Spotify is in talks to acquire Gimlet Media, multiple sources tell The Hollywood Reporter, as it sets its sights on becoming a bigger player in the podcasting space.
The move by the music streaming giant signals just how seriously it is taking its push into other forms of audio entertainment. Spotify and Gimlet representatives declined to comment.
Under the leadership of studios head Courtney Holt, Spotify has spent the better part of the last year developing its podcasting strategy. It has struck deals to carry a number of shows on its platform as a competitor to Apple’s Podcasts app and has also commissioned a handful of originals including Amy Schumer’s 3 Girls, 1 Keith and Jemele Hill’s Unbothered. It even cut a deal with Gimlet in 2018 to be the exclusive home of Crimetown’s second season.
By acquiring Gimlet, Spotify would tap into a podcasting production powerhouse that has churned out such hits as Heavyweight, scripted series Homecoming and Reply All.
Founded in 2014 by NPR veteran Alex Blumberg and former consultant Matt Lieber, Gimlet was early to the podcasting boom and attracted attention for documenting its early days via the show StartUp. Because it owns its IP, it has been able to extract extra value out of shows like the thriller Homecoming or tech-centric Reply All by adapting them into film and television projects.
The company has raised nearly $30 million in venture capital from investors including WPP, Laurene Powell Jobs’ Emerson Collective, Stripes Group, Graham Holdings and Lowercase Capital. At the time of its August 2017 fundraising, Gimlet’s valuation was said to be around $70 million.
There have been questions about how large the podcast industry, which relies heavily on advertising, can grow, especially after decisions by BuzzFeed and Slate last year to step back from producing original podcast programming. The interactive advertising bureau reported in June that the podcast industry’s revenue brought in an estimated $314 million in 2017, up 86 percent from the year before. While that’s a significant jump, it’s still tiny compared to the size of the radio or video industries. The industry is expected to grow to $659 million in advertising revenue by 2020.
Spotify, which has around 200 million users worldwide, went public last April and has a market cap around $24 billion, giving it the means to make a strong statement about the podcasting industry through a major acquisition of a darling in the space like Gimlet. And Gimlet could benefit from being part of a much larger company that has been building out its in-house advertising capabilities (it has been selling its own ads on its original podcasts since 2018) as well as the personalization technology that it will use to better recommend shows to listeners.