Spotify buys Gimlet and Anchor to combat iTunes' podcast dominance

Posted:
in General Discussion edited February 7
Music streaming giant Spotify is making a push into offering podcasts to its users by buying two companies in the field, an attempt to catch up and compete with the dominant Apple iTunes for podcast distribution and listening.

Spotify founder and CEO Daniel Ek
Spotify founder and CEO Daniel Ek


Advised in a blog post by Spotify founder and CEO Daniel Ek, the streaming service anticipates its next phase of growth in audio will be in podcasting. In just under two years, Ek claims Spotify has become the second-largest podcasting platform, but it wants to take first place.

To do so, Spotify is buying two companies that have made an impact in the podcasting industry. The first, Gimlet, is a major content creator seeing success with its podcasts, such as "Homecoming" adapted from podcast to video for Amazon Prime, along with the internet culture-based "Reply All."

The other company, Anchor, produces podcast creation and distribution tools, including apps for the iPhone and iPad. According to Ek, Anchor has helped in the production of 15 billion hours of content listening on Spotify during the fourth quarter.

Though terms of each acquisition were not revealed, Ek believes, "These companies are best-in-class and together we will offer differentiated and original content. Gimlet and Anchor will position us to become the leading platform for podcast creators around the world and the leading producer of podcasts."

Citing radio industry data, Spotify believes it is a "safe assumption" that 20 percent of all listening on the service will be non-music, and has the potential to grow at a faster rate with more original programming.

"Just as we've done with music, our work in podcasting will focus intensively on the curation and customization that users have come to expect from Spotify," states Ek. "We will offer better discovery, data, and monetization to creators."

The announcement arrives at the same time as Spotify revealed its fourth-quarter earnings for 2018. During the period, it saw revenue of 1.49 billion euro ($ billion), with a gross margin of 26.7 percent. The total user count is claimed to be 207 million across all tiers of service, 96 million being paid subscribers, with each increasing year-on-year by 29 percent and 36 percent respectively.

The 96 million paid subscribers puts Spotify at almost double the user count of Apple Music, which was revealed during Apple's quarterly conference call to have 50 million subscribers.

Comments

  • Reply 1 of 16
    So each user is worth $1.88. That does not sound profitable at all. 
    lolliver
  • Reply 2 of 16
    davgregdavgreg Posts: 477member
    Apple needs to launch a separate Podcast app for the Macintosh and not someday. The same should be true of Movies and TV- they all need to get out of iTunes.
    lolliver
  • Reply 3 of 16
    jimh2jimh2 Posts: 186member
    The writing is on the wall for them. Rising royalty fees will sink them.
    lolliverwatto_cobra
  • Reply 4 of 16
    Meh. Using the native podcast app after struggling with the hipster "Overcast" which seems Android-like to me. Yuck. Also, the CarPlay interface is garbage, because the developer "doesn't like CarPlay."

    The native app is better than it used to be. Can't wait for dark mode.


  • Reply 5 of 16
    AppleExposedAppleExposed Posts: 1,672unconfirmed, member

    Apple invented the Podcast.


    It's a shame they're allowing others to eat their lunch.

    lolliver
  • Reply 6 of 16
    maestro64maestro64 Posts: 4,675member
    genovelle said:
    So each user is worth $1.88. That does not sound profitable at all. 
    Actually $1.92 profits per quarter, so they have recurring revenue of $7.69 per year per user. But they have less than half of their users are paying so they are really making $15.50 per paying subscriber, and like any really socialist society the ones with money pay for the ones without the means. Some of those profits are coming from advertisers so the actual proof per paying subscriber if much less. 

    Just goes to show, most people are sheep, i listen to music today and do not pay over and over again, i listen to the radio with some ads which i tune out, or i listen to my private collection which I paid once and can listen to it as many times as I want. But people got suckered into paying to listen and keep shelling out money each month. In this generation subscription models, people will be shelling out $1000's of each year and have nothing to show for it.
  • Reply 7 of 16
    This is rather asymmetrical. Apple doesn't monetize Podcasts, they simply act as a clearinghouse for all those RSS feeds and they make an iOS app. They don't produce podcasts, nor do they manage or profit from advertisements on podcasts. They make podcasts convenient for many people, and they provide limited analytics to podcasters. That's it.

