I met Joe Rogan once. In the middle of LA on a lost afternoon in the 90s, I walked into an elevator and there he was. Still in the pre-fame period of his career, he seemed genuinely surprised that I recognised him.
I was a huge NewsRadio fan and Rogan was part of a wonderful cast that played exaggerated versions of themselves working for a minor news station. I told him how much I loved the show and (I think) he was genuinely happy that I liked it so much. I also think he was pleased when I got out of the lift.
Rogan’s character was called Joe Garrelli. He was the tech guy who fixed everything that went wrong in and around the station. But he was also a kooky conspiracist and would occasionally let slip alternative, paranoid viewpoints to his suddenly alarmed co-workers.
It was casting very close to type. Rogan has always been happy to take a different perspective and walk his own path. While it most famously led to the creation of the Joe Rogan Experience podcast, Rogan has been doing things his way for 30 years and defiantly ignoring convention. His political beliefs encompass both gun rights and gay rights. He endorsed left-wing firebrand Bernie Sanders in the 2020 presidential primaries but, when Sanders dropped out of the race, shifted his support to Donald Trump and not Joe Biden.
His podcast also takes a variegated and often divisive path. Rogan has a fearsome intellect and an equally courageous ability to embrace alternative points of view, with little if any concern for the status quo or how it might make him look. Like him or loathe him, Rogan is a rare independent mind in a culture that seems increasingly tied to dogma and partisan perspectives.
Compared to the bland tinned tuna of music streaming, Rogan is a very different kind of fish. A live fish. An uncontrollable fish. A consistently dangerous fish.
But it was that very independence that created Rogan’s biggest crisis. From the start of the pandemic his show has regularly explored the issues surrounding Covid-19. His guests represent all sides of the debate but Rogan has been clear about his personal scepticism of mass vaccination and the logic behind lockdowns. He has also been a consistent proponent of ivermectin and took the drug when he contracted Covid-19 last year.
But two years is a long time in science. When Rogan first aired his Covid beliefs, no one – least of all the scientists working on the virus – were sure of the answers. The old, grey men and women who would not comment in 2020 were not being shy, they were being scientists.
As Rogan kept talking through 2021 and 2022, science inched forward. Gradually, with more time and better data, the world has learned about Covid and its treatment, and many of Rogan’s beliefs have become outdated, even untenable. Not that this has stopped Rogan from continuing to expound them.
If anyone was going to make me look dumb on the podcast I’m glad it’s @joshzepps, because I love him, and he’s awesome.
However this is why I was confused: https://t.co/Yd31Hwbvqb pic.twitter.com/By1TLeUo94
— Joe Rogan (@joerogan) January 14, 2022
Rogan’s interview last month with Australian journalist Josh Szeps was a perfect example of the podcast star being outflanked by new, contradictory data. The fact that Rogan continued to question that data and its sources reflected badly on him – something Rogan happily later admitted, while continuing to argue his case. It should be noted that Rogan praised Szeps for countering him, and Szeps praised Rogan for his openness. Rare stuff in the heady, tribal climate of the 20s.
But the broader damage was already done. Simply by debating the orthodoxy of government guidelines, Rogan – with his massive worldwide audience – was becoming a problem. In January, more than 270 scientists and doctors signed a petition accusing him of spreading “misleading and false claims on his podcast, provoking distrust in science and medicine”. The petition described the impact of Rogan’s podcast as a “sociological issue of devastating proportions” and called on Spotify to immediately do something to moderate its impact.
And, of course, a problem for Rogan is a problem for Spotify. Back in 2020, the Swedish streaming company signed Rogan to its network for a cool $100m. Spotify is already the biggest streaming service on the planet with 381 million active users and a 31% share of the global streaming market – twice that of Apple. But the company has also been eyeing brand extension into the still diffracted world of podcasting, and Rogan was the biggest fish of them all.
But, compared to the bland tinned tuna of music streaming, Rogan is a very different kind of fish. A live fish. An uncontrollable fish. A consistently dangerous fish. A fish who did not give a fuck before Spotify fed him $100m, never mind after.
While the story of the world’s largest music service being taken down by a team of geriatric rockers makes for a wonderful tale, it also makes no sense.
And then artists got involved. First it was Neil Young, who pulled his music from the platform in protest at Spotify’s continued support of Rogan. Young, a polio survivor, is a vehement defender of vaccine efficacy and had lost patience with Rogan, and Spotify’s support for him. Next came Joni Mitchell, who also asked for her music to be removed.
Suddenly there was the prospect of a musical avalanche overtaking both Spotify and Rogan. Nils Lofgren followed. Brilliantly, James Blunt threatened to release more of his music on the platform unless Spotify canned Rogan. Most recently, Crosby, Stills & Nash showed support for their sometime band mate, Young, by pulling their music too. As usual, the headlines overclaimed a crisis. Showbusiness trade newspaper Variety led the charge, reporting that Spotify had lost more than $2bn in market value as a result of Young’s actions.
