Spotify Hints At Further Podcast Acquisitions In Near Future

There’s an important point to realise about Spotify’s announcement yesterday that it has “line of sight” on $400m-$500m to spend on acquiring podcasting companies: that figure *includes* the amount spent on Gimlet Media and Anchor. “The number is not additive to the cost of the acquisitions we announced today,” CFO Barry McCarthy told analysts.

The reported price tag for Gimlet Media was $230m, but Spotify isn’t confirming that, precisely because it’s in the process of buying other podcasting companies. “Just in terms of the numbers, it’s cash. The price will be disclosed in the fullness of time in our SEC filings,” said McCarthy. “I’m not commenting on that today, because we have other transactions in the works and I don’t want the transactions we’re closing to bleed over into deals we may be negotiating.”

More acquisitions to come, then, as Spotify gets to work on its stated aim of making non-music content as much as 20% of all listening on its platform – while also walking the delicate line of persuading its key music-licensing partners that this will be extra listening, rather than cannibalising their content. “Our podcast users are almost twice as engaged as non-podcast listeners on our platform and as a result spend even more time listening to music,” as CEO Daniel Ek put it.

Pundits are already thinking about what Spotify needs to do next. The Verge has some useful suggestions on how its podcasting features could improve, with the key one (for us) being “creators should be able to monetise”. If Spotify really wants to disrupt the podcasting ecosystem, getting creators paid rather than simply distributing their shows for free would be a smart move. In November, Anchor announced a scheme to match podcasters with sponsors, which hopefully has a future within Spotify. See also Midia Research’s mention of the importance of Spotify’s programmatic ad-buying technology as “crucial to monetising podcasts”.

But splashing out on more original content – exclusive podcasts – is also a big part of Spotify’s plans. “I don’t think it is unlikely that it is a Netflix type of story, even if the magnitude of the numbers won’t be the same, of us doubling that investment year over year to get more and more content,” Ek told CNBC in an interview yesterday. Not that every podcast production company is on its radar. “I don’t think we have to buy all of the companies that are in this space… What we feel very strongly about is we want to be in the game, we want to be the platform that these creators come to and go to.”

With research firm Ovum reiterating yesterday that it thinks the number of global, monthly podcast listeners will reach one billion in 2020, with advertising revenues nearing $4bn that year, the opportunity is high – but as Ek himself admitted yesterday, Spotify is far from the only company eyeing it.

Source: Music Ally