Has Joe Rogan just made a deal with the devil?

As you may know, Rogan has just made a deal to have his podcast distributed exclusively on Spotify. Matt Stoller is worried.

Yesterday audio streaming giant Spotify announced a deal with podcast king Joe Rogan, with the Wall Street Journal reporting that Rogan will be paid more than $100 million over several years in return for making his insanely popular show exclusive to the Spotify service. This is huge news. Investors were pleased; Spotify’s stock was up 8.42%, which is roughly $2.5 billion, or twenty five times what Rogan will be paid. From the perspective of someone who appreciates independent voices and an independent press, however, I’m concerned.

What's up?

As the web used to be, today podcasting is an open market, with advertising, podcasting, and distribution mostly separated from one another. Distribution happens through an open standard called RSS, and there’s very little behavioral ad targeting. I’m asked on fun weird podcasts all the time; podcasting feels like the web prior to the roll-up of power by Google and Facebook, with a lot of new voices, some very successful and most marginal, but quite authentic.

So what is Spotify trying to do?

First, Spotify is gaining power over podcast distribution by forcing customers to use its app to listen to must-have content, by either buying production directly or striking exclusive deals, as it did with Rogan. This is a tying or bundling strategy. Once Spotify has a gatekeeping power over distribution, it can eliminate the open standard rival RSS, and control which podcasts get access to listeners. The final stage is monetization through data collection and ad targeting. Once Spotify has gatekeeping power over distribution and a large ad targeting business, it will also be able to control who can monetize podcasts, because advertisers will increasingly just want to hit specific audience members, as opposed to advertise on specific shows.

What's this mean to Rogan's listeners? (I'm one, I only listen now and then on YouTube, and more often to clips than full shows.) After explaining a bit about anti-trust law, Stoller continues:

...Rogan has made it clear that there are likely to be few consumer benefits. He promised his listeners that “it will be the exact same show. I am not going to be an employee of Spotify. We’re going to be working with the same crew doing the exact same show.” The only difference is consumers won’t be able to get the Rogan show through other channels. It’s purely a restraint of trade. In other words, there’s literally no justification for this deal as anything but a payoff to Rogan from an aspiring monopolist who seeks to force Rogan listeners to use the Spotify app. It’s a leverage of Rogan’s legal monopoly over his own copyrighted material to create a distribution monopoly, which was one of the legal issues at stake in the 1948 Paramount decrees case that ended the monopolistic Hollywood studio system.

Now, I can imagine the argument that targeted advertising brings some sort of benefit I’m leaving out, that Rogan’s ad inventory will bring scale for podcast monetization. But the downside to consumers is quite obvious, while no one has been able to

Spotify isn’t the only bad actor here. The corporation is under heavy pressure from Amazon, Apple, and Google, all of whom have interests in the streaming music and podcast business, and all of whom can cross-subsidize with other streams of revenue. They also have gatekeeping control over Spotify through app stores. Here’s Spotify protesting to one of Congress’s Antitrust Subcommittees how Apple uses its bottleneck power.

Apple operates a platform that, for over a billion people around the world, is the gateway to the internet. Apple is both the owner of the iOS platform and the App Store—and a competitor to services like Spotify. In theory, this is fine. But in Apple’s case, they continue to give themselves an unfair advantage at every turn.

If you put Spotify where Apple is, and and change a few words so that this describes streaming instead of apps, this sentence describes Spotify’s strategy. They want to become the gateway to streaming, so they can tax the ecosystem. (It’s admittedly a bit more complex since Spotify is indirectly taxing via ad targeting and has to pay for music rights whereas Apple is directly taxing via an app store fee, but the power dynamics are similar.) show that targeted advertising is a net positive.

There's more at the link, including notes on McKinsey, Softbank, Trump's deal with Phlow, which manufactures chemical precursors to pharmaceuticals, contract tracing.