The Sweden-based music streaming giant announced plans to acquire The Ringer — a popular sports media company that produces more than 30 podcasts — for a stack-o-cash of undisclosed height.
Spotify has a lot of faith in Pod
For The Ringer’s founder Bill Simmons and the company’s ~90 employees (all of whom are expected to stick around), the deal could promise both stability and autonomy.
But it’s also a big deal for Spotify: This Ringer acquisition marks Spotify’s 4th podcast deal of the last 12 months (the first 3 were Gimlet, Anchor FM, and Parcast).
Spotify, which has more paying listeners (124m, a 29% increase since last year) than its growing rival Apple, seems to have bet that podcasts will help maintain its lead.
So far, the strategy seems to be working: When Spotify announced its 4th-quarter earnings yesterday, it revealed that podcast listening on its platform had increased 200% in the past year.
Buuuut… podcasts are also an expensive gamble
Spotify also reported yesterday that — despite exceeding expectations for user growth — it still failed to turn a profit, and instead posted an operating loss of $85m.
Why did it still come up short? Cuz podcasts are ’spensive.
It costs a lot to buy up podcasting companies: Spotify spent $400m to acquire Gimlet, Anchor FM, and Parcast last year.
But it also costs a lot to run these podcasting companies. Take The Ringer, for example: After buying the sports website and network, Spotify will likely absorb at least 90 new full-time employees — which also means paying 90 new salaries.
Plus, the Ringer deal is ol’ SpottyGuy’s first acquisition that includes written content.