Sales of podcasting amounted to $ 314 million in 2017, according to a third-party survey that was released last summer. It is a large number for what is traditionally considered a niche and difficult to make money with medium, but still pales in comparison to the extra $ 400- $ 500 million that Spotify is willing to spend on space this year. to spend.
Two major acquisitions announced at the beginning of this year already included a huge dedication to the category. The purchase of Gimlet would amount to almost half that number, at $ 230 million. Although no number has been revealed for the purchase of Anchor, Spotify undoubtedly paid a considerable amount for the buzzy creation / distribution platform, which has raised $ 14.4 million so far.
What makes Spotify so confident that it will be able to recoup such a huge investment? To hear the company talk about it, the service fell back a bit in the entire podcasting phenomenon. For one of the world's largest audio platforms, Spotify was remarkably late in the game. Podcasting goes back at least to 2000 and wins the popular momentum around 2004. A year later, Apple started supporting the technology with iTunes 4.9.
After a long beta period, Spotify opened its program for podcasts in October last year for everyone. Now that Spotify is struggling to stay ahead of the upcoming growth of Apple Music, the company is now suddenly all-in podcasting.
In an interview with TechCrunch, Chief R & D employee at Spotify, Gustav Söderström, admits that the company did not deliver particularly good work for offering podcasting content. "The user experience was very bad," he says. "There was not a 15-second skip, but we noticed that many users listened to podcasts, it was a bit unexpected and we did not really understand why, and it turned out that people would love to have podcasts in Spotify with their music. looks, that is not surprising. "
What Spotify discovered was what many undoubtedly already suspected: many users do not necessarily need or want extra applications for all their different audio types. Even more relevant, Spotify has bleached out in one important place where many other podcasting platforms have failed: discovery. It has been an important piece in the growth of the company as the leading music streaming service and could help to solve one of the biggest pain points of podcasting for most users.
Matt Hartman, partner at Betaworks – an early investor in both Gimlet and Anchor – says that the huge acquisitions can help signal the beginning of a new wave of podcasting growth.
"This feels like a turning point for a third wave," says Hartman. "Discovery is a big part of the structural problems that have been with podcasting in the past and with audio in general, and on the music side Spotify has a specific solution: between discovery and generating revenue, I think that's where it is. starting from niche to mainstream. "
The same company that issued podcasting revenue for 2017 at $ 314 million predicts that the number next year will be $ 659 million, an increase of 110 percent. That is a healthy bump, but still a way to bring Spotify's investment back into a category that is currently being shared among countless different players – including, in particular, Apple, whose iPod gave the medium its name.
Eventually Spotify will generate revenue in the same way with podcasts, through subscriptions and advertising revenues. In the short term Spotify will allow both Gimlet and Anchor to work as they are. Gimlet in particular has shown that he can make a fist. In addition to raising $ 28.5 million, the company has devoted a great deal of its activities to creating sponsored content – using the enormous resources to create custom podcasts for brands that want to pay a nice penny.
When I spoke to the founders of Gimlet after the last big round, they were happy to discuss what kind of intellectual property machine has become, now they already have shows like Alex, Inc. and Homecoming to ABC and Amazon have licensed. But construction companies and quality content takes time. The purchase of it, however, just costs money, but in this case it is a lot. Spotify was too late with the draw but still hopes to climb quickly. So it bought one of the best players in premium podcasting.
"The question is how much you want to invest and only history determines whether this is true or not," says Söderström. "We think this is the right time to invest in. We could only have continued, but we think this is a great acceleration of the strategy we already had […] This was a great opportunity for us to accelerate the amount of talent we have at Spotify. "
Spotify has long provided exclusive content from Gimlet and other podcasting studios. It says that this will continue to happen here, while the majority of shows are available on all platforms. Idem for shows made with Anchor, which provides a simple method to push different services – the company recently claimed that it powered about 40 percent of the new podcasts.
Even if these acquisitions ultimately have a fiscal significance for Spotify, what does this "third wave" of podcasting ultimately mean for creators? The great promise of podcasting has always been a kind of democratization of the content. Anyone with a computer and a microphone can create a podcast. But if the early days of the world wide web have taught us something, it is that all things in the direction of the company tend to be in a capitalist society.
Anchor, a courageous start-up from New York, offers a welcome change, so novice podcasters have the tools to easily build podcasts out of the box. Spotify tells me that the company will keep Anchor's branding and products around as consumer-oriented offers to help users on board (it would not offer the same promise for the Gimlet brand). More recently, Anchor has also worked to make advertising sales more accessible for beginning podcasters.
How that all trickles down to content creators, remains to be seen. Music streaming such as Spotify and Apple Music are notoriously greedy when it comes to actually paying out musicians. And premium content, the kind that Spotify was looking for in its Gimlet purchase, costs time and money, both things that are more difficult and difficult to obtain in this digital age.
Hartman disputes the music equation and notes that podcasting is a burgeoning field without the same kind of precedent for generating revenue. "Podcasting was not this huge industry that was disrupted," he says. "It is an industry that finds its way and grows, and creators are going to try to find podcasting a new way to connect with target groups."