For several years now, Spotify has been looking to become a premium destination for podcasts. Just last month, the Swedish company made worldwide headlines after plopping down over $300 million to acquire Gimlet Media and Anchor, two heavyweights in the podcast community.
While analysts say Gimlet seems like a natural buy, considering it’s home to popular podcasts like Homecoming and Reply All, the Anchor purchase signals that Spotify may be angling to become a full-service provider. Services like Gimlet furnish the platform, whereas Anchor provides the underlying logistics that podcasters need to create content.
Interestingly, even Spotify admits to not knowing which service will be more valuable as we march forward. And that’s preciously why the company plans to “place a bet on both ends of the spectrum,” according to CFO Barry McCarthy.
While these massive acquisitions prove that the company is taking podcasting seriously, if subscribers can’t easily discover new shows, much of the new content will never develop a following. To address the issue, Spotify’s Courtney Holt says his team is working to tweak the algorithm they currently use to help users discover new music. Once it’s all said and done, Holt believes the improved algorithm will help users stumble upon new podcasts as easily as Netflix’s algorithm helps unearth new movies.
But even if all goes according to plan, Spotify still faces the challenge of monetization. Podcasts are expected to rake in nearly $700 million in revenue by 2020, according to The Verge. But even large companies like Apple have had a hard time balancing advertisers’ data demands with users’ privacy concerns.
Considering the company still has about $200 million to splurge, some predict an advertising network or similar purchase may be on the horizon.