Interview Transcript

How do you compare those two deals? The Howard Stern Sirius deal, versus Spotify and Joe Rogan?

I think Howard’s deal was much more lucrative. I think they’re very similar, in the sense of what the objective is. The objective is to pull fans into your broader environment and for Sirius, Howard’s talk, it was radio talk and radio talk that, largely, was in the morning which was, mainly, for people driving to work but also for commercial drivers and, therefore, if you have Howard Stern, they’re going to have to subscribe, because that’s what they want to listen to. It made a huge difference to their ability to traction at that time. It’s still a hugely important thing for Sirius. Is Joe Rogan of that level of strength; very popular, but relatively new. Unlike Howard, who had spent two decades building an audience that was in the millions, Rogan has not demonstrated that yet.

But he has huge appeal and if you are trying to build a go-to place for podcasts, having a series of those key drivers, is really important. It doesn’t all have to be – in fact, it shouldn’t all be, in my view – unique and exclusive. But you need some clear pillars there that are doing something.

Intellectual property, you mean?

Yes. Joe’s show, next year, I guess, will be exclusive on Spotify.

But what is interesting is the fact that it’s almost as if Spotify started with distribution and is now moving into owning intellectual property. This question between content is king, versus distribution, is interesting. Obviously, Netflix has been similar, where Netflix started off licensing content and now, they’re producing originals. How do you look at the move, from Spotify, into actually owning intellectual property?

I don’t think they properly own it. They control it; they have an exclusive license to distribute it, for a period of time. It’s very much like anything else. The difference is that, with Bill Simmons, they have him on, but he has his own, unique distribution. I think they’re feeling their way. They’ve spent a lot of money on getting there, there’s no question about it. Building their infrastructure, to be able to service them, which isn’t trivial. So three businesses, cost them hundreds of millions of dollars, so they’re serious. Anybody who looks at it and says, I don’t know what they’re doing, should think, there is only one thing that they can be doing and that is to try and build a platform for podcasting, which has enough exclusive content that it will draw incremental listeners. Therefore, they will be able, over time, to create a business that has higher potential margin than the music side.

The argument that podcasts also appeal to people that also love music, isn’t a hard thing to say, because almost everybody loves some music and it is likely that a lot of those people will like podcasts. But I think that the challenge that we had, at Pandora, was to understand what your proposition is, to your subscriber, when you’re pulling them on. How do you talk about yourself? I thought you were about music and now you’re about something else; how does that work?

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