Brief:
- Streaming music platform Spotify plans to buy startup podcast network Gimlet Media for more than $200 million, Recode reported, citing unnamed sources. The deal would be Spotify's first acquisition of a content company and mark a bigger entry into the growing podcasting market.
- Gimlet Media produces shows such as Reply All about the internet and culture, and branded content like The Secret to Victory podcast for Gatorade. Alex Blumberg, a former producer for weekly radio program "This American Life," and podcast producer Matthew Lieber founded Gimlet Media in 2014.
- Spotify's subscription revenue grew 31% to 1.21 billion euros in Q3 2018 from a year earlier, as paid subscribers rose 40% to 87 million, the company reported in November. Its total user base rose 28% to 191 million during the period. Spotify will report Q4 2018 results on Feb. 6.
Insight:
Spotify has worked to diversify its content beyond music to include podcasts and videos. An acquisition of Gimlet Media would give the company a stronger foothold in the relatively nascent podcasting market. Gimlet raised $15 million in 2017 in a funding round that valued the startup at about $70 million, Recode said in a separate report.
Spotify's move to get deeper into podcast content would likely help the company boost the value of its subscriptions amid growing competition from Apple Music, which last week said it reached 50 million paid subscribers. Apple first launched podcasts on iTunes in 2005 and is said to be the current market leader for the streaming audio format. Apple Podcasts had delivered more than 50 billion episode downloads and streams by March 2018, Fast Company reported. At that time, Apple had more than 525,000 active shows and more than 18.5 million episodes available in around 100 languages, positioning it to be a global leader in the podcast space.
The popularity of smartphones underpins the streaming industry, including music, video and podcasts, with 76% of podcasting listening happening on a mobile device, according to an Edison Research survey. About 44% of U.S. consumers ages 12 and older have listened to a podcast, translating into an estimate audience of 124 million, the survey found. U.S. podcast ad revenue is forecast to surge surge 111% to $659 million by 2020 from $313.9 million in 2017, according to the IAB/PwC Podcast Advertising Revenue Study. Branded content grew from 1.5% of the podcast ad market in 2016 to 6.5% by 2017, hinting at a growing opportunity for marketers to reach an extended audience base. The most popular category of podcast advertising was direct response (64% of spending), followed by brand awareness (29%), the study found.
