Coverage: Spotify is buying two podcasting companies

Spotify Technology SA is buying a pair of podcasting companies, accelerating its investment in non-music content as it seeks to broaden its appeal and snap up share of listening time from radio.

Anne Steele of The Wall Street Journal had the news:

The company, which is already the second-largest podcasting platform, said it would buy podcast publisher Anchor in a move to increase its presence in other forms of audio. It also said it is buying podcast producer Gimlet Media, a deal that The Wall Street Journal previously reported was in the works.

The acquisition plans come as the company reported its first operating profit, for the fourth quarter. Chief Executive Daniel Ek said the result validates the company’s strategy.

“We can put that to bed and say the model works,” he said in an interview. “We said we can and did become profitable and now we’re going back to investing.”

Terms of the deals weren’t disclosed, but people familiar with the matter said the transactions valued Anchor at more than $150 million and Gimlet above $200 million. Spotify’s guidance indicates it expects to spend heavily: The company also said it wants to make more acquisitions in podcasting, and plans to spend as much as $500 million on multiple deals this year.

Ashley Carman of The Verge writes about what Spotify needs to do to become a leading podcast company:

First and most obviously, Spotify needs to rearrange its app, particularly on mobile platforms. The podcast tab in search is clunky on the homepage and difficult to navigate. Accessing your podcasts isn’t simple, either, as you have to navigate to your library and go from there. The evolving homepage sometimes shows podcasts up top, but other times it doesn’t. Generally, Spotify needs to get better at separating the two entities and making podcasts easy to find.

Spotify offers top charts for music, but has limited charts for podcasts. The team builds an annual best-of list and also has a “what’s trending” and “top podcasts” chart. It sorts podcasts into categories like “Stories” and “News & Politics,” but those appear to be independently curated.

It might want to follow Apple’s example — iTunes and Apple Podcasts have led the way with curation and charts. The company has top charts on the episode and series level for every show category, as well as overall charts for top podcasts. The company also allows people to rate shows and leave reviews. These are helpful for evaluating shows and also might contribute to how the company creates the chart rankings.

Brian Heater of TechCrunch writes about Spotify is betting big on podcasting:

In an interview with TechCrunch, Spotify’s Chief R&D Officer Gustav Söderström admits that the company wasn’t doing a particularly good job serving up podcasting content. “The user experience was really poor,” he says. “There was no 15-second skip. In spite of that, we saw a lot of users listening to podcasts. It was kind of unexpected and we didn’t really understand why. It turned out people really wanted to have podcasts in Spotify with their music. If you look at radio, it’s not that surprising.”

What Spotify discovered was what many no doubt already suspected: Many users don’t necessarily need or want additional applications for all of their different audio types. Even more to the point, Spotify has excelled in one key place many other podcasting platforms have failed: discovery. It’s been a key piece in the company’s growth as the leading music streaming service and could serve to help resolve one of podcasting’s biggest pain points for most users.

Matt Hartman, partner at Betaworks — an early investor in both Gimlet and Anchor — says the massive acquisitions could help signal the beginning of a new wave of podcasting growth.