 Hello everybody, I have an announcement. The podcast is moving to Spotify. Joe Rogan, one of the world's most popular podcasters, is making his show, The Joe Rogan Experience, a Spotify exclusive. This is huge industry changing news. The show hasn't even been available on Spotify up until this point, and the company is reportedly spending potentially more than $100 million to bring it over. This means that if you want to listen to the Rogan show, you're going to have to download Spotify. Now, you probably think more of music than podcasting when you hear Spotify's name, but this Rogan deal is actually an essential part of the company's plan to become the biggest name in audio. To understand why, we have to look at the big picture. Spotify made its podcasting ambitions known in 2019 with three acquisitions. Basically back to back, it bought two podcast networks, Gimlet Media and Partcast, and a podcast creation company called Anchor. Altogether, the company spent around $400 million for those three companies combined. Then this year, it also acquired The Ringer and Bill Simmons Flagship Show for reportedly around $196 million. The team spent a lot of money all in an effort to lock down some of the industry's top content, committing it to Spotify's library. But Spotify attempted exclusives with big name record releases and the strategy failed years ago. So why is it investing so much in podcasts now? It's about getting people to use its app. Similarly to how Amazon knows the items people most want to buy and develops its own products around that data, Spotify knows what content listeners search for the most and that data informs its purchasing decisions. The company said when it bought Rogan Show that it was one of the most searched for podcasts. It needed the show to become the go-to place for listening and this is critical. Rogan Show is free to listen to. People don't need Spotify Premium to hear or watch it. Instead, they pay with their data. Spotify also doesn't need people to subscribe because it makes money in a more traditional way too. This episode of the podcast is brought to you by Stamps.com. This is, we've been sponsored by Stamps.com for seven years now. There's never been a single podcast company that sells ads, makes content, has a popular podcast player, and gives people the tools to create their own shows. Spotify now has all of that. It's just a question of getting people to use it. Big names like Joe Rogan bring people to the platform, but a large show library keeps them there. Spotify says it has more than a million podcasts available and that during the first quarter of 2020, 70% of shows were created with Anchor. On top of all these acquisitions and deals, Spotify also created new tech for generating playlists and inserting ads. It now algorithmically generates podcast playlists and launched its own advertising tool called Streaming Ad Insertion, which allows targeted ads to be placed into shows as people listen to them, which again relies on that critical user data we talked about earlier. And then of course, it launched video podcasts in app, which allows it to sway some of YouTube's popular podcasters over to its platform. Spotify sees a big opportunity for podcasts because for one, the competition isn't very strong. Apple, the biggest name in podcasting up until now, has mostly left its product alone, letting listeners freely come and go and allowing all creators to upload their RSS feeds without Apple trying to own any show exclusively. It doesn't make its own shows right now and it doesn't sell ads, which would go against its privacy-oriented positioning anyway. Spotify can totally own this space. Even more importantly though, these exclusive podcasts cost Spotify a lot up front, but they could pay off in the future. Every time someone listens to a song on Spotify, the company has to pay the record labels for that listen. But with podcasts, it deals with the creators directly. In fact, with its exclusive deals and its own programming, it actually makes money off each listen because of the ads it places. Now, I should say, Spotify premium users still hear ads in Spotify programming, so the company's actually double dipping with the revenue there. Podcasts could be lucrative for the company, which is why although it's spending hundreds of millions of dollars on tools and talent for its platform, it'll likely make that money back. Midroll, another podcast ad network, says advertisers can pay anywhere from $18 to $50 per 1,000 listeners. Joe Rogan says his show reaches 190 million downloads per month, meaning he and his team could, on the low end, be making $3 million in revenue on ads per month. The bigger question is how Spotify's decisions affect the broader podcasting industry. It doesn't use RSS, so it controls the whole system, including the data, which informs not only its own purchasing decisions, but also its ad targeting. If the technology takes off, we could live in a world in which podcast ads more closely resemble web ads in that they're targeted to individual listeners. This might be okay with some people, but others might worry about their privacy. Podcast listening data is more sensitive than music, for example, because people listen to niche shows about potentially telling topics. Just as we've seen people on the broader web make decisions about where they browse or what email or messaging service they use based on their privacy, the same might happen with podcasting. Podcasting was once equal across all platforms, but it now seems like there will be two podcasting worlds, Spotify versus everybody else. Hey everyone, thanks so much for watching. Make sure you check out our other big picture episode about how podcasting became as big as it is now and why everyone's talking about it. I hope you're all staying safe and healthy. Subscribe to the channel, check out theverge.com. We got you. All right, bye.