Spotify is making a big bet on podcasts. The music-streaming giant reportedly paid nearly $340 million to buy a pair of podcast startups – Gimlet Media and Anchor. The acquisitions are a part of a $500 million investment that Spotify plans to spend on podcasting alone in 2019.
What’s driving Spotify’s investment in audio? As the landscape of streaming audio has gotten more competitive, Spotify is trying to stay ahead of its rival, Apple Music. Spotify’s investment in Gimlet – a leading creator of compelling audio content – was reportedly worth $230 million, alone.
There are three things driving Spotify’s investment in podcasts:
1) Content is still king: acquiring Gimlet provides Spotify a content engine, some of which may be available exclusively on Spotify.
2) Spotify’s Discovery feature enables people to find new audio content (including podcasts), which is something Spotify does uniquely well.
3) People want all of their audio content in one place and the investment in podcasts makes that possible.
You may be muttering to yourself, “We should start a podcast.” Not so fast. Just because you set up a mic and talk, doesn’t mean the content is valuable to listeners. The podcast world is now filled with unedited conversations featuring dudes bantering with their friends (a show where they watch West Wing and eat wings, for example).
Regardless of whether Spotify’s big bet pays off over the long run, there’s an opportunity here. Podcast revenue hit $314 million in 2017 and is expected to hit $659 million by 2020, according to a report by PwC and IAB. True, the market is niche. But brands can engage with specific audiences by creating engaging, well-produced audio content that is valuable to listeners because it has a bit of intrigue. As the market for podcasts grows, so does the ways companies can connect directly to their audiences in compelling ways.
Blaine Lay is a brand manager at Joe Smith, the brand consultancy of Padilla.