Spotify Scoops Up Podcast Ad Platform Megaphone in $235M Acquisition

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Spotify has made its intentions in the podcasting world clear for quite some time now, and the term "doubling down" barely does it justice any longer. So we’ll just say that Spotify has once again increased its focus on the podcasting realm with another acquisition, this time of podcasting advertising platform Megaphone from Graham Holdings Company for $235 million.

Megaphone, according to a press release, provides advertising hosting and ad-insertion for podcasting publishers, and sells targeted ads for brands. The acquisition follows the January announcement of Spotify’s "streaming ad insertion" technology, geared towards providing more precise metrics to potential podcast advertisers, the results of which "have been encouraging to say the least," the company said today in announcing the Megaphone deal.

"Together, Spotify and Megaphone will offer podcast publishers innovative tools that will help them earn more from their work," the company said in a blog post. "This includes the opportunity to opt in to have their content monetized, matching their loyal listeners with even greater demand from advertisers. And we’re excited to share that, once we come together, we will soon make Streaming Ad Insertion available to podcast publishers on Megaphone, the first time this technology will be made available to third-parties. That means that podcast publishers will be able to offer more-valuable podcast audiences to advertisers based on confirmed ad impressions (i.e., that their ad was actually heard)."

It is little surprise that Spotify is making another big acquisition in the podcast space, following big deals with companies like Gimlet, Anchor and Parcast in the past two years. Since the beginning of 2019, CEO Daniel Ek has referred to audio as the future of the company, envisioning a world where Spotify was less dependent on music -- and the content costs of such music -- to gain and retain users, listener hours and, ideally, subscribers. In the past two months, Spotify announced a partnership with Chernin Entertainment to provide a pathway for its podcasts to turn into film and TV projects, and, through its Anchor platform, now allows music to be embedded into its shows without further licensing requirements.

In late October, the company announced in its third quarter earnings report that 22% of its monthly average users were listening to podcasts, with podcast ad revenue up nearly 100% year over year, part of its overall ad business returning to positive growth following the pandemic-related downturn earlier this year. It now has 144 million paid subscribers and 320 million monthly average users around the world, and Ek also floated a possible price hike to Spotify’s $9.99/month premium tier -- which has not increased in the near-decade the service has been available in the U.S. -- with the possible implication that some premium content, including its exclusive podcasts, could be offered at a varied price point in the future.

Recent personalities to secure podcasts on Spotify are Joe Rogan, Michelle Obama, Reba McEntire, Lele Pons, Amy Schumer and Kim Kardashian, while Scooter Braun’s Ithaca Holdings, Bill SimmonsThe Ringer and Warner Bros. also have podcasts either on the platform or on the way to it. iHeartMedia, YouTube, Apple, Amazon, SiriusXM and the major labels have also made significant moves into the podcast world over the past several months as companies look to expand the audio options for their platforms to provide additional content for subscribers and users.

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