Wednesday, November 11, 2020

Spotify buys podcasting ad-tech firm Megaphone for $235m | Music Ally

Spotify announced its latest big-budget acquisition in the podcasting space yesterday: an advertising and publishing platform called Megaphone, for $235m in cash. The deal is about expanding Spotify’s existing ‘streaming ad insertion’ technology, including to podcasts on rival services.

“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,” is how Spotify explained it.

The deal takes Spotify’s podcast acquisitions spending past the $800m mark, just 19 months after kicking off its ‘audio first’ strategy with the purchase of Gimlet Media and Anchor. The company also says that its podcast advertising revenue has doubled in the last year.

Not everything is smooth in Spotify’s podcast business though. The staff of Gimlet, Parcast and The Ringer have unionised, and are calling for Spotify to start “substantive” contract negotiations, claiming that they have been “largely ignored” so far. “We call for prompt and good-faith negotiations at the bargaining tables,” said the unions’ joint statement.

There’s also a bracing longread for Spotify execs on The Baffler, written by one of the company’s prominent critics Liz Pelly (whose by:Larm conference keynote we reported on earlier this year). ‘Podcast Overlords‘ doesn’t mince its words about Spotify’s podcasting strategy.

“The playlistification of everything, the incentivization of easy-to-digest quick hits, the disguising of advertisements as editorial, personalization to the point of banality, and prioritizing what is optimal for moods and moments…”

Spotify will disagree with a lot of this, although that’s a good reason for the company to read it and engage with the criticism. The piece also zeroes in on moderation challenges that we’ve also recently been pondering. “Is Spotify prepared for what comes with being a media company? Is the company prepared to deal with disinformation and hateful ideas?” wrote Pelly.

“Think about how algorithmic political suggestion has led people to dangerous ideologies on YouTube: Does Spotify have breaks in place to prevent that? What if Trump, or a far-right outlet, wanted to launch a podcast on Spotify? Will Spotify take accountability for what its users publish, or will it take a page from Facebook’ tired refrain: We’Re JuSt a pLaTfOrM?”

The Megaphone deal shows how podcasting continues to be a big opportunity for Spotify, as does the company’s market cap, which has nearly doubled from $24.5bn the day its ‘audio first’ strategy was announced in February 2019 to $47.3bn at the time of writing. But unionisation tussles and the various criticisms raised in Pelly’s article are a reminder that podcasts bring plenty of challenges too.

Stuart Dredge


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