    Spotify almost surely wishes to monetize podcasts, which means a rather different approach that that taken by Apple. I'd wager that approach will be far more advertising-intensive and involve a lot more user tracking.
    n2itivguylolliverwatto_cobra
  • Reply 8 of 16

    Apple invented the Podcast.


    It's a shame they're allowing others to eat their lunch.

    They didn't invent it, they stumbled into it. Users created the idea.
    As mentioned in an earlier post, Apple does not monetize podcasts. They only act as a directory of RSS feeds, they don't host any audio files nor do they derive revenue from advertising.

    There isn't a lunch to eat.
  • Reply 9 of 16
    maestro64 said: 

    Just goes to show, most people are sheep, i listen to music today and do not pay over and over again, i listen to the radio with some ads which i tune out, or i listen to my private collection which I paid once and can listen to it as many times as I want. But people got suckered into paying to listen and keep shelling out money each month. In this generation subscription models, people will be shelling out $1000's of each year and have nothing to show for it.
    While I can appreciate your own personal perspective and rationale for why you dislike the subscription model I disagree with the statement of people being sheep if they use the subscription model. I get that with subscriptions there is no ownership, and that when you stop paying you have nothing to show for your purchases. So if you are someone that wants/needs to own something physical then yes, subscriptions are a scam. And while I don’t totally agree with the amount of money these individual sheeple will be spending each year on subscriptions, it doesn’t undermine the spirit of your argument. 

    I am one of those sheeple you speak of and I, for one, see value in the subscription model. I used to buy tons of CD’s and DVD’s in my younger years thinking the same thing you are. If I own it, I will be able to consume it whenever I want and as often as I want. But unfortunately the perks of growing up and making more money also has it’s drawbacks; I no longer have spare time to watch the same movie 3 times or more as that is no longer a reality for me (and many others I would assume) Not only that but I can no longer watch some of my all time favourites because I only owned it on VHS and never repurchased them on DVD or Blu-Ray. I have even bought movies after watching them thinking I’ll be watching them again at some point only to discover years later that they are still unopened. I see this all the time at friends houses, purchased media never being opened. The amount of money I was spending on CD’s back in the day was also more than my monthly family payment for Apple Music of 15 dollars a month. That 15 bucks a month gives me any song I could want to listen to, the ability to find and be exposed to new artists and music easily, and to never have to worry that I will need to maintain an aging device to keep playing that media. This is some of my rationale for why I prefer the subscription model over the purchasing. And while it is different than yours, I do take offence at being labelled as someone who bought into model that only a follower and non-thinker would buy into. 

    People need to recognize there is only so much time in a day. If they are subscribing to enough media where they are paying 1000’s (2000+ is how I read that) of dollars a year for it, then they really need to sit down and think about what it they are actually purchasing, because at 2000+ a year, I have got to assume those people are paying for the convenience and privilege to consume everything they want when they want; which is a completely different issue. So if that’s your argument for who qualifies as sheeple then I would agree, those people have lost the plot. I, however, recognize that I only have so much time available for consuming media and as such only subscribe to 2 video companies at a time, Apple Music, 3 podcasts, and 3 media sites. My totally monthly bill for those equals less than what I would be paying for full cable television. I also benefit from never having to be subjected to advertisements and knowing that a portion of that money is going to those who contributed to creating the content. But yeah, if you are someone who watches every sport and 15 movies a month and tons of other shorter shows, etc, then you probably should be paying more because you are consuming more. 

    K
    n2itivguylolliverwatto_cobra
  • Reply 10 of 16
    maestro64 said:
    Just goes to show, most people are sheep, i listen to music today and do not pay over and over again, i listen to the radio with some ads which i tune out, or i listen to my private collection which I paid once and can listen to it as many times as I want. But people got suckered into paying to listen and keep shelling out money each month. In this generation subscription models, people will be shelling out $1000's of each year and have nothing to show for it.
    While my sentiments lean your way as far as not “renting” music (and many other things), my good friend is the polar opposite - and I’ve come to understand that for him it’s all about convenience.  For him, he doesn’t need to concern himself with doing any library curation or whatnot...it’s just there when he needs it.  Since I have a curator’s mindset the need for convenience has no sway for me.  Not sure if that necessarily means he’s one of the sheeple or not...seems a bit harsh.

    But I am concerned that so many business models are predicated on the recurring subscription model only because it seems that ownership is being phased out and all the masses will have left is a stack of recurring bills and “nothing to show for it”. I certainly don’t want to feed that future.