Not quite. While it’s true that in the three days immediately after Young’s announcement Spotify’s stock did fall by 6%, it’s equally apparent that cause and effect are not being properly aligned here. Spotify’s stock has lost 40% of its value in the last 12 months and there have been several days, free from any artist controversy, when its stock lost 6% or more over a period of a few days.
While the story of the world’s largest music service being taken down by a team of geriatric rockers makes for a wonderful tale, it also makes no sense. To make that absurd claim, one would have to ignore one of the most important asymmetries in marketing – the relationship between suppliers and distributors. Put more simply, the big music stars and the companies that represent them simply cannot live without the exposure, reach and income that Spotify provides. They have relatively little power in the relationship.
It’s a simple case of gigantic supply and relatively limited distribution. As the world turns to music streaming, only a handful of global players led by Spotify, Apple and Amazon control the market. Five companies represent 80% of the global streaming opportunity.
Now, turn that around and think about it from an artist’s point of view. Spotify currently has 70 million songs and adds an additional 60,000 each and every day. These stupendous numbers have two implications. First, even when an artist like Young pulls his music from the service there are literally millions of potential replacements to fill the gap in a listener’s playlist. Second, artists cannot fuck with any of the big distributors of their music, because losing access to 31% of the market is the difference between success and failure for many of the record companies that run these artists.
Millions of songs, a handful of distributors. Do the maths yourself. And this isn’t a calculation reserved for just the music streaming industry. A select few retailers at the end of most distribution channels enjoy exactly the same dominion over their multitude of unfortunate suppliers – not just because of customer proximity but because that same asymmetry of supply and distribution applies again and again.
From music to wine
Imagine for a second being one of the 2,000 Australian wine companies targeting the British wine consumer. Each Aussie winery produces an average of five different wines meaning there are 10,000 different bottles of wine aiming for UK shelves.
Now look at the retailers that run the UK wine market. Once again five players – Tesco, Sainsbury’s, Asda, Co-op and Morrisons – run almost 70% of all off-premise sales. The biggest store might have a maximum of 1,000 SKUs of wine for sale at any time. Perhaps 15% will be dedicated to Aussie wine. So, while Tesco represents a quarter of all UK wine sales, it might have shelf space for 150 Australian wines in total. Ten thousand competing supply options, five retailers, each with 150 slots.
Again, that means two things. No wine brand on the planet has enough market power to guarantee its presence in Tesco or Sainsbury’s with so many willing replacements ready to replace them. Second, should a wine brand lose Tesco, it would immediately lose a quarter of its UK market sales. How many companies could handle that?
Make no mistake, retailers not only enjoy this asymmetrical advantage, they play on it to further their control. I remember one senior sales manager from a very famous wine brand telling me the story of how he and his team had prepared for annual negotiations with one of the big US retail giants. His team spent weeks looking at data, working with a famous negotiations expert, role playing the outcomes; preparing, preparing, preparing.
There isn’t a form of magical kung fu negotiation theory that can make up for the fundamental asymmetrical advantage that big retail has over its incredibly numerous set of suppliers.
On the morning of the big meeting, he walked into a drab room in the retailer’s HQ with his team behind him. His opposite number smiled and suggested coffee. While they waited, the retailer offered an “interesting insight” for both teams to ponder. “We ran the numbers over the weekend and we estimate we must be about 30% to 35% of your US sales.” The wine rep grimaced – the retailer’s estimate was spot on.
“And guess what share of our total sales you represent to us?”, the retailer continued. The wine executive grimaced again. “Well, it’s less than zero point zero, zero…” the retailer paused and checked with his number two, “zero, zero, zero, zero, eight percent.”
“Anyhoo,” the retailer said, suddenly becoming serious and opening the documents in front of him, “let’s talk next year.”
It’s a point missed by too many marketers when they wildly advise brands to withdraw from certain retailers, or extol them to push for better terms. It is nonsense talk. There isn’t a form of magical kung fu negotiation theory that can make up for the fundamental asymmetrical advantage that big retail has over its incredibly numerous set of suppliers, all vying desperately for access.
And while it’s lovely to imagine Neil Young and a rag tag army of 70s icons bringing Joe Rogan back to reality and Spotify to its knees, such things are simply not possible. None of the major artists will join the protest. They cannot afford to. And none of this will do any harm to the Joe Rogan Experience or Spotify’s reputation. If anything, the saga and the attention it has drawn to Spotify, and its influence in both spoken word and musical streaming, will surely send its share price higher in the months to come.
It has the ultimate power of retail asymmetry on its side, after all, and in Joe Rogan, a man who can play the game from any angle.