It’s the last week of the cruelest month and sure to be an eventful one for the audio world. Spotify posted its first quarter earnings this morning, reporting that the service in April finally reached over half a billion (or 515 million) monthly users. But first quarter revenue fell short of expectations — even though the platform’s podcast ad revenue saw a significant (20 percent) boost from this time last year. Still, the era of big spending by Spotify on podcasts is likely done, CEO Daniel Ek explained during the call. I’ll dive into more detail below.
We can expect even more financial news from the podcast industry on Thursday, with both SiriusXM and Cumulus Media scheduled to hold earnings calls.
Hot Pod can also exclusively report today that SiriusXM and Oprah’s podcast network have signed a two-year renewal deal, which I’ll cover more below. Also in this issue, Tom Brady threatened to sue two comedy podcasters over an AI-generated comedy special, and The Webby Awards crowns its podcast winners.
SiriusXM and Oprah Winfrey Network sign a two-year renewal agreement
Oprah’s Super Soul is staying on SiriusXM. According to a press release viewed in advance by Hot Pod, SiriusXM and OWN (the Oprah Winfrey Network) are planning to announce a two-year renewal deal that includes exclusive rights to distribute OWN’s slate of podcasts through the SiriusXM podcast network. The deal also includes additional resources to develop new OWN content for SiriusXM — but the company didn’t specify whether this would involve Winfrey herself.
“We’re honored that OWN continues to trust in SiriusXM’s ability to help them reach new audiences, and we look forward to the development of new content by OWN,” SiriusXM’s vice president of content partnerships and podcast strategy, Daniel Osit, said in a statement.
SiriusXM will also hold exclusive global audio and video ad sales rights to OWN’s podcasts, continuing the company’s podcast strategy of focusing on ads and reach rather than exclusivity to a platform.
The renewal is great news for SiriusXM after Bloomberg reported last year that OWN was looking for a potential new home for its podcast shop. SiriusXM’s previous deal with OWN (which it obtained after it acquired Stitcher) expired at the end of last year. A price for the new agreement wasn’t disclosed.
Spotify’s Daniel Ek says company will be “very diligent” about future content deals
Daniel Ek made it pretty clear that the era of big spending on podcasts is over. “You’re right in calling out the overpaying and over-investing, and I can start off by saying that we’re not going to do that,” Ek said in response to an analyst’s question about podcast investments on an earnings call this morning.
Spotify’s $1 billion spend landed the platform exclusive deals with the likes of Joe Rogan and Michelle Obama and propelled its platform into a leading position in the podcast world — but at a very steep cost. The platform has vowed to do some belt-tightening and operate more efficiently this year.
“The ones that aren’t performing, we’ll obviously look at them on a case by case basis.”
“We’re going to be very diligent in how we invest in future content deals, and the ones that are performing, we will renew, and the ones that aren’t performing, we’ll obviously look at them on a case-by-case basis on the relative value. We have very sophisticated tools for measuring impact on the platform.”
Ek’s caveat here is particularly relevant to Joe Rogan — the controversial host who is Spotify’s perpetual number one (except for right now, funnily enough). The former Fear Factor’s host deal with the company is expected to expire around the end of 2023. “Impact” is one way Ek could go about justifying the millions of dollars that Spotify would have to spend on a renewal.
Ek also teed up the idea that, now that Spotify is dominant in the podcasting world, an expensive talent deal might not actually be so pricey when you look at it on a per-user basis. “Because we’re now the largest podcasting platform, that means that we have an opportunity to amortize across a larger base,” he said. “So, relative to someone that’s smaller, we should be in a better position should we want to renew a deal.”
The platform this morning reported a net loss of €225 million (around $248 million) for this first quarter but surpassed expectations for user growth (it’s currently at 515 million MAUs) and premium subscribers, which is currently at 210 million. Quarterly revenue did grow (by 14 percent year over year to roughly €3.0 billion), but that’s still below Spotify’s target of €3.1 billion.
Podcast ad revenue grew by 20 percent year over year, driven mostly by Spotify Originals and exclusives. The podcast business isn’t profitable yet, though, and the company declined to give any updated projections on when that’ll change.
No increase in subscription prices was announced during the call — but Ek ensured investors today that a price hike is coming in 2023. Ek also said Spotify’s flashy new design — which will greatly impact the look and feel of audiobooks and podcasts — will take “multiple quarters” to roll out on the platform. Ek also hinted at future AI and machine learning upgrades to come in the future, resulting in “compounding improvements” for many years.
Tom Brady threatens to sue comedy podcasters over AI-generated special
Comedians Will Sasso and Chad Kultgen — the duo behind the Dudesy podcast — are in hot water over an animated segment that featured Tampa Bay Buccaneers quarterback Tom Brady doing a standup routine, complete with an AI-generated voice clone. Included in a one-hour comedy special posted by the comedians last week, the Brady cartoon caught the attention of millions of viewers on YouTube — including Brady himself. The football star’s legal team promptly sent a cease-and-desist letter to Dudesy, and the podcasters have since taken the special down.
“Mr. Brady will not allow Dudesy to exploit his publicity rights for Mr. Sasso’s and Mr. Kultgen’s personal financial gain — especially when Mr. Sasso and Mr. Kultgen have presented Mr. Brady’s likeness in connection with highly offensive and defamatory material,” stated Brady’s lawyers in the letter, which Dudesy read out loud in a subsequent episode.
To no one’s surprise, celebrities aren’t a fan of AI-generated impersonations of them going viral on the internet.
To no one’s surprise, celebrities aren’t a fan of AI-generated impersonations of them going viral on the internet. Joe Rogan last week tweeted, “This is going to get very slippery, kids,” in response to an AI-generated podcast that featured his voice. No kidding. The intersection of AI and law isn’t just nascent — it puts user-generated content platforms like YouTube in tricky legal territory. While satire and parody are protected forms of speech (let’s pour one out for South Park’s long-suffering legal team), it’s unlikely most creators can afford the legal expenses of defending their AI creations in court.
Audible wins Webby’s podcast company of the year
The winners of the 2023 Webby Awards — which includes podcast categories — were announced this morning. You can view the full list of winners here. Audible wracked up the most wins and nods across all the podcast categories — with an impressive four wins (for The Big Lie, The Sandman: Act III, and Finding Tamika — as well as a People’s Choice award for John Legend’s podcast Living Legend. Finally, Webby’s podcast of the year went to SmartLess — the popular comedy podcast by Jason Bateman, Sean Hayes, and Will Arnett.
And that’s all I got for you today. I’ll be back for the Insider edition of Hot Pod on Thursday.