It’s all about the ads
Spotify’s making another big podcasting acquisition. This time, it’s buying podcast hosting company Megaphone for $235 million, according to a source close to the companies. The deal doesn’t affect Spotify’s own podcasts — it already hosted its shows on Megaphone — but it does mean more shows will have access to Spotify’s proprietary ad insertion technology, called Streaming Ad Insertion.
SAI functions similarly to typical dynamic podcast ads, which are targeted based on a listener. But in Spotify’s case, the ads are inserted in real time as opposed to being swapped out ahead of a listen. This means Spotify’s system is making real-time decisions about which ads a specific listener should hear based on their data and also based on the goals of the various ad deals Spotify is currently running.
This acquisition means all podcasts currently hosted on Megaphone will gain access to SAI after the deal closes. No other hosting services offer SAI, so if podcasts or advertisers want to target their ads to Spotify’s data and potentially better reach listeners, they’ll have to pay to host their show on Megaphone, or they’ll have to pay Megaphone to distribute their ads. Megaphone has over 5,500 shows hosted on the platform from big publishers like Slate, iHeartMedia, Disney, and Vox Media.
With Megaphone, Spotify now owns a fully rounded-out podcasting ecosystem: a network of exclusive shows, a podcast player, podcast creation software, a hosting company, and its own ad sales team.
This flashy acquisition follows other big-name deals, including Gimlet Media for a reported $200 million, Parcast for $56 million, The Ringer for $196 million, Anchor for $140 million, and reportedly more than $100 million for just the exclusive distribution and ad sales for The Joe Rogan Experience. Spotify only really entered the podcasting world in earnest in 2019, and already, it’s buying its way to dominance.