The Great Consolidation: Spotify in talks to acquire Gimlet

February 4, 2019 4:00 pm

News broke on Friday evening that Spotify was in talks to acquire podcast network Gimlet for a reported $200 million, or maybe $230 million. The podcast studio helmed by This American Life alum, Alex Blumberg, is best known for their original podcasts like Reply All, Heavyweight, and StartUp. They’ve also recently been at the forefront of the podcast adaptation trend, with their podcast, Homecoming, premiering as a show on Amazon and StartUp converted to a sitcom in 2018.

Spotify, for their part, has been aggressive over the last 12 or so months in expanding their podcast strategy — both with original podcasts and their streaming platform. They brought in indie-favorite music podcast, Dissect, then offered Amy Schumer a reported $1 million to create a podcast, and later brought in politics and sports personality Jemele Hill to create an original podcast. They’ve added these podcasts in tandem with opening the doors for podcasters to submit their feeds and be listed on the platform.

Their added focus on podcasts has largely been met favorably by the podcasting community who are mostly tired of Apple’s near-monopoly and lack of innovation on their app.

Whether or not this is good for podcasting, I’ll let my friends Ely and Eric discuss. My take: it doesn’t matter if it’s good or bad for podcasting, it’s inevitable. The great consolidation.

State of the Podcast Industry

I segment the podcast industry into three main buckets: creators, distributors, advertisers. Though these are intended as buckets, some companies blend the lines between several segments.

Creators: Podcast networks and a large swath of independent whose primary goal is to create a compelling podcast.
Distributors: These are the companies responsible for the podcast going from creator to consumer. They’re separated into micro-segments, the streaming platforms and the hosting services.
Advertisers: These companies leverage and monetize the content.

The not-so-new trend has been either bundling solutions from all three buckets, like what Scripps has done by merging Earwolf, Stitcher, and Midroll into a consolidated podcast strategy. Other examples are distributors creating original content in an effort to commoditize their streaming platform — the aforementioned Spotify examples plus Stitcher’s Wolverine: The Long Night, and others.

The inevitability I mentioned at the top is consolidation among siloed solutions. iHeartMedia acquired Stuff Media (nee HowStuffWorks) in September for $55 million and I suspect this will be a common storyline over the next 18 months.

By owning the creation, distribution, and money associated with a given podcast or group of podcasts, a sole proprietor could theoretically operate more efficiently and increase their margins by cutting out the proverbial middle man.

What’s Next?

Spotify’s aggressive push into podcasting should raise eyes at the folks at both Apple and Google. Apple has been mostly complacent on their podcast strategy, only minimally innovating their app (allowed startups like Overcast and Pocket Casts to gain substantial followings), slow rolling their hyped analytics, and overall squandering their massive head start.

Google announced their podcasting strategy in 2018 which mostly came and went without any fanfare. Instead of a native app on every Android phone — the Apple method — they instead incorporated podcasts into their search on mobile. The experience has mostly been criticized by podcast fans or ignored by the general public.

As a larger player in the industry, Spotify is in the unique position to service both iOS and Android users and convert a portion of their massive pool of existing music listeners to become podcast fans. If they’re able to leverage Gimlet’s popularity and window exclusivity on new content, Spotify has a chance to convert even existing podcast fans who have already grown accustomed to another podcast app.