Spotify enters the podcast major league, acquiring Gimlet and Anchor

Spotify acquires New York podcasting companies Gimlet and Anchor

Spotify buys podcast firms in bid to become world’s largest audio platform

The podcast firms probably won't be Spotify's only acquisitions this year, either - it says it has its sights set on a potential total acquisition spend of $400-$500M in 2019.

Spotify CEO and Founder Daniel Ek called the acquisitions "an opportunity that will allow us to reach beyond music to engage users in entirely new ways".

Today, Spotify has confirmed that it's not only in definitive agreements to buy Gimlet but also podcast creation and publishing firm Anchor.

The value of the Gimlet purchase was put at $230 million by Recode, a technology website.

Nick Quah of Hot Pod, a newsletter that covers the podcast industry, said in an email to subscribers that the deals help Spotify branch out from music and differentiate its product.

One interesting aspect of these acquisitions is whether the podcasts will become Spotify exclusives, or whether they'll be able to be distributed elsewhere too.

Based on radio industry data, we believe it is a safe assumption that, over time, more than 20% of all Spotify listening will be non-music content.

The growth in podcasting provides opportunity for brands through advertising (though some have been skittish about podcast spots) and sponsored content. Gimlet produces quite a bit of branded content, and Anchor's tools may make it easy for brands to make their own.

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Gimlet spokesman Kevin Turner said the company's 120 employees would be joining Spotify.

"While podcasting is still a relatively small business today, I see incredible growth potential in this space", Ek said on a call with investors Wednesday morning.

While clearly telling of how serious Spotify is about the role of podcasts in its future model, the acquisitions don't mark the beginning of Spotify's venture into podcasts.

Gimlet, based in NY, has produced several popular podcasts, including "Homecoming", a drama about a rehabilitation program for former military members that was made into an Amazon show starring Julia Roberts.

Spotify is splashing out millions of dollars as it tries to move beyond music into the growing podcast market.

Anchor, also based in NY, is a platform that provides tools for podcasters to monetize and distribute their programs.

The acquisitions may also help reduce the money that Spotify pays to labels by cutting its music-streaming fees, some analysts said. Gimlet is one of the best content creators in the world, with unique, celebrated podcast shows like Homecoming, which was recently adapted into a critically acclaimed show on Amazon Prime, and the internet culture hit Reply All.

Spotify posted fourth-quarter operating profit of €94m compared with a mean forecast for a loss of €16m in a Reuters poll of analysts and a year-ago loss of €87m.

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