Spotify CEO Admits to ‘Overpaying and Over-Investing’ in Content Acquisition as Joe Rogan Renewal Negotiation Looms

Spotify admits to overpaying and over-investing in content acquisition
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Spotify admits to overpaying and over-investing in content acquisition
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Photo Credit: Spotify

Spotify admits to ‘overpaying and over-investing’ in content acquisition as Joe Rogan renewal negotiation looms.

As many of Spotify’s big-name content acquisitions, like Joe Rogan, near their deal negotiation renewal, its CEO Daniel Ek says the company will be “very diligent” about future deals. 

Speaking on the company’s first-quarter earnings call, Daniel Ek responded to a question from an analyst asking about plans for potentially expensive renewals this year. Spotify spent over $1 billion acquiring podcast assets and locking in exclusive deals with names like Joe Rogan and Dax Shepard

Those deals were spearheaded by Dawn Ostroff, who left the company earlier this year, and whose responsibilities have been taken on by Alex Nörstrom. Nörstrom’s specialty up to that point was the free, ad-supported side of Spotify.

“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,” said Ek. “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 continues, adding that those tools help the company determine a reasonable budget for content.

“Because we’re now the largest podcasting platform, that means that we have an opportunity to amortize across a larger base,” he says. “So relative to someone that’s smaller, we should be in a better position should we want to renew a deal.”

In the first quarter of 2023, Spotify more than doubled Wall Street expectations for new premium subscribers, adding 5 million to achieve 210 million globally. Analysts had been expecting 2.2 million additional subscribers.

Moreover, the company beat estimates for monthly active users, a larger category that includes those listening for free, reaching 515 million. Spotify reported a 14 percent year-over-year gain in revenue during the quarter, reaching $3.04 billion — although the top line fell four percent from the fourth quarter as the advertising market dialed back.