- By Natalie Sherman
- Business Reporter, New York
8 hours ago
When Spotify signed the Duke and Duchess of Sussex in 2020 to an exclusive deal reportedly worth around US$20million (£15.6million), the royal couple took their first steps into the commercial world and podcasting took off real boom.
These days, Prince Harry and Meghan’s brand has faded in the eyes of some, and Spotify is reducing its reliance on the big celebrity deals and expensive original content that have weighed on the bottom line.
Meghan’s podcast became one of the most high-profile casualties this week when the Duke and Duchess’s Spotify and Archewell Audio announced they were separating as a result of a joint decision.
This comes after Spotify’s contract with Barack and Michelle Obama’s production company ended last year.
Since then, Spotify has laid off hundreds of employees, entering its expansive podcasting division, a hodgepodge of podcasting companies that the company spent more than $400 million to acquire a few years ago.
In a conference call with financial analysts earlier this year, Spotify CEO Daniel Ek acknowledged that the company was growing as a major player in the industry during the more than $1 billion spending explosion that followed his attempt in 2019 establish, had made some mistakes.
“You are correct in pointing out the overpayment and overinvestment,” he said.
“We will invest very carefully in future content deals,” he added. “And of course we won’t extend those that don’t work.
“And of course those that are performing well, we will be looking at their relative worth on a case-by-case basis.”
Image source: Getty Images
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Daniel Ek co-founded the Swedish streaming company Spotify in 2006
Obviously, Spotify still has the guts for some expensive partnerships. Last year, the company resisted calls to sever ties with its controversial star Joe Rogan, who was reportedly paid $200 million in 2020 for granting the streamer exclusive listening rights.
But Mr Rogan’s show features several multi-hour episodes each week, which reportedly draws an average audience of 11 million people.
In contrast, Meghan only delivered 12 episodes of her Archetypes podcast last year.
The joint statement announcing the split said the Sussexes and Spotify are “proud” of the material they’ve created together.
And a number of awards showed why.
Archetypes’ debut last year topped the Spotify charts in six markets, including the US and UK. The show, which saw Meghan interviewing other celebrities including Serena Williams, Mariah Carey and Mindy Kaling, also won a People’s Choice Award.
But crisis communications guru Mark Borkowski says the show may not have been convincing enough when Spotify checked the numbers.
“It’s always about the content… obviously there wasn’t enough audience for it,” he says. “If you can’t deliver your fee, nobody will pay it.”
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Rogan is a stand-up comedian, podcast host and UFC announcer
Mr Borkowski says there is little doubt the Duke and Duchess still have value as a media brand. But it may not be what it used to be.
A Newsweek poll earlier this year suggested the couple’s popularity in the US has suffered following the advertising boom surrounding their Netflix documentary series and the release of Harry’s memoir, Spare. “The more Prince Harry and Meghan say, the less Americans like them,” read the Newsweek headline.
Mr Borkowski says the couple, who stepped down as working royals in 2020, are “needing to think hard” about what they can offer in their next activities.
“It’s a thread that’s been pulled out of the brand,” he says of the Spotify split. “If you want to prevent the situation from unraveling, you have to think really hard. The biggest question is whether they will learn from this setback or ignore it as a mere blip.”
A spokesman for the Hollywood talent agency that now represents the Duchess told The Wall Street Journal this week, “Meghan continues to develop more content for the Archetypes audience on a different platform.”
Max Willens, senior analyst at Insider Intelligence, says Spotify isn’t the only tech giant to have spent big bucks in recent years signing talent who failed to deliver on the promise they made with the money offered.
Those exciting days came to an end last year as economic sentiment deteriorated and share prices fell.
But shares of Spotify, which continues to add new users and whose podcast catalog has grown to more than five million, are up nearly 90% this year as investors embrace Mr Ek’s promises that it will continue to focus on “efficiency.” focus.
When the company announced the “next phase” of its podcasting business this month, it signaled that it would bring in lower-cost third-party providers while driving investments in “always-on” programming.
“The platforms that have stepped in [podcasting] “It had to take me some time to figure out what a good investment is,” says Mr. Willens. He calls Spotify and the Duke and Duchess’ decision to part ways an “understandable and natural part of this process”.
“These were big deals that were supposed to attract attention and make headlines, and they did it. Whether they made economic sense in the long term is another question.”