Spotify Ramps Up Its Podcast Acquisitions

The popular audio streaming platform beefs up its podcast arsenal, despite posting a loss at its recent earnings call.

Feb. 15, 2020

Spotify (NYSE: SPOT) is not only a huge name when it comes to music, but also in relation to podcasts. The streaming services provider recently announced its acquisition of The Ringer, Bill Simmons’ sports and culture site, as it expands its podcast pool. The news was revealed ahead of its fourth-quarter earnings call on February 5, with the music streaming business reporting a 200% year over year jump in podcast hours streamed.

The Ringer will join an extensive list of other podcast-centric acquisitions. Last year, the company paid $340 million to take over Gimlet, one of the fastest-growing podcast production studios. In addition, Spotify acquired Anchor, which is another podcast production and hosting studio. It last spent $56 million on Parcast, which is a story-based studio and it also has a joint partnership with the Wall Street Journal to co-produce the podcast, ‘The Journal’.

What does The Ringer add to Spotify?

It’s hard to believe that podcasts are only a recent trend and the CEO of Spotify, Daniel Ek, is positive that a lot of streamers will want to hear the content on The Ringer. At its earnings call, he said, “What we really did with The Ringer I think is we bought the next ESPN. We think that’s going to be a tremendously valuable property as we look at the development of sports over the next decade.”

The deal with Simmons is expected to close in the first quarter of 2020 and the terms are yet to be revealed. 

Spotify Slips on Recent Earnings Call

The streaming platform’s stock dropped 5% on the afternoon of its recent earnings call. This came from losses per share of -$1.25, which is worse than Wall Street’s prediction of -$0.25 cents. The company did generate $2.04 billion of revenue, but this was also lower than analysts’ estimates of $2.09 billion.

By the end of the 2019 period, more than 16% of Spotify’s 271 million monthly active users (MAU’s) were listening to podcasts, which equates to around 43 million users. Europe and North America make up more than 60% of the platforms current subscribers. CEO Ek continues to remain positive about the future of the company, with the streaming service expecting to add around 207 million premium subscribers in the first quarter of 2020 and post smaller operating losses. This year, the company expects to make revenue ranging from $8.88 billion to $9.32 billion.

Beating the Competition

Spotify remains the biggest of all the music-streaming platforms, but the competition is growing. Last month, rival Amazon (NASDAQ: AMZN), revealed 55 million users for the subscription music service. Meanwhile, Apple (NASDAQ: AAPL) reported last summer that it had more than 60 million paying users and TikTok is also preparing to launch a music streaming service. Internationally, the competition grows even stronger with Gaana in India obtaining 152 million MAU’s in that country alone. This is a huge threat, as Spotify hopes to grow its subscription numbers in that market.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold no positions in Spotify. Read our full disclosure policy here.

Written by Alsha Coppolina.