Rumour on the street is that Joe Rogan& #39;s blockbuster deal is a steal for Spotify and a bad hand for him.

Basically, Joe Rogan is getting ripped off. He& #39;s given up the monetary upside of his business for small conveniences.

Let me break it down [Thread]:
If the publicised numbers are true, Spotify just secured the largest podcast audience in the world for $100-$200m. That& #39;s a bargain.

Spotify’s market cap jumped by $3 billion in the 24h after the news of this deal broke. That& #39;s the power of ownership. /2
On the surface, it sounds like a sweet deal for Joe.

Listeners still get the pod for free—but only on Spotify. Spotify Premium subs get the pod w/o ads, but free users will have to listen to ads (sold by Spotify).

Joe previously made c.$64m annually. Now he gets 2-4x that. /3
So he& #39;s getting up to 4x the money, and doesn& #39;t have to worry about the business end. Perfect, right?

Not really. The gold here is his audience. He& #39;s losing control of that.

If he leaves Spotify in 3yrs he& #39;ll lose any monetary value from new subs in that time. /4
Joe could& #39;ve kept selling ads in addition to offering a subscription-only ad-free stream, + possibly bonus eps/extended content/live streams for paying subscribers only.

Joe& #39;s audience is c.12m listeners.

Converting just 5%, that& #39;s over $33m in annual recurring revenue. /5
An extra $33m doesn& #39;t sound like much but remember he& #39;s already making c.$64m in ad revenue. This puts Rogen at almost $100m fully independent of Spotify.

And how much is his Spotify deal worth? c.$100m. Same money, 100% ownership.

But there& #39;s more... /6
Joe Rogan would& #39;ve been building his own empire w/ recurring annual revenue.

Imagine a startup w/ crazy recurring revenue, low churn and insane margins, growing at 25-50% per year! That& #39;s Joe Rogan.

That& #39;s what Spotify is seeing. That& #39;s why they& #39;ll happily pay. /7
This model isn& #39;t new or rare. Look at his mate Sam Harris.

Sam aggressively pushes a sub. model. He has c.1.5m listeners. He& #39;s been doing this since 2014.

If he converts free listeners at a 5% rate at $5/month that gets him $4.6 million in annual recurring revenue. /8
Now imagine instead of 5% he& #39;s converting at 20% (more likely).

Suddenly that& #39;s $18.4 million in annual recurring revenue. With only 1.5m listeners.

Joe Rogen has up to 12x that audience. /9
TL;DR

Spotify deal = c.$100m

Min opportunity cost:
Ad rev - $50m
Subs @ $5 - $33m
Youtube - $27m
Total: $110m

Max opportunity cost:
Ad rev - $200m
Subs @ $10 - $66m
Youtube - $68m
Total: $334m /10
I want to end by saying I completely respect Joe Rogan. I& #39;m sure he looked at the numbers with his team and made the best decision for him and his family.

He& #39;s 52. He might not WANT to have the effort of running the business end. Maybe he just wants to sit down and podcast. /11
I& #39;m just sharing this to show what could& #39;ve been possible.

AND, why Spotify will be eating off this deal for YEARS.

It& #39;s a steal for them.

In short, ownership is key. Your audience is your goldmine. /12
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