Spotify buys Bill Simmons' The Ringer as podcast consumption soars

Brief:

Spotify entered a definitive agreement to acquire The Ringer, the publisher focused on a mix of sports and pop culture content, according to an announcement. Financial terms of the deal, which is expected to close this quarter, were not disclosed.
Founded by Bill Simmons in 2016, The Ringer produces a range of popular podcasts, including Simmons' own show, "The Rewatchables" and "The Ryen Russillo Podcast." With the acquisition, Spotify intends to deepen its monetization opportunities and user engagement while opening up new advertising formats only available via its platform to The Ringer.
The announcement arrives with Spotify's Q4 earnings report, where the audio streamer said that podcast consumption hours grew 200% year-over-year. There are now over 700,000 podcasts available to stream on Spotify.

Insight:

In acquiring The Ringer, Spotify notches another powerful publisher under its belt as the podcast market continues to rapidly expand and open up new revenue opportunities. Spotify initially focused on music streaming, but has pushed hard into podcasts in recent years and placed acquisitions at the center of its strategy in establishing a stronger presence in the space.

In its first significant podcast deal, the company last February bought Gimlet Media, the home of popular titles like "Homecoming" and "Reply All," for a reported $230 million. At the time, it also acquired the podcast production platform Anchor. One month later, it snapped up the narrative-focused podcast studio Parcast for $56 million.

Spotify's aggressive approach to podcast platform acquisitions appears to have paid off with a surge in listener engagement in 2019, per the Q4 earnings report. With that rise, Spotify has also built out advertising formats tailored to podcasts to attract more brands and better differentiate its products from rivals like Apple Music or Pandora, which are also working to carve out greater market share.

Last month, Spotify introduced a Streaming Ad Insertion (SAI) format that provides marketers data on ad impressions, ad frequency and reach and anonymized information about listeners' age, gender and device type. Test sponsor Puma claimed a 180% lift in ad recall from using the SAI technology around a show produced by Spotify Studios.

While The Ringer acquisition aligns with other Spotify deals such as Gimlet, there are a few key differences. The Ringer — a spiritual successor to Simmons' prior Grantland endeavor under ESPN — creates a range of content outside of podcasts, including written features and news.

The Ringer has 90 employees, who unionized in August and have previously expressed concerns over rumblings of a potential Spotify acquisition, which first surfaced online weeks ago, according to The Washington Post. Recode reporter Peter Kafka said Spotify plans to hire all of The Ringer's employees and allow the website to run as usual, per the Post.

"As we set out to expand our sports and entertainment offerings, we wanted a best-in-class editorial team," Spotify's Chief Content Officer Dawn Ostroff said in a press statement. "The Ringer's proven track record of creating distinctive cultural content as well as discovering and developing top tier talent will make them a formidable asset for Spotify."