Spotify is making a big expansion and betting heavily on podcast companies. From the looks of it, this could see the brand, known more for music streaming, adopt a new strategy to develop more exclusive and original content and break free from the constraints of major music labels.
As per our reporting on Monday Is comes as no surprise that the company has bought Gimlet Media, the New York-based podcast producer that brought us podcast-heads beloved shows like Reply All and Crimetown. What's more surprising is that fact that Spotify is also acquiring Anchor, a platform to help budding podcasters record, publish and manage their shows.
This confirms our suspicions that podcasts could be a good way for Spotify to develop original and exclusive audio content than it can control itself, and escape the music industry chokehold. "These companies are best-in-class and together we will offer differentiated and original content," Spotify CEO Daniel EK said in a press release.
Spotify has had a good Q4 last year, increasing Premium subscribers from 87 million to 96 million, with ad-supported listeners also rising from 109 million to 116 million. Many of these new users came from the mid-November expansion into new regions, including African and Middle Eastern countries. This helped the company finally turn a healthy profit of €94 million (about $107 million). After spending years taking heavy losses, it looks like Spotify is ready to reap the gains and grow. And where to grow? Podcasts.
Spotify already offers podcasts and original shows, but as we speculated previously, leaning into podcasts would be a good investment for the company, since this would allow it to avoid the licensing fees charged by record labels. By offering a wide library of exclusive and original content, Spotify could effectively become a Netflix for podcasts.
"Growing podcast listening on Spotify is an important strategy for driving top of funnel growth, increased user engagement, lower churn, faster revenue growth, and higher margins," the company said in the earnings report. "We intend to lean into this strategy in 2019, both to acquire exclusive content and to increase investment in the production of content in-house."
Gimlet and Anchor are just the beginning. According to the earnings report, Spotify has earmarked between $400 million and $500 million to spend on "multiple acquisitions" this year. If Spotify is smart with the shows it develops, it could eclipse the popular podcast apps and draw paying users by offering a library of content you can't find anywhere else. Anchor's tools to enable content creators could also see the company build a stable of self-made stars like YouTube does, though it remains to be seen just how attractive such a partnership would be for individual podcasters.
Do you listen to podcasts? What do you think of Spotify's plans?