In Progress No. 9

Your Friday Dose - Ben Weisbrod

Feb 05, 2021

Welcome to Friday.

Knowledge

Podcasting - Subscription-based Upside

Joe Rogan is the most popular podcaster in the world. It's not a debate. Rogan (somewhat recently) signed a deal with Spotify to exclusively host his content. If the numbers are to be believed, Rogan received $100M-$200M. In return, Spotify secured the largest podcast audience in the world. Spotify won this transaction. Joe Rogan lost. Here is why:

1. He lost control over his audience

Podcasting is free, open, and decentralized. Subscribers become the podcaster’s currency. They are what determine podcast valuable. This is why podcasts can become so mobile when they have direct relationships with their listeners. Through this deal, Rogan gave up control over his direct relationship. Any new audience he now builds, he loses to the platform of Spotify. His existing podcasting feed dies out as a result.

2. Spotify gets Rogan’s recurring revenue

I'm not sure Rogan even realized the value he was sitting on. For him, the only source of revenue creation came from advertising. What he missed was turning himself into a subscription business. Fans would pay a fixed fee to access exclusive content. He had the opportunity to turn himself into one of the world's best SaaS businesses. Crazy recurring revenue, with low churn and insanely high margins, growing at 25-50% per year as podcasting’s audience grows over time.

Here are some numbers:

In a former interview with Jordan Peterson, Joe said that he gets over 200 million podcast downloads per month. With 18 episodes per month, that means each podcast gets roughly 11MM downloads per episode.

11,000,000 listeners x 5% (conversion rate for subscribers) x $5 (monthly subscription price ) x 12 months = $33,000,000 per year

Going further, The Joe Rogan Experience gets 100MM views per month and on average runs 6 ads per video. JRE Clips (short snippets of certain podcasts) gets 170MM views per month and on average runs 2 ads per video. YouTube's ad CPM is roughly $4 - $6.

Low: [100mm x 4 ads x $4 x 12 months] + [170mm x 1 ad x $4 x 12 months] = $27mm

High: [100mm x 6 ads x $6 x 12 months] + [170mm x 2 ads x $6 x 12 months] = $68mm

Adding the subscription revenue to these ad numbers gives a range of $60MM - $101MM per year. Given the numbers, the reported fixed payment given to Rogan doesn't even compensate him with enough upside to accommodate for the tradeoffs.

What is interesting here is a new approach to podcasting. Even once a podcaster’s audience reaches moderate numbers, a subscription-based business model could provide significant upside. Given that anyone with a computer, microphone, and a guest can build an audience, we could see the rise of a new podcasting environment. One that is populated with small audience podcasters who provide their services on a subscription basis.

Wisdom

Life is a series of games

Our life is an embodiment of the games we play. Most of these games revolve around status and wealth. We either win these games and refuse to keep playing or find ourselves reiterating the same games until we meet our final hours. What is truly important are the games we decide to play. We either carefully pick or find ourselves consumed by a game we did not sign up for. Surrounded by rules that go against those who never intended to participate. If we win these games, reiterating them is pointless.

Define what winning is early. Freedom is finding new games once our winning definition is reached.

There are many things in this world that I do not want
- Socrates

Insight

Building Skills

Skills are built through the process. The process is a constant cycle of deciding the endpoint, iterating through deliberate practice, and seeing the endpoint fulfilled. Building skills is a skill in itself. Having a proper formula for executing how new skills are formed is a superpower. Do what works for you. Not everyone needs the same process.