Spotify, which has been trying to branch out of the streaming music business, is getting ready to make its first big move into podcasting: It plans to pay more than $200 million to buy Gimlet Media, the startup behind popular shows like Reply All.
Sources say Spotify is in advanced talks to acquire Gimlet, the Brooklyn-based company which produces a network of popular shows and makes shows for advertisers like Gatorade. Gimlet has also been moving into TV production, including a deal that turned Homecoming, which started out as a scripted podcast, into an Amazon TV show starring Julia Roberts.
The move would be the first time Spotify has bought a content company — and one of the biggest acquisitions in the still-nascent podcasting industry.
Gimlet last raised money in 2017, via a funding round that valued the company at about $70 million. A person familiar with the proposed deal says Spotify will pay more than $200 million in cash for the company.
I’ve asked Gimlet and Spotify for comment.
Spotify, which has attempted to break into the video business without success, has been public about its ambitions to move into podcasting in recent months. It has started promoting podcasts to its 200 million users, and has done one-off deals for exclusive podcasts with celebrities like Amy Schumer.
The logic: Spotify’s 200 million users are already used to consuming audio from the service — and, crucially, while the music business is controlled by three big companies who have real leverage when it comes to licensing their stuff, podcasting is in its early days, and no one has a chokehold on podcast content. And though Apple remains the dominant podcast distributor, Tim Cook’s company doesn’t appear to spend much time or energy on podcasts.
Podcasting is a small industry, with an ad model that generated an estimated $315 million in 2017. Digital video ads, by comparison, generated $11.9 billion in the same year. But it is growing quickly, which makes it attractive to some platforms and publishers (including Vox Media) who are interested in tapping new revenue streams.
While Spotify has made other acquisitions, it hasn’t bought a company that makes and distributes content before. In part because that’s because it’s unlikely to have the resources to buy a major music label — and in part because any move to buy a smaller label would rile up the big labels, who are constantly worried that Spotify will become a direct competitor for them.
Spotify is scheduled to release its next quarterly earnings report next Wednesday, February 6.
Update: This article was updated to include the amount of the proposed deal.