For Wondery And SiriusXM, Spending Big Isn’t The Same As Thinking Big
Here we go again. Wondery, which is owned by Amazon, just dropped $100 million for an exclusive distribution and ad sales deal for Jason and Travis Kelce’s podcast New Heights, and I am looking at this news and wondering how the hell this company lost the plot in such a grand fashion.
Neither the scale nor the cynicism of the deal comes as a surprise. That an industry that has been hemorrhaging ad rates and laying off entire teams of trained professionals has somehow simultaneously managed to scrounge up more than $300 million to shuffle distribution rights for just three shows—New Heights, Dax Shepard’s Armchair Expert, and Alex Cooper’s Call Her Daddy—in the last few months tells you everything you need to know about the values behind these companies’ decisions. More than that, though, the outlandish size of these big swings is an indication of how vague and abstracted a game the biggest players in the podcast business are playing.
An investment this big should, for starters, be a guarantee to make money, but I don’t think any of these major acquisitions are going to pay off as investments, let alone earn out on those nine-figure outlays. In theory these acquisitions should function as charismatic megafauna for the rest of the networks, or, if you prefer less panda-intensive metaphors, serve as a rising tide that lifts all the boats and brings awareness—and ad dollars—to the smaller shows in these networks. That might be true when the scale of these deals is much smaller, and more in keeping with the observable economic realities of the business, but I have a hard time imagining how Wondery and SiriusXM will manage to earn back even a fraction of these upfront investments. It’s a bad business decision on multiple levels.
Look, laying cards on the table, I am vehemently allied with the contingent of precious artist types who consider radio (there’s that podcasting-radio distinction again) to be a distinctively intimate medium, and one with a rich history that’s worth being consumed and appreciated and studied as much as the visual arts, or literature, or music. But I’m also a realist, and one who works in this particular business. Podcasting, like every other corporatized art form that exists as both industry and medium, must contend with the squeeze of making good things and the necessity to make money, just as anyone who makes their rent money off this sort of thing has learned to live with the compromises necessary to make a buck off their art. It’s not that the size of the deals offends me as much as it is that these purchases betray a fundamental misunderstanding of what successful art in a commercial marketplace is, and what it takes to make this kind of work.
The rubric of “success” in the context of the online media business is inextricably tied to virality. The MBA boys didn’t start seeing dollar signs in public media until Serial went viral in 2014, and soon everyone wanted a piece of that obsessively crafted, marimba-scored, shockingly rich pie. Other metrics of success exist and also matter—cultural or political impact, monetary profit, market share ownership—but when you’re scanning a P&L, scale is the easiest metric to track, and the one most closely correlated with the potential to earn money.
As someone who worked in the blog trenches of the 2010s trying desperately to engineer virality, I can assure you that this is not something that can be engineered. We developed best practices for headline styles and share images to help things move across the internet, but those best practices also led to the nightmarish headline formulas like “10 Times Skeeter from Doug Was Bae” that clogged up Facebook feeds and helped Trump win the election. When I think of era-defining viral moments, I think of The Dress, an 18-word blog posted in 2015 by Cates Holderness on Buzzfeed that was the product of fucking around on Tumblr and scrambling to meet presumably absurd posting goals.
Virality is a game of striking matches over and over with the hope that one will catch and become a bonfire. I often think about this anecdote, apparently popularized by James Clear, about a photography professor who divided his class into two groups at the beginning of the semester. The first group was told to take a perfect image, and the second was told to take as many photos as they could. At the end of the semester, the best photos apparently came from the quantity group rather than the quality group. The lesson here is that trying too hard to make something perfect—or in the context of online media, something “sticky”—will ultimately harm your final output. The more certain route to creating something good, whatever “good” means to you, is to create a lot.
Which brings us back to Wondery’s recent shopping spree. It is objectively staggering, especially in comparison to past jaw-dropping podcast acquisition deals like Spotify’s previous contracts with Alex Cooper for $60 million, Meghan and Harry for $20 million, and the Obamas for $25 million. (Joe Rogan is an exception here; his deal with Spotify was a mindblowing $200 million and has since been renewed for more.)
Rather than strike matches with the hope of lighting a bonfire, Wondery just tried to buy the bonfire. While I wish I could say it was a savvy business decision, it seems more like a giant waste of money on something that’s already big at the expense of what could be—not just the classic free-agent fallacy of paying money in the future for past production, but paying so much that it will hobble the company’s own capacity to create anything of value going forward.
To give you a sense of the opportunity cost of this decision: A narrative podcast I produced a few years ago had a budget of $200,000 which covered over a year of production, a staff of five, custom scoring, field reporting, and fact checking. This show was only eight episodes long and it didn’t go viral by any estimation, but it won journalism awards and was optioned for film and television. One of the companies that produced the show went on to be acquired by another company for multiple millions of dollars. The project made money for the companies that bankrolled the production off ad sales and option fees; all told, it was a modest success. For the price of the Kelce’s $100 million payday, Wondery could make 500 of these narrative shows, and I’d bet that an investment like that would return at least a couple of conventional successes. It is not part of Wondery’s calculus, obviously, but it would also pay journalists and creatives living wages for a period of time.
This doesn’t need to be an either/or calculation. These networks could make flashy acquisitions that would create a halo effect across their programming slates at a fraction of these totals and still have room to finance hundreds of new projects. But that’s not what counts as success for the people making these decisions, and as long as they continue making decisions like this, what could be will always be drowned out by the loudest and most expensive voices in the room.
