How SiriusXM bought and bungled a beloved podcast network

The pitch was simple. He recalls that Earwolf wanted him to make a show, and they told him that he could do whatever he wanted.

His show was recorded in a band rehearsal space in the middle of Hollywood and there was no talk of ads. There were no big deals in podcasting.

Hearing people describe Earwolf's heyday, you can understand how it quickly developed a roster of talented comics, from the Sklar Brothers and Harris Wittels to Jimmy Pardo. Everyone seemed to be having a good time making the shows they wanted to make in Earwolf's office.

It was always fun to see Tom Cruise or people from the LA creative world.

A wall of Vans sneakers painted with the faces of Earwolf hosts greeted visitors, suggesting that this was a place that not only cared about showing off its podcast roster but also nurturing an audience of fans passionate enough to celebrate them. The network became home to a tight community built around a shared passion for comedy and podcasting, former employees tell me, and early producers, hosts, and editors often came to the company already loving Earwolf shows.

The company had business motives as well. The team solicited fan donations and sold merchandise while early hosts read ads for brands. One former employee says that the key to how the industry worked back then is that flagship show. The small- to medium-sized podcasts that made up the network could use advertisers.

It wasn't supposed to be the biggest show in the world, but what was great about Earwolf at the time. The network was good at cultivating the shows that had a small audience but were committed and vocal and loyal, as well as the shows that had a medium-sized audience.

The network was formed by Jeff Ullrich. Scott Aukerman is the founder of a company that has changed over the years.

Earwolf is more than one entity. The combined entity of The Mid Roll and Midroll Media was bought by E.W. Scripps in the year after. The three assets were combined under the Stitcher name. All three brands were bought by SiriusXM in a deal worth up to $325 million. Big tech companies are spending a lot of money on audio success. They all do it out of necessity.

It is not possible for a platform to run wholly dependent on record labels and royalties. It needs to make money from different sources. The younger generation, who want to listen to anything other than their phone apps in the car, can't bank on the satellite radio business. That's why it invested $75 million in SoundCloud in 2020 and $3.5 billion in Pandora in the last two years, all in an effort to capture digital listening attention.

In the case of both SiriusXM and Spotify, small podcasts networks offered advantages they didn't already have: expertise in on-demand audio and stories, a loyal fan base, and an arsenal of quality programming. Being acquired by a giant had perks for the smaller networks. It gave them access to more money that could help them retain hit shows or recruit new stars.

The merger was marked by confusion, culture clash, and shifting objectives according to 13 former corporate employees who spoke with The Verge. More than a quarter of the people who worked at Stitcher have left since the company was bought. Notable departures include CEO Erik Diehn, CFO David Murray, and CTO Peter deVroede. Hollywood Handbook, an early and prominent show that is now independent, is one of many shows that have left the network. The network is bleeding talent so much that it has multiple threads on its fan subreddit wondering what happened inside the company and why shows left.

The answer is complex. Earwolf was initially a beacon for comedy talent with minimal pressure around numbers or performance, but the broader audio industry has been shifting toward a scale where bigger and bigger hits are critical to staying afloat. The time was right for a talent reckoning because of the x-factors of a pandemic, a new corporate environment, and growing ways for shows to make it on their own without network support.

It's hard to exist in the middle, says a person familiar with Stitcher's strategy at the time.

The problems started before the acquisition. In the year prior to the purchase, hosts at some of the network's smaller shows began to feel like they were being overlooked in favor of bigger names.

The concerns came to a head in the month before the acquisition. More than 40 Earwolf hosts and creators sent a letter to management in June of 2020 expressing their concerns that the ad sales model of Stitcher disadvantaged smaller shows and failed to land them consistent revenue. Host receive a minimum guarantee and then make money off an ad share agreement. The sales team only employed white team members, which multiple employees tell me led to incidents in which hosts of color felt under-served.

The Earwolf team loved the title " Yo, Is This Racist?", but it ended up leaving the show because it came up multiple times. Ti tells me that the show's title was removed because it made ads harder to sell. The sales team told them that some advertisers might think the show is racist.

He says that it means you haven't listened to the content and aren't making any effort to explain it to advertisers. The word "racist" was removed from select sales materials to prevent the show from being unfairly rejected by marketing filters. The show left the network to work with Gumball.

The letter, signed by prominent hosts like Chris Gethard, demands answers for why ad revenue dropped or never thoroughly existed in the first place.

The letter says that the sales team has passed the buck to each of us in order to hide their own ability to properly support the shows. The entire Midroll model is only designed to sell for the top shows, and in addition to that, actively penalizes any medium or smaller shows.

A person familiar with Stitcher's finances tells me that advertisers stopped spending money during the early stages of the swine flu, which in turn cratered smaller shows and caused the host uprising.

There wasn't something we could do that would just suddenly make the shows make more money, and some of the things they suggested were just impossible.

The company responded by committing additional revenue guarantees for some shows and dedicating more money to smaller shows. A woman of color was hired to a prominent role on the sales team but left less than a year later.

The deal to acquire Stitcher was finalized during this time.

A person familiar with discussions says that the executives of the company knew they needed to invest in the company's future, but they didn't have a fully baked plan. The company only knew that it needed a shot in the arm.

