Spotify Drops $235 Million to Acquire Podcast Platform Megaphone

Photo Credit: Sara Kurfeß

Spotify has made yet another multimillion-dollar podcasting investment, this time by acquiring podcast advertising and publishing platform Megaphone in a $235 million deal.

Spotify unveiled the nearly quarter-billion-dollar acquisition this morning, via a general release. Characterizing the buyout as the “next step” in its comprehensive plan to capitalize upon (and monetize) the “intimate and screenless medium” that is podcasting, the Stockholm-based streaming service indicated that Megaphone will enable podcast publishers to “earn more from their work,” including by effectively reaching fine-tuned target audiences “based on confirmed ad impressions.”

“And we’re excited to share that, once we come together, we will soon make Streaming Ad Insertion available to podcast publishers on Megaphone,” Spotify’s release continues, “the first time this technology will be made available to third-parties.”

Spotify closed the release by reiterating that its podcast library encompassed some 1.9 million podcasts as of Q3 2020 – an increase of approximately 400,000 from this year’s second quarter – and that 22 percent of its 320 million or so monthly active users (MAUs) interacted with the programs.

Megaphone – formerly named Panoply Media, before ceasing to produce podcasts and zeroing in on the advertising side of the business – was founded in February of 2015 by The Slate Group, which operates the namesake online magazine. Additionally, Graham Holdings Company, former owner of Jeff Bezos’s The Washington Post, established The Slate Group in June of 2018.

On the day, Graham Holdings stock (GHC) has grown by about $10.04 (2.26 percent), with shares trading for $455.04 apiece at the time of this writing. Since Friday, October 30th, when GHC closed at $380.34, the stock has quietly added $74.70 to its worth. Inversely, Spotify stock (SPOT) has dipped nearly 8.2 percent today, and its per-share price is currently hovering around the $252 mark.

As mentioned, Spotify has made more than a few major investments in podcasting (largely on the content side, prior securing Megaphone) to this point in 2020, as part of a larger effort to broaden its non-music earning potential. Some publishers and labels are expressing concern that the platform’s bolstered focus on podcasting – including the rumored rollout of a premium-podcast subscription plan, which would generate little revenue for music creators – will draw away from their own payments.

On the other side of the coin, Spotify’s not obligated to serve the music industry exclusively, and its royalty payments to the Big Three labels in particular are decidedly high. Either way, the platform’s investments remain extremely aggressive and future-focused. Earlier this year, Spotify Chief Financial Officer (CFO) Paul Vogel stated that his company could achieve long-sought profitability “if we wanted to.”

One Response

  1. Avatar
    John

    So, all this saids, is that Spotify has the money to pay artist but, instead they are taking the artist money and investing it into podcast investments? This is stupid. I didn’t sign up to Spotift to listen to podcast and I never will.

    Reply

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