February 7, 2019

Doubling down on podcasts: Spotify buys Gimlet and Anchor, plans future spending

In an effort to expand its reach, Spotify has acquired Gimlet Media and Anchor, with a plan of spending $500m on podcasts in 2019.

Fire up the studio, and give ’er the ol’ “mic check 1, 2, 1, 2,” because Spotify announced on Wednesday that it acquired podcast production company Gimlet Media and short-form podcasting app Anchor.

While no acquisition terms were released, Recode reported last week that Gimlet Media had a price tag of more than $200m.

Puttin’ on the cans

The Stockholm-based streaming powerhouse, which went public last March, has long expressed its ambition to stretch the appeal of its platform. In a blog post, Spotify’s CEO Daniel Ek predicted that more than 20% of listening on Spotify will eventually be “non-music content.”

Ek believes accelerating Spotify’s spending on original content, AKA podcasts, is the perfect way to do it — in hopes of becoming the “Netflix of audio.”

They aren’t messin’: The streaming service reportedly plans to spend up to $500m this year on more podcasting acquisitions — but, why? Isn’t podcasting still a relatively small business?

It is… in the US

The American ad model for podcasting only generated an estimated $315m in 2017, compared to digital video ads that brought in $11.9B in the same year — but that’s likely because of its generally free or ad-supported business model.

The podcast industry in China is 23x larger, estimated to be worth an astonishing $7.3B+, thanks to paid subscriptions.

There are vast differences between China’s state-run media market and America’s free market, but a company like Spotify — whose ambitions stretch beyond just the ol’ US of A, and which has a whopping 96m monthly paid subscribers (and growing) — could be the giant to make it work.

Gimlet ain’t no slouch either

Valued at around $70m in 2017, Gimlet has slowly climbed the podcast studio ranks, bringing the world hit shows like Reply All, Startup, and an inaugural fictional podcast, “Homecoming,” which was adapted into an Amazon series.

The other acquisition, Anchor, creates products that simplify the process of recording and earning money from podcasts — showing that Spotify is also focusing on building an infrastructure around its creators. Both deals are expected to be finalized by March 30.

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