Spotify’s announcement on Tuesday didn’t really take us by surprise.
The recent acquisition of “The Joe Rogan Experience” for $100M may seem like a good content deal for both Joe Rogen and Spotify. It’s an extremely popular show, driving significant ad revenue with over eight million YouTube subscribers. But look deeper and you will find it is much more than that.
As a lynchpin of the overall strategy led by Spotify CEO Daniel Ek, there is genuine brilliance in this defining deal.
With their purchase of Gimlet in February 2019 for $230M ,it’s clear that Spotify is looking to be the leading platform for Media and Entertainment (M&E) streaming.
Expanding its reach through podcasts and soon video, Spotify is redefining the world of M&E, not just for its own consumers but for the overall market.
“The Joe Rogan Experience” will become available on Spotify on Sept. 1st. The show is known for attracting high-profile guests such as Tesla CEO Elon Musk, Sen. Bernie Sanders and atheist academic Richard Dawkins.
With 8.4 million subscribers, the Joe Rogan podcast is certainly a great investment in itself. The ad revenue coming in and the expected growth in user acquisition for Spotify given the exclusive streaming rights will certainly give Spotify value. But the deal actually redefines the model of valuation. First by choosing which asset (podcast) is the right choice for their audience and audience growth strategy but also by identifying the market response to this carefully engineered move.
As expected, this new content acquisition deal caused Spotify stock to shoot up over 1% increase, trading at $176.95. This is because it puts them on the same stage as Apple and Amazon, which produce their own content and do not depend on music labels for revenue.
Meanwhile, with an additional $5 billion to spend, we are looking forward to seeing what’s the next move in Spotify’s chess game
Daniel Ek, who is showing a true understanding of the market, has repeatedly demonstrated his ability to leverage investors’ needs for a new growing market. By positioning Spotify at the heart of consumer interaction, he is becoming a force that defines the market value – not just for M&E technology but for content as well.