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When Spotify CEO Daniel Ek announced the $340 million acquisition of podcast companies Gimlet and Anchor in February 2019, he declared that Spotify’s mission was to become to the world’s leading audio—not just music—platform. In a blog post titled “Audio-First,” he wrote of the “incredible growth potential” for podcasts despite the business being a relatively small one.

A year later, it’s still modest. The global podcasting market in 2020 is expected to grow 30%, surpassing $1 billion for the first time, according to Deloitte. Recorded music, by contrast, is projected to reach $21 billion; radio comes in at $42 billion. But Spotify won’t be bothered. Despite the minimal returns, podcasts offer the Swedish company something it could never have with music: original content. By acquiring content-creating companies like Gimlet—and later Parcast and Bill Simmons’s The Ringer—Spotify could leverage podcasts to increase subscribers and advertising sales. That strategy culminated this week with an exclusive multiyear deal, reportedly worth $100 million, with the world’s biggest podcast star: Joe Rogan.

Rogan’s podcast, The Joe Rogan Experience, is massive. It consistently ranks near the top of Apple’s podcast charts, perched at No. 2 as of Wednesday. He is the highest-profile individual podcaster not affiliated with a media organization. Rogan last year said the show was being downloaded about 190 million times a month. Spotify will hope that when Rogan’s podcast arrives on its app this fall, the exclusive nature of the show will bring millions of listeners from other platforms to Spotify.

Such an arrangement is a fundamental shift in the way people consume podcasts. There are dozens of podcast apps available on Android’s Google Play and Apple’s App Store, and Apple’s default Podcast app that comes pre-installed on Apple devices remains the most used. Generally, any podcast can be downloaded and listened to on any app. Now, the industry’s biggest name is available on just one: Spotify.

Before, the basic business model for podcasting was to distribute shows on as many platforms as possible. Podcasters could then appeal to more advertisers and generate additional profits from crowdfunding and merchandise sales. Spotify and Rogan’s exclusive licensing deal now suggests that the industry could change in two significant ways:

Subscription-supported podcasts—finally?

First is a future in which major podcasts are subscription-based, rather than available on an open marketplace. This isn’t a new concept: Venture-backed startup Luminary positioned itself as the “Netflix of podcasts” last year, launching with more than 40 exclusive shows without ads for $8 a month. The company raised nearly $100 million and courted some of the industry’s top stars, like NPR’s Guy Raz of How I Built This fame. But the company’s launch accompanied negative press over its advertising model. Industry stalwarts like Spotify’s Gimlet, the New York Times, and eventually Rogan himself, withheld popular shows. In January, Luminary lowered its subscription fee to $5 a month. And earlier in May, Bloomberg reported that Luminary has signed up just 80,000 subscribers and was losing money every month.

Spotify also offers a premium, ad-free subscription. The big difference, of course, is that it includes a vast library of recorded music and curated playlists. A $10 monthly fee will get you podcasts as well as music paired with Spotify’s popular discovery algorithms. With Spotify’s roster of in-house podcast companies, Spotify can continue to funnel exclusive shows to the service, increasing the demand for subscriptions. While Spotify has said free, ad-supported users can still access its original shows, as well as Rogan’s, there’s nothing stopping them from making a premium subscription a requirement in the future. Compared to Luminary, Spotify recently announced it reached more than 130 million paying subscribers—a much more enticing figure to podcast publishers.

Licensing the way forward

Rogan’s deal also shows that licensing agreements may be a way forward for podcasters. Similar to musical artists, television shows, and movies, we might see a future in which more and more podcasters exclusively license their content to particular services, similar to how TV shows move from Netflix to Hulu to Amazon, and so on.

Rogan’s deal with Spotify is an anomaly: As music writer Ted Gioia pointed out, a musician would need to generate 23 billion streams on the service at the standard $.00437 rate per stream to match the $100 million agreement with Rogan. “In other words,” Gioia wrote, “Spotify values Rogan more than any musician in the history of the world.”

Most podcasters can’t expect to earn such a high fee. But it’s safe to assume some are realizing how lucrative a hit podcast can be under this type of exclusive licensing deal. Spotify, having spent well over half a billion dollars on podcast acquisitions and licensing, has made its intentions clear: It wants to own the podcasting market and may have more of these deals up its sleeve. But others—Google, Amazon, Apple, to name a few—may choose to compete.

News of Rogan’s deal sent shock waves through the podcasting community, and it will leave indie podcast app developers wondering what’s next. “What Joe Rogan is going to find out—after it’s too late—is that moving an existing, open, free show behind a proprietary wall results in massive audience loss,” tweeted Marco Arment, creator of the popular podcast app Overcast. “I hope he at least leaves his public feed up so he can return to it when his Spotify exclusivity fails.”

More time will be needed before the true impact of Spotify’s podcast spending spree can be assessed. But what’s already clear is that the company is taking podcasting very seriously. A first-of-its-kind, $100 million deal with the industry’s biggest star seems destined to change the business.