    NB - obviously there are loads of good examples of where renting instead of owning makes sense. Just saying the sentiment these days seems to me to push more people into paying over and over again.
    edited February 6 n2itivguyuraharawatto_cobra
  • Reply 11 of 16
    Sucks, Gimlet has my favorite podcasts, but I'm not going to pay another $15 a month for another music streaming service to listen to them. :-(
    lolliverwatto_cobra
  • Reply 12 of 16
    maestro64 said:
    genovelle said:
    So each user is worth $1.88. That does not sound profitable at all. 
    Actually $1.92 profits per quarter, so they have recurring revenue of $7.69 per year per user. But they have less than half of their users are paying so they are really making $15.50 per paying subscriber, and like any really socialist society the ones with money pay for the ones without the means. Some of those profits are coming from advertisers so the actual proof per paying subscriber if much less. 

    Just goes to show, most people are sheep, i listen to music today and do not pay over and over again, i listen to the radio with some ads which i tune out, or i listen to my private collection which I paid once and can listen to it as many times as I want. But people got suckered into paying to listen and keep shelling out money each month. In this generation subscription models, people will be shelling out $1000's of each year and have nothing to show for it.
    Only 120 $ a year. So your number of $1000's each year is pulled from where?
    You listen to the radio with 'some' ads? Bro, you listen to the radio with ALL its ads.
    So convenient to have a romantic evening with chill out music... and then some burrito advertisments.

    I pay because I get great sound quality and save time:
    - I have higher quality sound (yeah, I had a huge lossless collection, so don't start on that).
    - I have my playlists synced across the devices and music being available offline on my mobile
    - The shared playlists are awesome. Before I had to manage my collection (starting from laborious tag management)
    lolliverwatto_cobra
  • Reply 13 of 16
    maestro64 said:
    genovelle said:
    So each user is worth $1.88. That does not sound profitable at all. 
    Actually $1.92 profits per quarter, so they have recurring revenue of $7.69 per year per user. But they have less than half of their users are paying so they are really making $15.50 per paying subscriber, and like any really socialist society the ones with money pay for the ones without the means. Some of those profits are coming from advertisers so the actual proof per paying subscriber if much less. 

    Just goes to show, most people are sheep, i listen to music today and do not pay over and over again, i listen to the radio with some ads which i tune out, or i listen to my private collection which I paid once and can listen to it as many times as I want. But people got suckered into paying to listen and keep shelling out money each month. In this generation subscription models, people will be shelling out $1000's of each year and have nothing to show for it.
    I pay less than $100 per year for Spotify and have access to unlimited music, on my PC, phone, in my car, and connected speakers, anywhere I go with a connection. If I keep this up for 20 years, and I don't assume that things will stay the same, I'd have spent $2000. I spent that much in about four years during my peak CD buying days and only had a couple of hundred CDs to show for it. There is nothing sheepish about paying not much money for a tonne of music.
    lolliver
  • Reply 14 of 16
    The subscription model is definitely the way going ahead. For all kinds of media that we consume on a daily basis - movies, music, sports, podcasts and especially games. This is a gargantuan market. 

    And when the dust has cleared, there will be just 2 players. Like Hertz and Avis. 
  • Reply 15 of 16
    This is rather asymmetrical. Apple doesn't monetize Podcasts, they simply act as a clearinghouse for all those RSS feeds and they make an iOS app. They don't produce podcasts, nor do they manage or profit from advertisements on podcasts. They make podcasts convenient for many people, and they provide limited analytics to podcasters. That's it.

    Spotify almost surely wishes to monetize podcasts, which means a rather different approach that that taken by Apple. I'd wager that approach will be far more advertising-intensive and involve a lot more user tracking.

    Makes sense to me.
    watto_cobra
  • Reply 16 of 16
    I will never use PodCasts on the Spotify platform because they don't allow any music / remix podcasts such as the widely popular Anjuadeep or Group Therapy podcasts.

    I understand from a business perspective why Spotify would't want to carry music podcasts, but this is shortsighted, as I use these shows to discover new music which I eventually add to my Spotify playlists.

    Spotify will never embrace the free market of podcasts and artificially restrict them to information / talk only.  So sorry Spotify, nice try but you'll never get me and millions of other Podcast listeners. 
    watto_cobra
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