Spotify is well on its way to becoming the Netflix of podcasting. They single-handedly propelled the business of podcasting into the big leagues this week. Spotify announced they are planning to spend a cool budget of $500,000,000 (That's 1/2 a billion!) on podcasting acquisitions. For starters, they purchased Gimlet Media, reportedly for some $230M, as well as the Anchor podcast platform for $60M.
From the Spotify perspective, I agree with the analysis of the Wall Street Journal and others: This model means a focus on premium content and acquiring exclusive podcasts only available on Spotify. I think this theory covers both Gimlet as well as Anchor acquisitions.
Of course there are more questions than answers at this point. So what follows is speculation:
Does Netflix of Podcasting Imply Exclusive Content?
I could see that if their strategy succeeds, exclusive versions of the best and most desirable podcasts may only be available on Spotify, driving new subscribers to their overall platform.
So yes, I anticipate that Gimlet Media will produce some bespoke content for Spotify.
But I also I think there are a lot of variations on how this could play out when it comes to exclusivity - for example offering ad supported versions of exclusive podcasts outside of Spotify, meaning iTunes and elsewhere.
The Future of Podcast Monetization?
Also, I would predict that podcast hosting, ad platforms, monetization and reimbursement models will be routed through Spotify. Could they be going for a model of reimbursing premium podcasters as they currently reimburse musicians?
This could mean a democratized monetization model for mid-level podcasts, with micro payments to podcasters that are not currently commanding enough downloads to easily run ads inside their shows. I see this as a positive alternative for podcasts that don’t have any monetization options outside of Patreon.
However, the emphasis being on MICRO-payments, as in “Podcasters, don’t quit your day job”.
Symbiotic or Competitive?
I am also wondering if this is symbiotic with Apple and iTunes, or competitive when it comes to discoverability?
Will Spotify finally be able to break up Apple’s quasi monopoly in the podcast discoverability space?
Just considering my own behavior: I happen to have a Spotify music account. I NEVER search for any music on iTunes anymore. I search in Spotify directly. So just imagine a future to where Spotify would be the first place to search for interesting podcast content to listen to.
Considering Anchor
If you want to be the Netflix of podcasting, you need content. Content you develop, or acquire. My understanding is that Anchor owns the podcast content hosted on their platform, and so I am assuming that with this acquisition Spotify will acquire direct ownership of a massive amount of transitioned podcasts, leaving them to be able to decide on monetization and subscription and discoverability models.
Considering Gimlet
From the Gimlet perspective, this is the best exit their investors could expect now or in the future. In my opinion, I think there may also be an opportunistic element for Alex Blumberg to get his life back and move forward in the best possible way.
I imagine him being able to move towards more fun and meaningful opportunities within Spotify. Gimlet with its storytelling chops should be the perfect podcast content strategists. I think Alex and his team could be focused on developing interesting content - rather than Gimlet being a money making entity beholden to investors.
One of the most compelling aspects of Startup as a podcast has been the intimacy of sharing of his journey, including the stress on work life balance. Listening to the last few episodes of that, combined with the show WithoutFail, it seems like the stress levels have not lessened, so with this exit perhaps the pressure from keeping investors happy will be eased.
More acquisitions coming?
I am again speculating for now, and I think the picture will become clearer over time.
But yes, Spotify's CEO Daniel Ek's $500 million budget leaves room for additional deals. In addition to new acquisitions of podcast networks and content I would not be surprised if Spotify will also start to acquire podcast specific technology and ad platform companies. Not naming any names at this point. And rumors are afloat that Netflix might acquire all of Spotify.
So as a podcast producer, how do I feel about this all?
I think any movement within the podcasting industry that rivals Apple, or makes them move a bit faster on the innovation front, is a good thing.
