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Insider (July 1, 2021): Amazon Music signs deal with Smartless, Podcasting in China update, Spotify to push into live events?

Amazon Music strikes a pricey deal with Smartless. So, there’s a straightforward way to write the headline for this development — “Amazon Music strikes an exclusive deal with Smartless worth up to $80 million” — but the specifics require some unpacking to get the full gist of what we’re looking at here.

Let’s start with what we know. First of all, Bloomberg’s Lucas Shaw has been running point on this thread, originally writing a piece two weeks back that Smartless — the conversational celebrity show hosted by Jason Bateman, Will Arnett, and Sean Hayes, which signed with CAA as a collective in May, presumably in anticipation for this — was shopping around a $20 million per year deal for its distribution rights. Two things stood out about that story. Firstly, the equivocation that the Smartless crew was seeking a sum that would essentially match the exclusive distribution deal that Call Her Daddy went to Spotify for, and secondly, that Spotify had looked at Smartless, and ultimately passed.

Amazon was identified in that piece as a possible buyer, and this past week saw the company’s Amazon Music division emerge as the buyer. On Tuesday, Bloomberg reported that while Amazon didn’t publicly disclose the terms of the deal, a source tells him that “the total value is between $60 million and $80 million” over a three-year period.

Now, assuming all the details reported in Bloomberh’s piece are correct — and there’s no reason to doubt any of it at this point — this might seem like Amazon Music’s deal with Smartless either matches or beats the deal that Spotify signed with Call Her Daddy, given that the latter deal pays out $60 million over a three year period. But it’s not, not really.

According to Bloomberg, “Starting on Aug. 1, new episodes [of Smartless] of the show will appear on Amazon Music and Wondery+ one week before they are released on other outlets, the companies said Tuesday.” Which is to say, the deal seems to be premised on a one-week exclusivity window, as opposed to full exclusivity, which is what Spotify is getting from Call Her Daddy starting sometime this month. (Unless, of course, Spotify chooses to adjust the exclusivity terms, as they have with The Michelle Obama Podcast and Renegades, though not with its major perpetually publishing exclusive assets, like The Joe Rogan Experience.) Amazon Music is also getting what amounts to a first-look deal with the Smartless team on future audio projects, but that’s what Spotify is getting from Call Her Daddy as well.

To put it cleanly: based on the exclusivity detail alone — perhaps the most significant pillar of this deal, read within the context of Amazon Music’s overall platform goal around this pursuit, which is to increase active users and time spent on platform metrics — it really does look like Amazon Music is paying far more… for much less. You could, of course, try to interpret the deal comparison on the basis of… let’s call it “star power.” One show, less than a year old, features three relatively well-known actors, who will presumably become busier with acting gigs as the entertainment industry scales back up post-pandemic. The other show, almost three years old, in many ways a phenomenon among the more aggressively monetizable ~youths~, is built around a talent who’s more or less native to the form. ¯\_(ツ)_/¯

Anyway, before we proceed, let’s attend to two questions that popped up most frequently in my inbox and mentions in the wake of the deal’s announcement. (1) Is this crazy? Sure! You know what else was worth $80 million? The new deal Guy Fieri signed with the Food Network, which makes a whole lot more sense, because, for one thing, that dude is an institution, and for another, the Food Network knows how to make money off Guy Fieri. (2) Are we in a podcast bubble? TBD on a podcast bubble, but we’re most definitely in a podcast acquisition bubble, sure, and we’ve been here a while. (2a) Doesn’t this suck? Sure!

A couple more notes. One point of refrain or counterargument I’ve heard from various business-types in my rolodex: “I’m sure the business development team over there has figured out some model or another that suggested enough user acquisition and retention outcomes from exclusively distributing new Smartless episodes even for just a week that would justify the deal.” Sure! But we’ll never truly know, will we?

Are we missing something about the deal? Are there other components of the deal that’s not public that may very well justify the price? Possibly! Maybe! Probably?

Last thing. This development seems to illustrate how Amazon Music, being later to the game than its peer competitors, appears to be more willing than others to commit dumb money moves in order to make statements and its intentions known, as the sum of this deal will likely cause other shows to approach them first with deal prospects. But it’s perhaps equally true that, in the larger scale of things, $60 to $80 million is, ultimately, a relative pittance within the context of the broader Amazon coffers. These two pieces fit together.

Something something money in the banana stand

Anyway, I was poking around the alleyways of the Amazon empire, and found these two audio-related things that I felt are worth flagging:

  • As part of Amazon Music’s on-going push into podcasts, the division has established a portal, attached to its Research and Development team, it’s calling “Backstage for Podcasters” to open up a feedback loop between podcast creators and the platform. According to an email that was sent out, creators will “receive activities from us about once a month. This will include piloting new features, giving us your opinion on early designs, or answering some brief questions.”
  • Meanwhile, over at Audible, some curious job openings, including a “Head of Film and TV.” Netflix wants to make podcasts, Audible wants to make TV and movies. 

Spotify to push into live events? So exclusively reports the Information, which phrases the Swedish audio streaming platform as “considering” the move as a possible way to not only further diversify revenue, but also to improve its relationships with artists, which, as you probably know, is generally strained in the aggregate, still.

Despite the fact that the piece principally focuses on the potential of this move around the music industry — and keep in mind, live touring revenues have come to be extremely important for the business model of music artists, big and small, in large part due to the economics of the streaming age — one does wonder about Spotify’s interests here around podcast acts with live components.

Speaking of Spotify…

NYT profiles Joe Rogan. Every few years, somebody takes a swing at figuring out the Rogan situation. It’s been about two years (and a Spotify deal) since the last one, by Slate, so here’s the Times. Rogan, as usual, declined to be interviewed, resulting in a write-around.

Meanwhile, in China. Fascinating piece over at Protocol by Shen Lu, who flags that “China’s Communist Party is coming for podcasting.” Lu writes:

Years behind the podcast landscape in the U.S., podcasting in China is only a fledgling industry, with most creators pursuing it as a side gig. Until recently, Chinese podcasting was considered a tight-knit community catering to the niche interests of a very specific audience: highly-educated young urbanites. Independent podcasters like Li have in the past few years created a vibrant, albeit small space for social and political discourse rarely seen on mainstream social media.

But it is a fast-evolving industry with tremendous growth potential. Major investments into podcasting are incubating high-quality, professional audio production. But growing popularity inevitably subjects the nascent podcast sector to the same level of propaganda influence, censorship and monetization pressure as mainstream social media platforms.

Among other things, the article provides what feels like a more accurate contextualization of the Chinese podcast ecosystem and community than the prevailing narrative, initially instigated in mid-2019 by an Andreessen Horowitz blog post on the lessons that the US podcast industry can take from its Chinese counterpart, that pegs the China’s podcast ecosystem too closely to centralized paid audio platforms like Himalaya. (Which is backed by the also-Chinese audio giant, Ximalaya. Remember them?)

But the thrust of Lu’s piece has to do with the risks to the Chinese podcast ecosystem’s relatively open publishing culture as it grows in popularity and profit, framing those gains as being strong enough to draw the attention of the country’s centralizing, limiting governmental authorities. 

A peculiar kind of mirror, perhaps, given that the American open podcasting culture is itself threatened by the similar centralizing tendencies, albeit spurred on by unfettered capitalism.