Spotify has announced its acquiring podcast companies Gimlet Media and Anchor as part an aggressive push to position the streaming service as both the premier producer of podcasts and leading platform for podcast creators.
Gimlet, is a Brooklyn-based independent producer of podcast content like series StartUp, Reply All and Homecoming, founded in 2014. The company includes in-house ad agency Gimlet Creative which produces official podcasts for brands like eBay, Tinder, Gatorade and Mastercard. Gimlet Pictures, the company’s film and television production arm was formed last year and is focused on developing its content for the big and small screen. It’s best-known project to date is the Homecoming series for Amazon, based on the podcast and starring Julia Roberts.
Anchor is a free, end-to-end podcast creation, publishing and monetization platform, offering unlimited content hosting and distribution. Based in New York City, it was founded in 2015 and powers more than 40 per cent of new podcasts globally.
“These acquisitions will meaningfully accelerate our path to becoming the world’s leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience as well as enhance the Spotify brand,” said Daniel Ek, Spotify co-founder and CEO, in a press release. “We are proud to welcome Gimlet and Anchor to the Spotify team, and we look forward to what we will accomplish together.”
Anchor CEO Michael Mignano highlighted the opportunity to tap into Spotify’s massive user base, which has grown to over 200 million users in 78 markets, including over 96 million Spotify Premium subscribers.
“We are incredibly excited to introduce Anchor’s industry-best podcasting tools to Spotify’s massive user base as we continue our journey, now with even greater resources,” said Mignano. “We look forward to continuing to empower creators all over the world to build an audience, generate revenue, and most importantly, have their voices heard.”
“Spotify is poised to become the largest audio platform in the world and we are excited for Gimlet’s award-winning podcasts to connect with new audiences around the world,” said Alex Blumberg and Matt Lieber, co-founders of Gimlet Media. “The medium of audio is uniquely great at creating human connection and understanding. We are thrilled that Gimlet is joining Spotify to do that at a global scale, on the platform and beyond.”
The transactions, the terms of which have not been disclosed, are expected to close in the first quarter of 2019.
“Audio-First” strategy
In its most recent earnings announcement, Spotify indicated it plans to spend up to $500 million on acquisitions in 2019, with its CEO affirming the streaming giant’s mission to expand from just being about music to being the go-to destination for all audio.
In a blog post Wednesday, Daniel Ek expanded on the company’s “Audio-First” strategy, writing that podcast listeners spend twice as much time on the platform than other users.
“Our podcast users spend almost twice the time on the platform, and spend even more time listening to music. We have also seen that by having unique programming, people who previously thought Spotify was not right for them will give it a try,” wrote Ek.
“Based on radio industry data, we believe it is a safe assumption that, over time, more than 20% of all Spotify listening will be non-music content. This means the potential to grow much faster with more original programming — and to differentiate Spotify by playing to what makes us unique — all with the goal of becoming the world’s number one audio platform.”
Ek writes that at the heart of the Audio-First strategy is a desire to maintain Spotify’s position at the centre of the global audio economy.
“As much as the next decade will be defined by a more personalized, immersive audio experience, it also will be defined by fierce competition. We know we aren’t the only company thinking about or preparing for this future…with the addition of Gimlet and Anchor, Spotify will now become the leading global podcast publisher with more shows than any other company. These levers of growth have the potential to double the size of our industry. And no other global company is as focused on this one thing — audio — as Spotify.”
It’s that fierce competition that has Spotify projecting an annual loss for 2019. The company’s Q4 2018 earnings included its first-ever operating profit of $107 million, compared to one year ago when it lost almost as much in the same quarter. Overall, revenue grew to $1.7 billion for the fourth quarter, up 30 per cent year-over-year. On an annual basis, the company lost $89 million in 2018, compared to $1.4 billion in 2017.
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