The media sphere burbled over the weekend with late-Friday reporting that Spotify is “in talks” to acquire podcast powerhouse Gimlet Media, with a price tag above $200-million. If this happens, it will be the richest institutional dive into podcasting yet. (See below for other acquisitions since 2015.)
Gimlet is the producer of 25-podcast network, whose shows are downloaded 12-million times a month, according to the company website. Its two best-known podcasts are Reply All and StartUp. The Brooklyn-based, 100+ employee company was founded, and is run by, Alex Blumberg. After a 2017 fundraising, Gimlet is reported to be valued at $70-million. Anonymously sourced reporting from Nick Quah’s Hot Pod puts the Spotify talks at $230-million.
Spotify is already involved waist-deep in podcasting, with most punditry noting that expanding beyond the profit-crushing economics of licensed music streaming is crucial to the company’s success. Spotify serves about 200-million users, half of whom are monthly subscribers to its premium platform. Podcasts are available to all app users. As James Cridland notes in today’s Podnews, Spotify is measured to be the second-highest podcast consumption platform, after Apple Podcasts, by two large hosting companies Blubrry and Libsyn.
Why would Spotify acquire a podcast production company when it already has access to Gimlet shows via podcasting’s open distribution framework? (StartUp and Reply All are easily found in the Spotify app.) The quickest answer is that the streaming company wants to completely own Gimlet’s revenue chain. One way way to accomplish that would be to put Gimlet’s podcasts behind the Spotify Premium wall, as a lure to acquire new members. Scale that strategy out and we might see Spotify aspiring to play a Netflix-type role in podcasting — an experiment already in progress with the $1M development deal granted to Amy Schumer last year.
But even without limiting the distribution that way, Spotify could be placing a standard M&A bet on Gimlet’s production and monetization capability. Is the reported $230-million price point a plausible valuation? “Plausible” can have many scales in the venture and acquisition worlds. for reference, here are several significant investments and acquisitions in the podcast space since mid-2015:
Scripps buys Midroll Media, July 2015 (full acquisition, $50M)
Hubbard Radio partial buy of PodcastOne, August 2015 (30% acquisition; $$ undisclosed)
Scripps buys Stitcher from Deezer, June 2016 (full acquisition, $4.5M). Stitcher was bundled into Midroll, but last year the positioning switched, with Midroll as the B2B component of the front-facing Stitcher consumer brand.
Entercom partial buy of DGital Media, August 2017 (45% acquisition with options, $10M) DGital Media rebranded as Cadence13. https://rainnews.com/entercom-acquires-45-of-dgital-media-options-the-rest-we-speak-with-dgital-execs/
NPR + WNYC + WBEZ + This American Life buys Pocket Casts, May 2018 (full acquisition, $$ undisclosed)
iHeartMedia buys Stuff Media, September 2018 (full acquisition; $55M reported)