics of the situation might be stunning to those who still think of podcasting as a hobby for the NPR set. Portnoy said Barstool was losing $100,000 for every missed episode, and that the company had offered Cooper and Franklyn base salaries of $500,000 a year, plus a raft of incentives. This comes at a time when most digital media companies are slashing costs and laying off workers. But in 2020, the hosts of a successful podcast are very different from typical media employees. They are stars in their own right.

Not every podcast business is thriving. Luminary, a new service that launched last year with what’s believed to be well over $100 million in venture funding, set out to raise new capital at a reduced valuation, Bloomberg reported earlier this month. The vast majority of podcasts aren’t enormous moneymakers. But names like Rogan, Simmons, Cooper and Franklyn are able to draw enough ears to make a serious dent in a market that could top $1 billion in annual ad revenue by 2021, according to data from the Interactive Advertising Bureau and PwC. 

That’s still a drop in the bucket of the online ad empires built by Facebook and Google. But in a sense, companies like Spotify and Barstool Sports may be following a similar playbook to those tech giants: First, win people’s hearts and minds with technological innovation and entertaining content. Then, win their wallets one ad at a time.  2. The week in SoftBank Masayoshi Son compared himself to Jesus on an investor call this week on the same day his company, SoftBank, reported a $17.7 billion loss. What a sentence. This week was also a busy one for companies backed by SoftBank’s Vision Fund. Reports emerged that Indian ridehailing company Ola had laid off about 1,400 workers, while construction tech startup Katerra raised $200 million from SoftBank and hired a new CEO, a little over a month after the company conducted layoffs of its own.  3. Medical mega-deals This week brought a spate of nine-figure fundings, including a trio of major deals in healthcare. Atea Pharmaceuticals, which is developing a drug to help treat COVID-19, raised $215 million in a round led by Bain Capital Life Sciences. Telemedicine startup American Well collected $194 million in new funding. And Rallybio raised $145 million to finance its development of drugs for rare diseases.  4. Fintech mega-deals Like healthcare, the fintech sector has proven relatively resilient to the trying times of the coronavirus crisis. And like healthcare, fintech saw some new mega-deals this week. Corporate-credit startup Brex secured $150 million, reportedly an extension to its Series C, while Aspiration, a digital banking startup that emphasizes social consciousness, brought in $135 million, according to Fortune.  5. Even more mega-deals Like I said: It was a full week. Magic Leap raised $350 million in new funding mere weeks after announcing 1,000 layoffs, according to multiple reports. Mortgage specialist States Title signed a $123 million agreement. Couchbase collected $105 million to fund its database services. And Mindstrong locked down $100 million in new VC, a reflection of a growing interest in mental health startups.

  Brain waves are making waves in VC. (Science Photo Library/Getty Images) 6. Valuation reductions Samsara Networks, which makes internet-of-things products for industrial markets, raised $400 million at a $5.4 billion valuation this week, according to Bloomberg, a slight drop from the $6.3 billion valuation that came with the company’s prior funding. In a very different sector, fashion startup Rent the Runway is on the brink of losing its unicorn status, with Bloomberg reporting that the company is in talks to raise new funding at a $750 million valuation.  7. The IPO rebound The IPO drought caused by the arrival of the coronavirus is showing signs of abating. SelectQuote, a private equity-backed provider of insurance comparison tools, raised $570 million in a debut this week and saw its stock rise 35% on its first day of trading. Medical device specialist Inari Medical also had a successful debut, with its stock more than doubling on its first day from an already-increased IPO price. There’s also Vroom, the VC-backed provider of a used-car marketplace, which filed this week for a public offering.  8. Mega-fund resilience Ares Management is targeting €9 billion (nearly $10 billion) for its latest European debt fund, The Wall Street Journal reported, one of a few signals this week that big-time private equity funds aren’t slowing down during the crisis. Asia’s MBK Partners reportedly closed a $6.5 billion fund of its own, and Oaktree Capital Management registered a new vehicle with the SEC that reportedly has a $15 billion target.  9. Law & order Forescout Technologies is suing Advent International over Advent’s attempts to walk away from a $1.9 billion deal to acquire the cybersecurity specialist, the latest legal battle to enforce contracts signed before the coronavirus outbreak. 10. Boom & bust TikTok named a new CEO this week, bringing in former Disney executive Kevin Mayer to lead the wildly popular social media app. Shortly thereafter, Bloomberg reported that the valuation of ByteDance, the parent company of TikTok, has soared to over $100 billion in recent secondary sales. It was a very different kind of week for another Chinese company that once had its eye on global domination: Luckin Coffee’s stock price plunged more than 30% this week as the fallout continues from a fraud investigation.  11. Imperfection Produce doesn’t have to be pretty. That’s one of the guiding ideas behind Imperfect Foods, a grocery startup delivering food that, for one reason or another, doesn’t meet the standards of most grocery stores. So far, at least, all those misshapen carrots and “ugly” turnips are paying off: The company raised $72 million in new funding this week, the latest indication of growing investor interest in grocery delivery. 

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