Spotify buys podcast company Megaphone for $ 235 million
Faced with the rise of services such as Amazon Music, Pandora or Apple Music, Spotify is pursuing its strategy of investing in the world of podcasts with the purchase of the podcast hosting company Megaphone for an amount of 235 million dollars. Megaphone notably offers hosting and distribution tools for podcast publishers. The companies declined to disclose whether the transaction was in cash, stocks, or a mixture of the two.
Exclusive advertising targeting
Megaphone has more than 5,500 shows hosted on its platform produced by major podcast publishers such as Slate, iHeartMedia, Disney and Vox Media. This acquisition means that all podcasts currently hosted on Megaphone will have access to Spotify’s proprietary ad insertion technology, called Streaming Ad Insertion.
The advertisements are then targeted according to the listener. Spotify is the only company to offer ads that are inserted in real time instead of being exchanged before listening. Spotify’s system makes real-time decisions about which ads a specific listener should hear based on their data and also based on the goals of different ad offerings. This is the first time that Spotify will open this tool beyond its own original and exclusive podcasts.
An ongoing diversification strategy
Before Megaphone, the streaming platform had already got its hands on various companies around the podcast, including Gimlet Media for $ 200 million, Parcast for $ 56 million, The Ringer for $ 196 million, Anchor for $ 140 million and over $ 100 million for exclusive distribution and advertising sales related to Joe Rogan’s podcasts.
With this new acquisition, Spotify now has a complete podcasting ecosystem: a network of exclusive shows, a podcast player, podcast creation software, a hosting company and its own ad sales team.
Spotify now offers more than 700,000 podcasts and 50 million music tracks. The company has 271 million users, including 124 million subscribers to a paid offer. Since its launch, the Swedish company has donated more than $ 15 billion to rights holders. In 2019, despite a turnover of 6.7 billion euros, an increase of 28%, Spotify recorded another 186 million euros in losses.