Spotify’s $1 billion bet on podcasting has had mixed results, but recent moves to make the division profitable appear to have been the final straw for the person responsible for its once-vaunted exclusive deals.
The streaming giant is parting ways with the head of its podcast studio, Julie McNamara, Bloomberg reported, citing a memo she sent to staff.
McNamara explained to employees that she was returning to her “creative roots”, the publication reported, ending a turbulent period at a division that started with promise three years ago but now has been forced into retreat.
A representative for Spotify didn’t immediately respond to Fortune’s request for comment.
Podcast pivot
McNamara joined Spotify in 2021 after 15 years at CBS, her last job being with the streaming service Paramount+.
When she arrived, Spotify was aggressively expanding into podcasting as part of a broader bid to take Apple’s market share. It was the first real diversification away from its music streaming business, and it began with a bang.
In 2020, the Sweden-based company locked Joe Rogan into an exclusive three-and-a-half-year deal worth a reported $200 million, which meant Rogan’s estimated 14.5 million listeners could only listen to him on Spotify.
Similar exclusivity deals followed with Prince Harry and Meghan, the Duchess of Sussex, the Obamas, and Kim Kardashian, costing Spotify an estimated $1 billion in total.
The strategy was to invest in bringing new listeners to the platform, before monetizing them with other products. While co-founder and CEO Daniel Ek said the deals were a “net positive”, they were not as successful as the company had anticipated.
Spotify has since uncoupled somewhat from its biggest podcasters. For example, the new deal it signed with Rogan in February saw the company scrap its exclusivity agreement, instead licensing the show to other streaming services.
A similar less-than-exclusive deal followed when resigning Alex Cooper for her hugely successful podcast, Call Her Daddy.
Spotify has also shifted its focus to partnerships with high-output creators, rather than the short series that came from deals with Harry and Meghan and the Obamas, both of which have ended in recent years.
“We have doubled down on the deals that worked, and we have gotten out of a lot of the deals that didn’t work,” Ek said in February.
McNamara’s role evolved since she first joined the streaming giant in 2021, Bloomberg reports. Originally working under chief content officer Dawn Ostroff, she eventually took control of its exclusivity agreements, the importance of which has now been minimized.
Layoffs
McNamara’s exit comes months after Spotify laid off 1,500 employees, or 17% of its workforce, as part of a major efficiency drive to move the company to long-term profitability.
The group’s podcast division was significantly hit by those layoffs, leaving McNamara with a bit more work in her final weeks.
Speaking on the company’s Q1 earnings call, CEO Ek said the layoffs had hit day-to-day operations more than he had anticipated, contributing to Spotify missing its earnings target for the quarter.
The company expects its podcast division to become profitable this year.
