Why Spotify’s big bet on Meghan Markle fell flat

When Spotify signed an exclusive deal with the Duke and Duchess of Sussex worth around $20 million (£18 million) in 2020, the royal couple were taking their first steps into the world of commerce, and podcasts were on the cusp of a positive boom. was becoming

The Sussex brand has been overshadowed by some in recent days, with Spotify lessening its reliance on big-name celebrity deals and expensive original content that are squeezing its bottom line.

Meghan Markle’s podcast has become one of the most high-profile victims of the week. Spotify and Meghan Markle’s Archwell Audio have announced they are parting ways by mutual decision.

This comes after Spotify’s deal with Barack and Michelle Obama’s production company ended last year.

Spotify has since laid off hundreds of staff, hitting its sprawling podcasting division, a hodgepodge of podcasting companies it acquired for more than $400 million just a few years ago.

In a conference call with financial analysts earlier this year, Spotify Chief Executive Daniel Ek said the company’s spending of more than $1 billion follows a 2019 effort to establish itself as a major player in the industry. admitted to making some mistakes.

“You are correct in pointing out overpayments and overinvestments,” he said.

“We will be very enthusiastic about how we invest in content deals going forward,” he added. “And if it doesn’t perform well, of course we don’t update it.

“And what is performing well will obviously be looked at on a case-by-case basis based on relative value.”

It’s clear that Spotify is still interested in an expensive partnership. The company last year resisted calls to cut ties with controversial star Joe Rogan, who reportedly received $200 million for giving exclusive rights to streamers in 2020. ing.

However, Logan’s show offers several multi-hour episodes each week, reportedly averaging 11 million viewers.

Meghan, by contrast, aired just 12 episodes of her “Archetypes” podcast last year.

In a joint statement announcing their split, the Sussexes and Spotify said they were “proud” of the music they created together.

And a series of accolades showed why.

Archetypes’ debut last year topped Spotify’s charts in six markets, including the US and UK. The show, in which Meghan interviewed celebrities including Serena Williams, Mariah Carey and Mindy Kaling, also won a People’s Choice Award.

But crisis communications guru Mark Volkowski said the show may not have been compelling enough when Spotify scrutinized the numbers.

“Content is always important. Obviously, we didn’t have a large enough audience to embrace it,” he says. “No one is going to pay if they can’t pay.”

Borkowski says there is little doubt that the Duke and Duchess still have value as media brands. But it may not be what it used to be.

Earlier this year, a Newsweek poll suggested the couple’s popularity in the United States had waned following the publicity hype surrounding the publication of the Netflix documentary series and Prince Harry’s memoir Spare. . “The more Prince Harry and Meghan Markle speak out, the less Americans like them,” read the Newsweek headline.

Borkowski says the couple, who stepped down as royals in 2020, will have to “think hard” about what they can offer in whatever they do next.

“It’s a thread pulled from the brand,” he says of Spotify’s breakup. “They have to think seriously if they want to stop the unraveling of the situation. The biggest question is whether they’re going to learn from this setback or just ignore it as a passing event.”

A spokesperson for the Hollywood talent agency that now represents Meghan told The Wall Street Journal this week, “Meghan continues to develop more content for archetype audiences on other platforms. there is,” he said.

Insider Intelligence senior analyst Max Willens said Spotify wasn’t the only tech giant to spend big on talent deals in recent years and failed to deliver on the promises backed by the money. ing.

Those dizzying days came to an end last year as economic sentiment deteriorated and stocks fell.

But Spotify’s stock, which continues to grow its user base and has a catalog of podcasts soaring to more than 5 million, is up nearly 90% this year as investors welcome Ek’s promise to continue to focus on “efficiency.” there is

In announcing the “next stage” of its podcasting business earlier this month, the company signaled it would be open to low-cost third-party creators while investing more in “always-on” programming.

“Platforms entered [podcasting] It took time to figure out what was a good investment,” Willens said, noting that Spotify’s decision to part ways with the Duke and Duchess was “an understandable and natural part of the process.”

“They were big, big deals meant to generate buzz and grab headlines, and they did. Whether it makes financial sense in the long run is another question.”