Markets

Spotify Continues Its String of Exclusives

Just over a year after Spotify (NYSE: SPOT) first announced a partnership with President Barack Obama and Michelle Obama's production company, Higher Ground, the company this week said that the first new series from that deal will be The Michelle Obama Podcast. The exclusive title will launch on July 29. Financial terms regarding the partnership were never disclosed.

Spotify shares jumped on the announcement yesterday, despite broader market declines.

Daniel Ek on stage in front of Spotify logo with an audience watching him

CEO Daniel Ek. Image source: Spotify.

The first of many

The Michelle Obama Podcast will be a general-interest show in which the former First Lady discusses interpersonal relationships, current events, and a wide variety of other broad topics. Obama will interview a mix of special guests with expertise on those issues.

The show will be available for all free users and premium subscribers, like all other podcasts on the audio-streaming tech platform. The Michelle Obama Podcast is the just the first podcast to come out of the multiyear partnership, with more content expected to be in the pipeline.

The Obamas founded Higher Ground in 2018 and released its American Factory documentary on Netflix, which proceeded to win an Oscar earlier this year.

The streak continues

The news adds on to Spotify's recent string of exclusive podcast deals, following the Joe Rogan exclusivity deal, worth an estimated $100 million, announced in May. Last month, the company inked another deal with AT&T's WarnerMedia to produce original podcast series with DC superheroes like Batman and Wonder Woman. The streaming specialist also reportedly signed a contract with Kim Kardashian West for a true-crime series.

While that last deal has not been formally confirmed or announced yet, Spotify Chief Content Officer Dawn Ostroff recently told CNBC that true crime is the biggest genre of podcast content, making it a critical category to focus on as the company builds out its catalog of original podcasts.

Investors are enthused about podcasts because of the potential to contain costs, as hefty royalties associated with music streaming hinder profitability as well as scalability since those expenses are variable in nature. Podcast production costs, on the other hand, are relatively fixed. However, competition is also intensifying: Apple has started to ramp up its defensive strategies and SiriusXM just announced that it was acquiring competing podcast platform Stitcher for up to $325 million from E.W. Scripps.

Overall U.S. podcast advertising revenue is expected to top $800 million this year, according to recent estimates from IAB. That may not seem like a large market to go after, particularly in the context of Spotify's market cap increasing by $20 billion since May, but the company is confident that the aggressive push into podcasts is boosting conversion rates of free users into premium subscribers.

10 stocks we like better than Spotify Technology
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Spotify Technology wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

 

*Stock Advisor returns as of June 2, 2020

 

Evan Niu, CFA owns shares of Apple, Netflix, and Spotify Technology. The Motley Fool owns shares of and recommends Apple, Netflix, and Spotify Technology. The Motley Fool recommends Sirius XM Radio. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

SPOT

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More