No, Joe Rogan didn't get ripped off

Yesterday I was making my rounds on Twitter when I ran across a tweet from Andrew Wilkinson:

Wilkinson’s tweet was a follow up to a blog post he authored entitled, Joe Rogan Got Ripped Off in which he outlines why he believes Joe Rogan made a massive mistake in selling out to Spotify for a $100 million per year contract.

The post makes some interesting points alongside a lot of back of the napkin math, showing how Rogan, if he remained independent, could see anywhere from $110 million to $334 million in revenue per year by changing his business model from a predominantly ad supported one to a more subscription-based one.

Wilkinson furthers his point by showing how Wall Street reacted to the deal, sending Spotify’s market cap soaring upwards another $3 billion.

But while Wall Street appears to think that this is a good deal for Spotify, why can’t the same be true for Joe Rogan?

In fact, Wilkinson writes:

To the untrained eye, this looks pretty good for Rogan. His listeners can still access the podcast for free—as long as they use Spotify. Spotify premium subscribers get the podcast without ads, but free users will have to listen to ads (presumably sold by Spotify).

In my last post I estimated Rogan was making around $64MM/year.

In contrast, the Spotify deal gets him 2-4x what he was making before, and as a bonus he doesn’t have to worry about the business side.

Not bad, right?

WRONG.

He then goes on to list a few reasons: he’s giving up recurring revenue, he’s losing control over his audience, and he’s now going to become less influential (akin to how Howard Stern has become less influential since moving to Sirius).

I’ll concede that all of those are possibilities but at his core Joe Rogan is an entertainer. He wants to create great content that people enjoy and selling ads is likely not where he wants to spend his time. It’s quite the drag, I can attest to that first hand. Sure, he could do a lot to build his platform as an independent force to be reckon with. He could add subscription models, build out more content verticals, possibly even hire more podcast hosts and create spinoffs… or he could take a $100 million deal and do what he actually enjoys: creating content and entertaining people.

I don’t see this move as a mistake, it’s clearly a decision Rogan made after weighing the possibilities. Yes, Spotify will greatly benefit from the deal, but again, so will Joe Rogan. It’s the same decision Kevin Systrom made when he sold Instagram to Facebook for $1 billion back in 2012. It was the deal of the century for Facebook as it turned out, but at the time, Facebook was still popular and could have put essentially unlimited resources into crushing Instagram. That’s a lot of headache to deal with. It’s a calculated risk all founders, whether at a tech company or a digital media company, need to make.

Spotify has been making huge waves in the podcast space, let’s not forget they acquired Anchor and Gimlet for $340 million back in February 2019. According to reports, Spotify paid $200 million for Gimlet and $140 million for Anchor (which raised $14 million in funding). I use Anchor for the TechieBytes podcast, it’s a great platform but it only launched a couple years prior. Is this also a bad deal? Did Anchor sell too soon? Possibly. But I don’t think you can compare Joe Rogan and Anchor. Or Joe Rogan and Casper for that matter.

The fact of the matter is everyone has different considerations. Not to mention, I don’t think Joe Rogan has raised any external capital either so there’s no cap table mess to deal with.

Spotify sees podcasting as the next major entertainment frontier and they’re doing all they can to be at the forefront through calculated acquisitions and hiring of talent. Sure Joe Rogan could compete against them or he could team up and continue to do what he really loves: creating content. I just don’t see that as getting ripped off.

While Wilkinson’s analysis may be correct, Joe Rogan is not the person who’s going to do what he’s describing.