Spotify rumoured to be in “advanced stages” of podcast company acquisition
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Spotify rumoured to be in “advanced stages” of podcast company acquisition

Last Friday, a number of major news outlets reported that Spotify was in the final stages of agreeing to acquire podcast production company Gimlet Media for $230 million. The reports cited anonymous sources, and none of them speculated as to whether any of Gimlet’s senior team would be joining Spotify. However, what they did make clear was that Spotify would add a collection of highly trafficked podcasts, such as Reply All, Science Vs., and StartUp, to its offering if the deal goes through.

Spotify’s share price has appreciated by an incredible 24% already this year

graph 06 spotify

Source: Yahoo Finance

Writing in Recode, Peter Kafka noted that this deal (assuming it comes through) will mark the first time Spotify has purchased a content company. He also noted that Spotify has failed to break into the video business, and “has been public about its ambitions to move into podcasting in recent months”. As a result, the company has been promoting podcasts to users and signing one-off deals with celebrities to sign them up to the platform.

Summing up the logic behind the buy, Kafka writes: “Spotify’s 200 million users are already used to consuming audio from the service — and, crucially, while the music business is controlled by three big companies who have real leverage when it comes to licensing their stuff, podcasting is in its early days, and no one has a chokehold on podcast content.”

Spotify may well be betting that it can not only gain a major stake in the podcast business, but push it out to a new crowd. Podcasting is a small industry, and ad revenue for 2017 was just $315 million. For comparison’s sake, digital ads that year brought in $11.9 billion. But podcasting has an additional plus point: it’s an incredibly fast-growing industry.

We could learn more today, when Spotify releases quarterly earnings. We’ll be writing those up imminently, and will bring you more on this story as-and-when we have it.

Disclosure

Dominion holds Spotify in its Global Trends Luxury Fund.


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