You see something on the horizon that suggests that the cash machine is going to come to an end, when you have one that is built to do one thing.

Is it a business of ad sales or a subscription business? Should a new business be built around podcasting, or would the SiriusXM subscription matter most? They say that the approach was to let the talent do all that.

According to the former employees and hosts, the acquisition set off a domino effect of bad vibes and distrust. They say that Stitcher management didn't comment on the rumors and delayed all-hands meetings to discuss it, only to host one to confirm the sale. Employees say Diehn told them the deal was happening and that they were all employable, making some worry that they might lose their jobs. Employees had to adjust to a new company when they joined SiriusXM. Everything happened quickly.

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According to the press release announcing the deal's closing, it seems that SiriusXM bought Stitcher for its ad business or to expand its position in digital audio advertising. A person familiar with the product said that it had between 130,000 and 140,000 subscribers at the time of sale.

The employees I spoke to had differing expectations about the purchase. Some received raises and others didn't. They were supposed to invest more in their shows, but were let down and saw their favorite shows leave. Employees say they felt uninspired and disempowered when they had to run decisions up the bureaucratic ladder.

It shifted from excitement to pity because you guys are so small.

I was shocked by howurious people were about how we did what we did.

The knowledge gap made Stitcher employees feel like they walked into a company that didn't want or need their help, despite evidence to the contrary. The employees had to educate the team on what made a good show. One employee of the team said that they had to explain that the RSS feed was live and that there wasn't anything playing in it.

A former sales team member says that Stitcher never allowed advertisers to pre-approve the actual audio of a host, only the ad copy they would receive. A person says that cross-promoting shows with other networks became difficult because of the minimum ad spend that was implemented by SiriusXM. When they joined SiriusXM, they were told not to spend any more money on Spotify for promotion.

One former employee says that it got to a point where he would just sit there and bang his head against his desk. The marketing team is allowed to purchase ads through the Megaphone and pre-approved host-read ads are allowed.

The culture fit wasn't right. The town hall was held after people pointed to a survey that the HR team asked them to complete. Employees were told that they couldn't have diversity issues because the company employed a female CEO.

One former employee says that the company hated on its competitors rather than reflecting on why they worked. A former employee of the team said that the enemy offered a "boomer business mentality, like a toxic business mindset."

A former employee says that he has been called out in meetings for saying that.

Executives didn't seem to have a full picture of its competitors. DJ Khaled joined as a special guest during one all-hands meeting, but he also hosts a show on Amazon Music. At least one person on the Stitcher team was made aware that the company didn't know the space well.

Content strategy was a point of confusion. According to a former employee, the team at SiriusXM was told to stop pursuing fiction podcasts after they decided to go after it. Audio Up, a company designed to make scripted shows, was invested by SiriusXM months after that. The work on original fiction is still going on inside the company.

They say that they were promised that they would be allowed to do what they wanted. I mean laughable amounts of money.

The findings of our reporting are typical of the challenges facing any corporate acquisition, with staff and executive turnover, transitions to the company's preferred systems and technologies, and meetings, according to Patrick Reilly.

There are always challenges following an acquisition, but the leadership of SiriusXM and Stitcher worked together to make sure the transition went as smoothly as possible.

Since the acquisition closed, the staff at Stitcher has grown by 25 percent, and the company continues to support emerging creators.

He says that the team of experts that was brought on was part of the reason for the acquisition of Stitcher.

Earwolf was already changing before the acquisition. The network started to focus on bigger shows, like Office Ladies, over the small comedy series it had built its name on.

Employees say that has accelerated since the acquisition. Several smaller shows, including Culture Kings, Off Book: The Improvised Musical, and Spanish Aquí, have left or ended their runs, while Earwolf has continued to focus on big names. The show exceeded 3 million downloads across its nine-episode first season, and a second season is in the works.

It doesn't feel like it has an identity as a comedy network.

The integration of the two companies made employees head for the door. There was at least one who left without notice. They were dismissed for making a TikTok about quitting.

Some former employees say that some employees did well. The people who could make the corporate system work for them did, and the ones who couldn't left. Some shows and hosts, like Scheer, say nothing has changed on their end, they still talk to the same person at Earwolf and keep making their show as usual.

There are other issues that SiriusXM is having. It was difficult to integrate and support its own studios. Business Insider reported last year on shows from Gimlet Media, which was purchased 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 888-739-5110 Sources said at the time that the studio had never been given a clear direction.

At the time of the acquisitions, there was upheaval in the podcasting industry. Those with small, loyal fanbases now have more options. Earwolf founder Aukerman launched his subscription offerings through new partners. Aukerman worked with Acast. That's a bang! In October last year, the world had ad-free and bonus content.

When he launched the Earwolf sub-network, he and the team told shows they would need 40,000 weekly Listeners to be successful. Smaller shows with dedicated audiences might have better success on Patreon, charging their fans directly.

It's an easier way to make money.

Earwolf's early energy likely couldn't last, and most employees and hosts at Stitcher seem to understand that. Not taking one last stroll past the wall of Vans sneakers is what quitting the job means. Free laughs won't pay the bills for multiple deep-pocketed companies that need spoken word audio to survive.

On Tuesday, you will receive analysis, insights, and commentary on the audio industry.