New York (CNN) — 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 milliondealthis 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 exclusivebroadcastdeals in favor of distribution andadvertisingrights.
In recent months,SiriusXMinked a $100 milliondealto acquire the distribution rights for thepopular“SmartLess” podcast hosted by Will Arnett, Jason Bateman and Sean Hayes. Spotify signed anew multiyear dealwith Joe Roganworth up to $250 million, announcing that his podcast, the platform’stop-performingprogram, would no longer be exclusive to the audio app. Andearlier this month, Alex Cooper departed Spotify in favor of a three-year,$125 million contractwith SiriusXM that granted the platform exclusive ad and distribution rights to her sex and relationship podcast, “Call Her Daddy.”
Theeye-watering figuresmarkthereturn ofmajorpodcast companies paying stars enormous sumsfor their audio programs, but with a twist on theirpreviousbusinessstrategy.Rather than banking on unproven stars who mightfail todeliver on episodes or a massive audience, companies are increasingly inking advertising and distribution deals topublishthe shows across competing platforms.
In the past,podcasting giantshopedthat by signing exclusive deals with high-wattage starsandplacingtheir showsbehind paywalls,celebrityvoices would bring a flood ofnewsubscribersandadvertisingdollars.Butthatdidn’t necessarily materialize,saidMichael Rueda, who heads upUSsports 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 suchhigh-profiledealthat sputteredwas Spotify’smultimillion-dollarpartnershipwith Prince HarryandMeghan, duch*ess of Sussex, which was meant to produce several programsbut ultimately yieldedonlya 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 toaxe200 staffersin its podcasting unit,or 2% of its global workforce, citinga“strategic realignment.”
The shift toward deals to exclusively distribute showstoother platforms while granting a single company control over advertising sales offerswhat the companies hope is alucrative path forward that spreads risk across multiple platforms.
Under theKelcebrothers’deal,Wonderywill haveexclusive ad sales and distribution rights to“New Heights,” providing the Amazon studio with all its audio and video episodes, including the entire backcatalog. The agreement comes as thesportspodcast approaches its third seasonaheadofnext month’sNFLopener. The timing marks a major win for Wondery given the Kelce brothers’ program is typically the top sports podcastduring thefootball season.
In its latestranking of theTop 50 USpodcastsby audience, EdisonResearchranked “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 theindustry’sbiggest existing audiences, theprice of the partnerships signed in recent monthsencompasses severalfuturemilestones, meaningthe nine-figure dollarvaluesarenot necessarily what the audiogiantsare paying out of the gate, Rueda said.
“Changing the nature of the deal so that it’s not exclusive in terms of publishingbut 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 onthe ad sales on the back end,” he said.
Under such contracts,the companiesassume a wider audience from high-profile podcasts will translate into higher ad sales.For the podcasters, the deals are equallyappealing, providing a hefty sum to cover production overhead while offering access to resources and connections endemic to largeplatforms.
The return ofbig checks for top talentfollowstwo consecutive years of slumping advertising salesin the podcasting industryas 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 tothe Interactive Advertising Bureau.
While podcasting was once seen as a way to reach a niche audience,roughly100 million Americansreportedlisteningto at least one podcast per week, according toanEdison Researchsurveyconducted this year. Ajoint studyfrom Nielsen and Edisonalsoshowed that while Americans spendmore thanfour hours a daylistening to audio content, consumers give 20% of their daily ad-supported audio time to podcasts.
In its latest quarterly report,Spotifyadded7 million paid subscribersfor a total of 246 million,whilethe company’s ad-supported revenuegrew 13%.A Spotify spokespersontold CNN that between recordsubscribersand 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 themultimillion-dollarpodcastdealsoffer new promisefor the companies opening their wallets,it remains to be seen whetherthe 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.”
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