Joe Rogan, economics, and why capitalism makes people blame the CCP – TechCrunch

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Whatever podcasts you like to listen to, you should have heard about Joe Rogan’s situation by now.

The Rogan-related Spotify saga has been burning for long enough now that it’s worth taking a moment to sit back, consider the bigger picture, and try to piece together the economic forces behind the kerfuffle. This morning, let’s talk about platforms, publishers, market reactions and the fact that people who vote with their agency are not the same as the Chinese Communist Party.

Understanding Spotify’s Clutter

Spotify was early in the music streaming business and did very well. I say this as a longtime Spotify user and general music streaming fan and supporter. I happen to think streaming access to music is undervalued, in part because Apple is able to maintain a price cap due to its hardware-generated wealth, but it’s a another matter.

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Music streaming is a commercial activity. This means that many platforms mainly offer the same music and charge a roughly similar price. It’s a tricky situation for artists, as they’re torn between not offering their music where fans have congregated (streaming services) and accepting prices that many consider too low for their art (Spotify streaming rates ). Fair enough.

Spotify has a different problem stemming from the same roots: because music is commoditized, it has minimal price leverage. That is, it can’t charge $15 a month for the same thing Apple charges $10 a month.

This means that Spotify’s economics are largely fixed and cannot impact its gross margins too much with price changes. This limits its profitability, which is not good. So the company went on an investment spree in the podcasting world, buying up startups and shows in hopes of owning enough unique hardware in time to maybe charge more for its service, improving thus the quality of its income and its overall economic profile.

This is my reading of the situation, but I don’t think I’m wrong.

As part of this podcasting push, Spotify has spent big bucks to bring Joe Rogan’s podcast to its platform in what the company called an “exclusive partnership.” The mountain of money Spotify spent on it was a gamble, part of its larger podcasting strategy, and was an editorial choice by the platform company.

This last point is important, because Spotify hosts almost all music without exercising editorial control. Singer Chris Brown, who assaulted Rihanna, is still on Spotify and Apple Music, as a data point. But Spotify put a lot of its own money into getting Rogan as an exclusive, a different choice than just streaming the same pile of tunes as other competing platforms.

Rogan’s popular show hosted a number of guests that many members of the Spotify community, customers and content providers found objectionable. The latter camp made headlines when a few musicians decided to pull their tracks from the platform, in light of Spotify buying podcasting content they vehemently disapproved of on public health grounds – we remain, today, in a pandemic, mind.

This got Spotify in trouble. The company wants to have both a core music business and a proprietary podcasting business. But instead, its proprietary podcasting strategy undermined its core value proposition and revenue stream of offering most recorded music for a regular fee.

Of course, losing Neil Young and a few others wouldn’t be a game-changing amount of missing music, but if the trend continues, Spotify could become a bit underpopulated with music, sending its subscribers elsewhere. Apple Music, for example. Spotify needed to calm the waters because if it lost music, no Rogan fandom would be able to pull out the math pencil — the company remains a music streaming service with a podcasting business, not the other way around.

So the company released its existing content rules and said it would add a note to podcasts discussing COVID-19. And Joe Rogan made an Instagram video discussing the situation. In classic Rogan style, he made an affable clip that included ramblings on his life, but he said he’d try to accommodate more views to balance out his more controversial guests.

Towards the end of his clip, he added the following after thanking Spotify and his fans: “Thank you haters, because it’s good to have haters – it makes you reevaluate what you [are] do, and put things into perspective, and I think that’s good too.

Okay. The marketplace is a pretty cool thing, with individual players being able to make choices with their assets (music) and custom (where they choose to subscribe to streaming music). And when the market disagrees with one company choice or another, individual players can help guide things. This is how capitalism works.

And even.

The pure irony

And yet, David Sacks.

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