Podcast stars are inking massive nine-figure deals. Here’s why companies are writing the big checks
New York
CNN
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Podcasting superstars are taking their fame to new heights as media companies offer nine-figure deals for the rights to their shows.
NFL brothers Travis and Jason Kelce's $100 million deal this week with Amazon's podcasting studio, Wondery, marked the latest high-priced deal in 2024, highlighting a major shift in the audio landscape as top streaming platforms distance themselves from exclusive broadcast deals in favor of distribution and advertising rights.
In recent months, SiriusXM inked a $100 million deal to acquire the distribution rights for the popular "SmartLess" podcast hosted by Will Arnett, Jason Bateman and Sean Hayes. Spotify signed a new multiyear deal with Joe Rogan worth up to $250 million, announcing that his podcast, the platform's top-performing program, would no longer be exclusive to the audio app. And earlier this month, Alex Cooper departed Spotify in favor of a three-year, $125 million contract with SiriusXM that granted the platform exclusive ad and distribution rights to her sex and relationship podcast, "Call Her Daddy."
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The eye-watering figures mark the return of major podcast companies paying stars enormous sums for their audio programs, but with a twist on their previous business strategy. Rather than banking on unproven stars who might fail to deliver on episodes or a massive audience, companies are increasingly inking advertising and distribution deals to publish the shows across competing platforms.
In the past, podcasting giants hoped that by signing exclusive deals with high-wattage stars and placing their shows behind paywalls, celebrity voices would bring a flood of new subscribers and advertising dollars. But that didn't necessarily materialize, said Michael Rueda, who heads up US sports and entertainment at Withers, an international law firm that advises podcasters on contracts.
"You do these big deals with talent, and suddenly they don't really produce the content that you expected them to produce, so there was a lot of risk on that end," Rueda said. "Of course, there's always the risk of the podcasters themselves getting into trouble, covering controversial stuff, and you, as the party that hired them, being completely responsible for it."
One such high-profile deal that sputtered was Spotify's multimillion-dollar partnership with Prince Harry and Meghan, Duchess of Sussex, which was meant to produce several programs but ultimately yielded only a single series and holiday special.
News that the couple had parted ways with Spotify in 2023 followed two years of slumping ad sales that culminated in the company's decision to axe 200 staffers in its podcasting unit, or 2% of its global workforce, citing a "strategic realignment."
The shift toward deals to exclusively distribute shows to other platforms while granting a single company control over advertising sales offers what the companies hope is a lucrative path forward that spreads risk across multiple platforms.
Under the Kelce brothers' deal, Wondery will have exclusive ad sales and distribution rights to "New Heights," providing the Amazon studio with all its audio and video episodes, including the entire back catalog. The agreement comes as the sports podcast approaches its third season ahead of next month's NFL opener. The timing marks a major win for Wondery given the Kelce brothers' program is typically the top sports podcast during the football season.
Adam Sandler and Travis Kelce.
Getty Images
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In its latest ranking of the Top 50 US podcasts by audience, Edison Research ranked "The Joe Rogan Experience," "Call Her Daddy," "SmartLess," and "New Heights" among the top 15 most listened-to podcasts. While the programs have some of the industry's biggest existing audiences, the price of the partnerships signed in recent months encompasses several future milestones, meaning the nine-figure dollar values are not necessarily what the audio giants are paying out of the gate, Rueda said.
"Changing the nature of the deal so that it's not exclusive in terms of publishing but exclusive in terms of sales and of advertising makes it more attractive to the platform where you can see larger deals where maybe they pay some of this money up front and they recoup a lot of it on the ad sales on the back end," he said.
Under such contracts, the companies assume a wider audience from high-profile podcasts will translate into higher ad sales. For the podcasters, the deals are equally appealing, providing a hefty sum to cover production overhead while offering access to resources and connections endemic to large platforms.
The return of big checks for top talent follows two consecutive years of slumping advertising sales in the podcasting industry as ad revenues once again rise.
According to a recent report from Magellan AI, advertiser spending on podcasts climbed 22% this year. And overall podcast ad revenue is expected to pass the $2 billion mark in 2024, up 5% over last year, according to the Interactive Advertising Bureau.
While podcasting was once seen as a way to reach a niche audience, roughly 100 million Americans reported listening to at least one podcast per week, according to an Edison Research survey conducted this year. A joint study from Nielsen and Edison also showed that while Americans spend more than four hours a day listening to audio content, consumers give 20% of their daily ad-supported audio time to podcasts.
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In its latest quarterly report, Spotify added 7 million paid subscribers for a total of 246 million, while the company's ad-supported revenue grew 13%. A Spotify spokesperson told CNN that between record subscribers and positive podcast performance, 2024 will likely be the company's biggest year for podcasts.
A SiriusXM spokesperson declined to comment for this story. Wondery could not be reached.
While the multimillion-dollar podcast deals offer new promise for the companies opening their wallets, it remains to be seen whether the deals will prove to be lucrative in the long-term.
"Everything looks great at the beginning and new issues can arise, which can cause another shift, that's how these markets work," Rueda said. "But, for the near future, this seems to be the way the platforms are moving and the way that they're signing these podcasters up, because that's how they envision the revenue generating."
