Wednesday, February 06, 2019

Spotify finally made a profit and spent big on its podcast future | Engadget

For more analysis, see The end of an era: Spotify buying Gimlet signals the start of something new in podcasting. Is that good or bad? | NiemanLab
"Spotify already offers podcasts and has been producing original shows for some time. The company isn't content with its offerings, however. In addition to Gimlet and Anchor, executives are hoping to spend between $400 million and $500 million "on multiple acquisitions" this year. "Growing podcast listening on Spotify is an important strategy for driving top of funnel growth, increased user engagement, lower churn, faster revenue growth, and higher margins," the company said in its earnings. "We intend to lean into this strategy in 2019, both to acquire exclusive content and to increase investment in the production of content in-house."

Spotify is taking the Netflix model, in short. As the company grows, it's inevitable that established record labels will start charging higher licensing fees. Podcasts, however, is something that Spotify can buy and own as exclusive content. If it green-lights the right shows, it could pull users away from third-party podcast apps and then slowly persuade them to take out a premium subscription. Anchor, too, gives Spotify the potential to rapidly build a YouTube-style distribution network. "Gimlet and Anchor will position us to become the leading platform for podcast creators around the world and the leading producer of podcasts," Ek hinted in a blog post."
Spotify finally made a profit and spent big on its podcast future | Engadget

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