Spotify, the Sweden-based audio streaming platform is reported to be looking at making a more than $200m move into original podcast production by buying Gimlet Media, indicating not only Spotify’s sense of opportunity, but the trajectory of the podcast medium.
Sources that spoke to Recode’s Peter Kafka have reported that the company is in talks to acquire the Brooklyn-based startup, Gimlet, which is known for producing several popular shows including New York Magazine’s The Cut on Tuesdays, the internet-focused podcast Reply All, and the narrative podcast Homecoming, which became an Amazon Prime TV series.
In addition, the startup’s branded arm, Gimlet Creative, has produced content for the auto company Ford, insurer Hiscox, and Spotify itself.
According to the Hollywood Reporter, which spoke to multiple sources independently, Gimlet had already drawn $30m in venture capital from investors including WPP in 2017. Proprietary IP is a significant draw – the Homecoming example is notable here – from which Gimlet is able to extract more value by adapting the podcast into TV or film.
This would mark the first time that Spotify has bought a content company, in a move that would be one of the largest ever acquisitions in the podcasting space, significantly bigger than iHeartMedia’s $55m acquisition of Stuff Media. It would also be an expansion of a direction that Spotify has been touting publicly for some time.
At CES last month, Spotify’s Head of Studios and Video, Courtney Holt, said in a panel discussion (reported by Gizmodo) that the company was actively looking to expand its podcasting. “We found podcasting to be a great complement to our music service”, Holt explained. “People who consume podcasts on Spotify are consuming more of Spotify, including music.”
In May 2018 the company signed a $1m deal with the comedian Amy Schumer to produce original content for the platform, which was a colossal deal at the time, but some commentators argued that the deal was not only an indication of slow moves in the space, it also highlighted a systemic struggle in the space: platform exclusivity.
The Amy Schumer podcast, despite investment from Spotify, was not in fact exclusive, meaning that the money also helped to benefit Apple, the Swedish company’s main podcasting rival.
Apple currently enjoys a reported 55% of the podcast market as of 2017, according to Bloomberg, despite only serving 20% of the smartphone market worldwide. Apple also seems to take its podcasting might as something of a given; it mentioned podcasts just once in its most recent earnings call, to say the call would be available to download on the platform. The opportunity for Spotify is therefore vast.
Compared to online video, the podcast ad market is minuscule: just $314m was spent on the medium in 2017, according to the IAB, relative to the almost $12bn spent on online video. Podcast spend in the US was, however, up a staggering 86% year-on-year. At a global level, the outlook is promising: PwC estimates that by 2020 global podcast adspend will clear $1bn.
However, the path of podcast production has not always been a smooth one. In September Panoply – a sister company of online magazine Slate – announced the cessation of content operations as it pivoted to focus on its Megaphone dynamic ad-insertion platform. In the same month, Buzzfeed also cut its in-house podcast production team, saying that it would move toward a TV-production model, hiring teams as needed. The two stories saw many commentators pose a question: has the podcast bubble burst?
A simple reading of the above would suggest so, but on closer inspection there are important considerations. Buzzfeed, as a content company, never full committed to the medium, for instance. And Panoply’s cuts should be considered in light of the broader company: Slate was taking over the content side, while its sister company would focus on building an ad product for the long-term.
Meanwhile, a glance across to China reveals the potential for subscription podcasts, which bodes well for Spotify’s business model. Through paid subscriptions, the Chinese podcast space is 23x more valuable than the US: it is worth $7.3 billion. However, it is worth noting that this podcast industry is education over entertainment focused.
Sources that spoke to Recode’s Peter Kafka have reported that the company is in talks to acquire the Brooklyn-based startup, Gimlet, which is known for producing several popular shows including New York Magazine’s The Cut on Tuesdays, the internet-focused podcast Reply All, and the narrative podcast Homecoming, which became an Amazon Prime TV series.
In addition, the startup’s branded arm, Gimlet Creative, has produced content for the auto company Ford, insurer Hiscox, and Spotify itself.
According to the Hollywood Reporter, which spoke to multiple sources independently, Gimlet had already drawn $30m in venture capital from investors including WPP in 2017. Proprietary IP is a significant draw – the Homecoming example is notable here – from which Gimlet is able to extract more value by adapting the podcast into TV or film.
This would mark the first time that Spotify has bought a content company, in a move that would be one of the largest ever acquisitions in the podcasting space, significantly bigger than iHeartMedia’s $55m acquisition of Stuff Media. It would also be an expansion of a direction that Spotify has been touting publicly for some time.
At CES last month, Spotify’s Head of Studios and Video, Courtney Holt, said in a panel discussion (reported by Gizmodo) that the company was actively looking to expand its podcasting. “We found podcasting to be a great complement to our music service”, Holt explained. “People who consume podcasts on Spotify are consuming more of Spotify, including music.”
In May 2018 the company signed a $1m deal with the comedian Amy Schumer to produce original content for the platform, which was a colossal deal at the time, but some commentators argued that the deal was not only an indication of slow moves in the space, it also highlighted a systemic struggle in the space: platform exclusivity.
The Amy Schumer podcast, despite investment from Spotify, was not in fact exclusive, meaning that the money also helped to benefit Apple, the Swedish company’s main podcasting rival.
Apple currently enjoys a reported 55% of the podcast market as of 2017, according to Bloomberg, despite only serving 20% of the smartphone market worldwide. Apple also seems to take its podcasting might as something of a given; it mentioned podcasts just once in its most recent earnings call, to say the call would be available to download on the platform. The opportunity for Spotify is therefore vast.
Compared to online video, the podcast ad market is minuscule: just $314m was spent on the medium in 2017, according to the IAB, relative to the almost $12bn spent on online video. Podcast spend in the US was, however, up a staggering 86% year-on-year. At a global level, the outlook is promising: PwC estimates that by 2020 global podcast adspend will clear $1bn.
However, the path of podcast production has not always been a smooth one. In September Panoply – a sister company of online magazine Slate – announced the cessation of content operations as it pivoted to focus on its Megaphone dynamic ad-insertion platform. In the same month, Buzzfeed also cut its in-house podcast production team, saying that it would move toward a TV-production model, hiring teams as needed. The two stories saw many commentators pose a question: has the podcast bubble burst?
A simple reading of the above would suggest so, but on closer inspection there are important considerations. Buzzfeed, as a content company, never full committed to the medium, for instance. And Panoply’s cuts should be considered in light of the broader company: Slate was taking over the content side, while its sister company would focus on building an ad product for the long-term.
Meanwhile, a glance across to China reveals the potential for subscription podcasts, which bodes well for Spotify’s business model. Through paid subscriptions, the Chinese podcast space is 23x more valuable than the US: it is worth $7.3 billion. However, it is worth noting that this podcast industry is education over entertainment focused.
Sourced from Recode, Gimlet, Hollywood Reporter, Wall Street Journal, Gizmodo, Fast Company, Bloomberg, Seeking Alpha, IAB, Strategy+Business (PWC data), HotPod News, The Hustle
