| If you don't listen to a podcast on Spotify now, you probably will in the next year or two. The Swedish audio giant just secured exclusive rights to "The Joe Rogan Experience," perhaps the most popular podcast in the U.S., a deal worth tens of millions of dollars. The deal isn't an outright acquisition – Rogan still has creative control – but fans won't be able to hear or see his podcast anywhere but Spotify starting later this year. The logic behind the Rogan deal is pretty simple. Millions of people listen to his podcast every month. None of them do it on Spotify at the moment. If a good number of those listeners adopt Spotify, that will boost the app's share of the podcast audience, drive more advertising revenue and perhaps convert some of those listeners into subscribers. Once people start listening to podcasts on Spotify, they tend to stick around. The Rogan deal also sends a signal to other podcast producers that Spotify is the place to be. Many producers have been reluctant to post their shows to Spotify, or make them exclusive to Spotify, because the podcast audience there is still much smaller than Apple. (Spotify accounts for 10 percent to 20 percent of listening in the U.S., while Apple accounts for more than 60 percent.) But if it's good enough for Joe Rogan – as well as Bill Simmons and "Reply All" -- it's good enough for lots of other people too. Spotify is going to announce a bunch of deals over the next couple months, and while neither Simmons' podcast nor "Reply All" is exclusive to Spotify right now, odds are they will be one day. I've explained why Spotify cares so much about podcasts before. A brief primer: - Podcasting helps Spotify reduce its reliance on music, thus gaining a little more leverage in negotiations with record companies who extract the majority of its revenue. Those deals are why Spotify doesn't turn a profit.
- Podcasting also has the potential to be a multi-billion dollar advertising business, a second revenue stream to complement Spotify's very large subscription business. Chief Executive Officer Daniel Ek talked about this opportunity in a recent interview with Emily Chang.
This is a long play. Spotify will still be paying most of its sales to music companies for years to come, and podcast advertising is still worth less than $1 billion annually. Ek is willing to wait. Independent podcasters have bemoaned Spotify's spending spree as bad for the industry. They don't want to limit their audience to the customers of a giant tech company. Others see it for what it is: the maturation of the business. We are in the midst of a clear shift of audience and attention from terrestrial radio to online audio. Personalities like Rogan and Simmons are the modern-day talk radio hosts. Their passionate followings are starting to attract people with money, which should be good for producers, especially if advertisers follow the ears. Spotify has now committed close to $1 billion to podcast companies, from Rogan (~$100 million) to Simmons' The Ringer ($250 million) to Gimlet ($230 million), along with Parcast, Joe Budden, Amy Schumer and others. Apple and Amazon are starting to spend more to keep up, and are only likely to boost their commitments in the years ahead. The recent flurry of dealmaking invites comparisons to TV, where every other company is now trying to copy Netflix. Like Netflix, Spotify is shifting from intellectual property it doesn't control (music) to IP it does control (podcasts). But like Netflix, Spotify, has a major advantage: focus. While Apple and Amazon are dabbling, Ek is betting his company's future on the belief that podcasting will be a multi-billion dollar opportunity. He may be wrong, but Ek seems to have convinced investors. They bought a whole lot of Spotify stock this week. – Lucas Shaw | 
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