Spotify drops $235 million on podcast ad-tech company

[Pete Flint]

In brief: Spotify just acquired podcast ad-tech company Megaphone for a whopping $235 million in an effort to broaden its advertising, marketing and publishing toolsets for podcast creators.

Spotify has made a push for the podcast market since early 2019, acquiring podcast empires, developing its own charts, and buying tech that improves the experience for publishers. The green music machine is now pushing the latter with a $235 million acquisition of Megaphone, a podcast ad-tech company.

Formerly Panoply Media, Megaphone was sold by Graham Holdings, a media conglomerate that was also the previous owner of The Washington Post before selling to Jeff Bezos.

Megaphone develops tools for publishers to insert third-party ads and better monetize their work. For podcasts that build-in advertising, this will be less relevant, but for those that use solutions like this on other platforms such as third-party publishers, Spotify may make more sense as a financial option. The podtech firm also provides podcast-hosting tools and gives targeted advertising capabilities to marketers.

Podcast listenership statistics have notoriously been monitored and monetized based on downloads, mimicking the music industry of yesteryear. While this has created a culture of occasionally amusing, hard-coded ads in many popular pods, the option to insert targeted advertisements and report user statistics back to publishers is a logical progression in the way media is distributed in 2020.

In that vein, Spotify launched its Streaming Ad Insertion (SAI) system back in January this year, an ecosystem that Megaphone’s tech will undoubtedly be tacked onto.

Spotify seems to be mirroring SiriusXM, which recently acquired Stitcher at a similar price point this summer from the E.W. Scripps Company. That package came loaded with the Stitcher app, various podcast networks, and its own ad-insertion company.

Spotify will reportedly find a place for all 70 Megaphone employees within the company.

In a statement on the deal, Timothy O’Shaughnessy, president and CEO of Graham Holdings, said, “Spotify will be a great home for Megaphone. I am proud of the Megaphone team and what they have built, and we look forward to their continued success.”

Image credit: Spotify

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[SirDigby]

The issue I have with podcasts on Spotify is that many podcast hosting/ distribution platforms add built in adds for platforms like Podbean, but also for Spotify - but where most podcast platforms are free, Spotify has a paid tier to remove adds. I'd much rather pay to remove these ads, which is why I tend to listen to most podcasts with Youtube instead as I already have Youtube Premium.