On Wednesday, Spotify announced that it acquires two podcast technology companies, Chartable and Podsights. The company did not share the terms of the purchase. Both deals are likely to be less than $ 50 million as Spotify is a public company and will have to file a pre-merger notice for anyone transaction north of that number.
These transactions, as well as other major strides made by Spotify over the past few years, show that the company doesn’t want to just act as a distributor and publisher of audio content, but wants to fully own the entire podcast supply chain. Opportunity for Spotify? Advertising revenue.
Both Chartable and Podsights offer an insight that delves into the effectiveness of podcast advertising and engaging listeners. Chartable’s clients include leading podcast publishers, including Vox Media, iHeartMedia, Wondery and Cadance13. The company’s SmartAds technology allows advertisers to measure the effectiveness of podcast advertising, which has traditionally been very analogous in terms of collecting data from listeners. Podsights says it helps “combine downloads with site visits via home IP, graphics between devices, custom URLs and discount codes.”
When broadcasting music, Spotify pays rights holders about two-thirds of every dollar raised. By comparison, most podcasts hosted on Spotify are funded directly by the company, used by podcast publishers to expand coverage, or downloaded through the Anchor Spotify platform. While Spotify Premium offers listening to music without ads, Premium members can still see ads while listening to podcasts on the platform.
Spotify distributes exclusive content for the platform. $ 200 million was spent on it obtain an exclusive license on the podium “Joe Rogan Experience” and another $ 60 million for the rights to “Call Her Daddy”. This came after the company acquired podcast publishers Gimlet Media, Parcast and The Ringer.
While having exclusive content for the platform is important, the gains that are likely to help Spotify become a profitable company lie on podcast technology platforms that help new creators launch podcasts on Spotify, analyze audiences and track marketing performance.
Spotify acquired Megaphone, a podcast advertising platform, for $ 235 million in November 2020. The company also acquired Anchor in 2019 for $ 154 million, as well as Whooshkaa in December 2021 and Betty Labs in March 2021.
Ashley Carman, a senior reporter for The Verge and author of the Hot Pods newsletter, told Jason Kalakanis and Molly Wood on Podcast “This Week in Startups”. that these steps should concern another power of advertising: YouTube.
“All of this acquisition is actually due to competition from YouTube,” she said. “Spotify wants to compete with YouTube, and YouTube is a platform for creators. That’s where people go to upload their videos. ”
Popular podcasts that started with audio eventually switched to video versions of their podcasts. As a result, YouTube has become a de facto home for video podcasts with its long-running download restrictions. This is one of the reasons for the success of the “The Rogan Experience” podcast, which regularly garnered millions of views per episode when it was available on YouTube.
Spotify is in the midst of a mass distribution of video podcasts, which Kalakanis said his podcasts “This Week’s Startups” and “All in” are on a trial basis. Pocket said Spotify is trying to recruit 50 million creators to the platform amid their push for video podcasts.
“They have a technology creator from Anchor. They’re trying to run software like YouTube with AdSense, ”she said.“ So more people can make money on the platform. And that’s what this purchase is about. It’s trying to make sure they know that this ad works, so they can help smaller creators monetize, so these smaller creators come to the platform and use it, perhaps instead of YouTube. “
How does YouTube react? In October 2021, YouTube starred in a podcast by Kay Chuck, who served as director of digital media and corporate partnerships. The company has also started free background music listening in its YouTube Music app, starting with Canada, which many industry analysts consider the first step in offering to listen to only audio podcasts on the platform.