Published: Thu, February 07, 2019
Life&Culture | By Sue Mclaughlin

Spotify bets big on podcasts with acquisition of Gimlet and Anchor

Spotify bets big on podcasts with acquisition of Gimlet and Anchor

The company said it will spend up to $500 million on podcast start-ups this year; the deal with Gimlet is rumored to be in the neighborhood of $200 million.

Spotify has also announced its acquisition of Anchor, whose platform is designed to make it easier for podcasters to create, distribute, and monetize their shows.

Spotify Technology, the world's most popular music streaming service, today announced that it has entered into definitive agreements to acquire both Gimlet Media Inc. the renowned independent producer of podcast content along with Anchor, the company leading the market for podcast creation, publishing, and monetization services. Terms were not disclosed, but industry sources have estimated the GIMLET deal at about $230 million.

He said the move was aimed at putting it ahead of music streaming rivals like Apple Music and Tidal, as well as allowing it to earn more from advertisers. That alone would be the biggest acquisition in Spotify's history.

Based on radio industry data, we believe it is a safe assumption that, over time, more than 20% of all Spotify listening will be non-music content.

Spotify is making a bigger bet on podcasts as it looks to bring a Netflix-like model of original programs to the audio world.

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"While podcasting is still a relatively small business today, I see incredible growth potential in this space", Ek said on a call with investors Wednesday morning.

The amount Spotify is looking to spend on podcast companies is greater than a year of for the entire podcasting market.

Read the comments from CEOs of Spotify, Gimlet and Anchor below. It has a slew of popular shows that focus on everything from entrepreneurship to science, including Startup, Homecoming, and Reply All. During its last round of funding in 2017, Gimlet was valued at about $70 million.

Spotify doesn't seem like it's finished spending money on acquisitions yet, either.

In its own acquisition announcement, the podcast production and hosting platform, Anchor, stated that its platform is now powering of all new podcasts.

"If the Spotify listener converts from 100 percent music to even 90 percent music, 10 percent podcasts, that's a 10 percent decrease in checks cut to other entities on behalf of that listener", wrote Tom Webster, a senior vice president at Edison Research in a blog post. Therefore, if the service can get more people to listen to a higher number of podcasts, maybe it can even become the world's largest. The closest deal was iHeartMedia's acquisition of Stuff Media for $55 million in September.

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