Obamas to Leave Spotify, Seek Podcast Deal Elsewhere
(Bloomberg) -- Barack and Michelle Obama’s time with Spotify Technology SA is coming to an end.
The former first family’s production company, Higher Ground, won’t be signing a new deal with the audio platform, according to people familiar with the negotiations. The company is instead talking to other distributors about a deal worth tens of millions of dollars, among the most-lucrative in the podcasting business.
Higher Ground is in the middle of negotiations with several potential partners, including Amazon.com Inc.’s Audible and iHeartMedia Inc., said the people, who asked not to be identified because the conversations are private. The company wants to pick a new home within the next few weeks. It has talked with multiple big networks, including Spotify, but the Swedish streaming giant declined to make an offer, according to three sources familiar with the discussions.
Spotify shares were little changed at 9:50 a.m. in New York trading. Amazon stock rose 1.1%, while iHeartMedia climbed 2.5%.
Higher Ground is seeking a deal that will allow it to produce several shows and release them on multiple platforms at the same time. This could explain iHeart’s interest given that it hasn’t historically relied on an exclusive strategy for its podcasts. This is one reason why some potential bidders, like Spotify, have bowed out -- a widely released show will end up on their service anyway. Companies like Spotify and Amazon have pursued exclusive rights to promote their own services.
The Obamas are each willing to appear in an eight-episode program, which for some bidders isn’t enough of a commitment to justify a deal comparable to those for shows like “SmartLess,” “Call Her Daddy” and “My Favorite Murder.” Those shows appear weekly, or with a frequency to close to that, while Higher Ground’s programs featuring the Obamas have been limited series.
Higher Ground signed a deal with the music streaming giant in 2019 as the Obamas planned their post-presidency media business. The company has produced a few podcasts since then, starting with “The Michelle Obama Podcast,” which features the former first lady chatting with friends and family on the subject of relationships. Spotify said that show was one of its five most popular podcasts in 2020.
Higher Ground and Spotify were partners on the shows under the current deal, meaning the future agreement would be for new programming.
Higher Ground and Spotify have clashed during the course of their partnership. Both “The Michelle Obama Podcast,” and “Renegades: Born in the USA,” a show featuring conversations between Barack Obama and musician Bruce Springsteen, debuted exclusively on the platform. They only went live on other services months later. That exclusivity is why Spotify paid Higher Ground, but the production company found that being tied to one service limited the audience for its shows.
The two parties also disagreed about how much of the company’s output would include the former president and first lady. Spotify wanted more shows featuring two of the most famous people in the world, while Higher Ground hoped to use their deal to provide a platform for a range of voices. Higher Ground has pitched Spotify dozens of shows, but produced five. The company released “The Big Hit Show,” one of its only programs that didn’t feature an Obama, in January. Sources familiar with their current deal said more Spotify programming will be released through the fall.
Spotify has spent hundreds of millions of dollars to work exclusively with some of the most popular podcasters, including Joe Rogan, Bill Simmons and Alex Cooper of “Call Her Daddy.” The company did so hoping to capitalize on their star power to build its app’s reach, while recouping the costs through ad sales. It has had less success doing deals with mainstream celebrities and Oscar-nominated filmmakers that had no experience making podcasts.
Spotify’s investments encouraged Amazon and SiriusXM to spend hundreds of millions of dollars on their own deals, and the Obamas are hoping to capitalize on what has been a frothy market. With Spotify out of the bidding, however, the list of potential homes for the Obamas has shrunk by at least one.
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