Why Spotify’s Big Gamble on Meghan Markle Didn’t Pay Off?

When Spotify signed the Duke and Duchess of Sussex to an exclusive deal allegedly worth about $20 million (£15.6 million) in 2020, it was the royal couple’s first step into the business world, and podcasts were really taking off.

How Times Have Changed?

Some people are less interested in Prince Harry and Meghan’s brand new, and Spotify is relying less on big star signings and expensive original content that have hurt its bottom line.

This week, Meghan’s show was one of the most well-known things to go away. Spotify and the Duke and Duchess of Sussex’s Archewell Audio announced that they would be ending their partnership.

It happened after Spotify’s deal with the production business run by Barack and Michelle Obama ended last year.

Since then, Spotify has let go of hundreds of employees. Many of them worked in its podcasting business, a large group of podcasting companies that it bought for more than $400 million a few years ago.

During a conference call with financial experts earlier this year, Spotify CEO Daniel Ek admitted that the company had made some mistakes during the more than $1 billion spending spree that followed its 2019 push to become a major player in the industry.

“You’re right to point out how much is being paid and invested,” he said.

“We’re going to be very careful about how we invest in content deals in the future,” he said. “And obviously, we won’t continue the ones that aren’t doing well.

“And the ones that are working, we’ll look at them case by case to see how much they’re worth.”

Spotify is still willing to do deals that cost a lot of money. Last year, it refused to break up with its controversial star Joe Rogan, who allegedly got $200 million in 2020 for giving the streamer exclusive listening rights.

But Mr. Rogan’s show has several episodes each week that are more than an hour long. These episodes are said to be watched by an average of 11 million people.

In contrast, Meghan’s Archetypes show only had 12 episodes last year.

In a joint statement, the Sussexes and Spotify said they were “proud” of the work they did together.

And a long list of honors showed why.

Last year, Archetypes’ first album went straight to the top of the Spotify charts in six countries, including the US and UK. Meghan’s show, in which she talked to other famous people like Serena Williams, Mariah Carey, and Mindy Kaling, got a People’s Choice Award as well.

Spotify

But Mark Borkowski, an expert in crisis communications, says that the show may not have been interesting enough when Spotify looked at the numbers.

“It’s always about the content It’s clear there hasn’t been a big enough audience for it,” he says. “No one will pay your fee if you can’t deliver.”

Mr. Borkowski says there isn’t much doubt that the Duke and Duchess of Cambridge are still valuable as a television brand. But it might not be as good as it used to be.

Newsweek did a poll earlier this year that showed the couple’s fame in the US went down after their Netflix documentary series and Harry’s memoir, Spare, got a lot of attention. The cover of Newsweek said, “The more Prince Harry and Meghan Markle talk, the less Americans like them.”

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Mr. Borkowski says that the pair, who will stop working as royals in 2020, will have to “think hard” about what they can do next.

“The Spotify breakup has pulled a thread out of the brand,” he says. “They really need to think hard if they don’t want it to fall apart. The biggest question is whether they will learn from this defeat or just brush it off as a small problem.

This week, a representative for the Hollywood talent agency that now works with the duchess told the Wall Street Journal, “Meghan is still making more content for the Archetypes audience on another platform.”

Max Willens, a senior analyst at Insider Intelligence, says that Spotify isn’t the only tech giant that spent a lot of money in recent years to sign people who didn’t live up to the promise of the money they asked for.

The good times stopped last year when the economy turned bad and stock prices fell.

But Spotify’s stock is up almost 90% this year because Mr. Ek promised to stay focused on “efficiency” and the company continues to add users and podcasts. It now has more than 5 million podcasts.

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This month, the company talked about the “next phase” of its podcasting business. This was a sign that it would work with lower-cost third-party creators and put more money into “always on” programming.

“The platforms that have gotten into [podcasting] had to take some time to figure out what made a good investment,” Mr. Willens says. He says that Spotify and the Duke and Duchess of Cambridge’s choice to part ways is “understandable and a natural part of that process.”

“Those were very big deals that were meant to make a lot of noise and get a lot of attention, and they did that. If they were good for the economy, in the long run, is a different question.”

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