Told you Spotify wasn’t done shopping.
This morning, the Swedish streaming company announced that it has closed the Gimlet acquisition, and that it had additionally acquired another podcast company: Anchor, the podcast hosting-and-monetization platform founded by Michael Mignano and Nir Zicherman.
Terms of the transaction were not disclosed
Here’s the press release, and here’s the particularly relevant chunk:
With these acquisitions, Spotify is positioned to become both the premier producer of podcasts and the leading platform for podcast creators. Gimlet will bring to Spotify its best-in-class podcast studio with dedicated IP development, production and advertising capabilities. Anchor will bring its platform of tools for podcast creators and its established and rapidly growing creator base.
To quickly repeat myself from yesterday’s newsletter on the subject of Spotify’s podcast angle:
- Spotify is looking to diversify away from purely focusing on music, where it’s been long locked into bruising rivalries with other streaming platforms (Pandora, Apple Music) and traditional music industry Powers That Be (labels). Podcasts, or talk content more broadly, offers the Swedish tech giant two things: first, a completely new growth channel for investors to get excited about, and second, the opportunity to differentiate its product, deepen its value to the user, and increase the friction of shifting away to another service.
- As I also mentioned: we should relatedly pay close attention to Spotify’s adventures in building direct relationships with musicians — first by striking deals with independent artists and then by rolling out a feature that allows artists to upload music directly and automatically receive royalty payouts. In other words, they’ve been trying to become the monetization layer for musicians straight-up. I imagine they would want to do the same for podcasts.
These two acquisitions directly speak to these pieces: Gimlet for the first strategic target, and Anchor for the second.
Founded in 2015, Anchor initially started life as a social audio app — think Twitter, but for audio, which is kind of a throwback to Twitter’s original incarnation, Odeo — that caught some buzz at SXSW the following year. It received venture backing from a pool of investors that includes Betaworks (which also backed Gimlet), Homebrew, GV, The Chernin Group, and Accel, among others. The social audio thesis didn’t quite go anywhere, and the company eventually pivoted towards what would eventually turn out to be some sort of end-to-end podcasting platform, encouraging new podcast creators to host on their platform (thus functioning as a competitor to Libsyn and Art19) and later launching something called Anchor Sponsorships, an in-platform advertising marketplace for shows hosted on the platform.
With the acquisition of both Gimlet and Anchor, Spotify appears to be angling towards a situation in which it can both function as a publisher and a platform. (Add your Medium/platisher jokes here.) All the questions I raised in my Spotify analysis column still very much applies, perhaps even more so now. But the biggest one now, in my mind, is: can you effectively be both at the same time? Can you have your cake and eat it too? As always, it will come down to the execution.
Also: I’d like to double down on my tin foil hat Gimlet Creative theory. Only, slap Anchor’s Sponsorship marketplace to the mix too.
Spotify has made a huge statement about its intentions with podcasts. They had my interest. But now they have my attention. (Not that I matter in this situation, of course.)
Few closing thoughts:
- Again, for those keeping track: I reported that the Gimlet acquisition went for around $230 million. The press release didn’t confirm it, and who knows what the final number turned out to be by the end of the negotiations.
- As for Anchor’s deal, I don’t have any information on that, but let me know if you do.
- Honestly, I thought I’d be spending the first quarter of 2019 talking about Luminary. Guess, uh, that’s going to be tough now.
- Since yesterday’s newsletter, several readers pointed two personnel related matters to me: (1) Spotify’s CFO is Barry McCarthy, the former CFO of Netflix, and (2) Spotify has a Chief Content Officer, Dawn Ostroff, who used to be the president of The CW (and hence, was/is a Hollywood insider). Those pieces might be relevant for your own analyses.
Okay, more soon.