Spotify is betting big on the future of podcasting

It is Wednesday, February 6, 2019. In case you forgot.
hearing voices

Spotify gobbles up podcast company Gimlet

On Friday, it was reported that music streaming giant Spotify was in advanced talks to acquire Gimlet Media for $230 million.  

Gimlet Media is the company behind some of the most popular podcasts, including Reply All, Homecoming, and Conviction.

Gimlet was founded by Alex Blumberg, who produced one of the first breakout podcasts This American Life (he also co-founded NPR’s Planet Money), and Matthew Lieber, a former WNYC radio producer and BCG consultant.

In a very meta fashion, the two documented the start of Gimlet in the first season of the Gimlet-produced podcast Startup (which we highly recommend).

Gimlet was one of the first and most valuable venture-backed podcast companies, raising more than $20 million from investors since it was founded in 2015.  

Podcast Stuff You Should Know

Although podcasting has gained a lot of traction in recent years, it is still a relatively small business in the world of digital advertising. In 2017, podcast ad revenue was just over $300 million, while digital video ads racked up nearly $12 billion.

Gimlet's acquisition is by far the largest podcast company purchase ever (the previous high was $55 million in 2015). With podcast ad revenue expected to double by 2020, Spotify is hoping Gimlet will give them an early foothold in the industry.

How Spotify Wants to Build This

It’s no secret that Spotify would love a world without record labels, where artists upload their music directly to the platform and Spotify handles the rest. The company barely nets a profit due to the billions of dollars it shells out in licensing fees to labels every year.

Spotify is experimenting with ways around the labels but completely removing them from the picture will take a long time -- if it ever happens.

However, podcasting is a very different industry. Without the old guard of labels owning a majority of the content, Spotify can make itself the go-to place for podcast creators to host and distribute their shows.

Spotify’s acquisition of Gimlet shows that it betting big on the future of podcasting.
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Brendan Uyeshiro
Brendan Uyeshiro