Brief:

• Spotify has reached an agreement to acquire the storytelling-focused podcast studio Parcast, the streaming platform announced today in a news release. Financial terms of the deal were not disclosed.
• Founded three years ago, Parcast currently runs 18 narrative series in genres like true crime, mystery and history. Titles include "Serial Killers," "Unsolved Murders" and "Cults and Conspiracy Theories," along with its first fictional offering, "Mind's Eye." The studio additionally plans to debut more than 20 new shows in 2019, per the release.
• The deal is expected to close in Q2 this year. Dawn Ostroff, Spotify's chief content officer, said in a statement that crime and mystery podcasts are a "top genre" among the platform's listeners and that it looks forward to further supporting Parcast's growth.

Insight:

The Parcast news builds on Spotify's momentum in the podcasting space, closely following the company's back-to-back acquisitions of the network Gimlet Media and production house Anchor for a total of $337 million in February. Podcasts could be a big listener draw for Spotify, which is mostly known for music streaming, in its battle to fend off competitors like Apple Music and Pandora and gas up advertising revenue as it closes in on the one-year mark of being a publicly-traded company.

Executives have previously said that Spotify has become the second-largest podcasting platform behind Apple and that they expect 20% of all streaming will eventually be for non-music content. Buying Parcast shows that Spotify is potentially going more niche in its acquisition targets to meet audience demand for certain genres, in this case true crime and mystery-related narrative series.

The deal is another sign that big-name platforms and marketers, including McDonald's, Nike and BMW, are becoming more interested in podcasts as an ad medium, despite the audio format having now existed for nearly two decades. While podcasts are only going more mainstream from a consumer standpoint — the number of programs available on Apple's service has nearly doubled from 2016 figures, according to industry analyses — making them profitable has remained an issue due to the low amount of revenue provided from advertising, Bloomberg reported earlier this month.

Some of Spotify's previous purchases have also encountered potentially unforeseen developments in the transitional period. Staff at Gimlet, who number around 80, are attempting to unionize following the acquisition. However, Gimlet's leadership this week rejected calls to voluntarily recognize the union and has brought on legal counsel to deal with the matter, according to Women's Wear Daily. Writers Guild of America, East, which is leading the unionization push at the podcast network, posted on Twitter that Gimlet's lawyer responded with a "surprisingly aggressive counter proposal" to its demands.

The back-and-forth signals that there will be some rocky roads ahead as the podcasting market grows its listenership but consolidates behind the scenes, with more smaller companies and startups being acquired by large digital platforms and media owners. It wouldn't be surprising if activity continues to accelerate in the coming months, as podcasting ad revenue is projected to more than double to $659 million by 2020, according to the Interactive Advertising Bureau and PwC.