CEO Daniel Ek says he expects podcasts to make up 20 percent of listening on Spotify in the near future
Spotify is placing a big bet on podcasts being a major part of its future, with the streaming giant agreeing to buy podcast producers Gimlet and Anchor, the company announced Wednesday. The streaming service also detailed plans to spend up to $500 million more this year on bolstering its podcast blitz.
“These acquisitions will meaningfully accelerate our path to becoming the world’s leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience as well as enhance the Spotify brand,” Spotify chief Daniel Ek said in a statement.
Terms of the deals were not disclosed, but The Wall Street Journal reported its Gimlet buyout would cost $200 million last Friday, making it the biggest podcast acquisition ever.
The Brooklyn-based Gimlet is the home to “Homecoming,” which was adapted into an Amazon TV series starring Julia Roberts. Other popular podcasts there include “Reply All” and “Crimetown.”
Anchor, meanwhile, provides tools for podcast creators to distribute their shows. Ek, in a separate blog post on Wednesday, said the company had helped create 15 billion hours of content by the end of Q4 2018.
Ek added the company anticipates “over time, more than 20 percent of all Spotify listening will be non-music content.”
The acquisition news came on the same day Spotify released its fourth quarter earnings, with the company turning a surprise profit, despite slightly missing analyst revenue projections. Spotify reported its first quarterly profit of €94 million, or about $107 million. Revenue of $1.71 billion narrowly lagged behind analyst estimates of $1.72 billion, while its 44 cents earnings per share easily topped estimates of a 22 cents loss per share.
Spotify added 8 million paying customers during the quarter — a 36 percent year-over-year increase — bringing it to 96 million paying customers overall. Apple, for comparison, has about 50 million customers paying for Apple Music. Spotify, across paying customers and those that listen to ads, hit 207 million accounts in total.
Spotify shares dropped 4.5 percent in early-morning trading, hitting $133 per share.