Spotify has long dominated the music streaming world, but it's making big moves when it comes to podcasts. That continues with the recent announcement that Spotify is acquiring Megaphone, a podcast advertising platform that aims to make it simple for publishers to monetize their podcasts.
Spotify Acquires Megaphone
Megaphone describes itself as "podcast technology for publishers and advertisers". The service is designed for podcast creators to publish, monetize, and measure their content.
Some brands using Megaphone include Disney, Wall Street Journal, CBS Interactive, and ESPN. One of the companies listed is now the one buying them: Spotify.
According to a report from The Verge, sourced from those close to the company, Spotify is paying $235 million to acquire Megaphone.
This is hardly the first big acquisition that Spotify has made in the podcast world. It's already snapped up the likes of Gimlet Media, Paracast, and The Ringer, along with paying millions for exclusive distribution rights to podcasts like The Joe Rogan Experience.
Why Does Spotify Want Megaphone?
This deal revolves around Spotify's technology called Streaming Ad Insertion (SAI).
Using Spotify's reach and data, the company can understand who is listening to a podcast (based on insights like age, gender, and listening behavior). It can then use this data to insert ads into a podcast in real-time.
As detailed on For the Record, SAI will be available to publishers on Megaphone. This is the first time that it has been available to third-parties.
It means that publishers will need to pay Megaphone to host or distribute their podcasts, if they want access to the advertising insights that the platform brings---that not only includes the SAI data from Spotify, but also analytics that show the ad was actually heard.
This is different to traditional podcast advertising, which has long been plagued with the problem of advertisers struggling to know the reach of their commercials or what the true conversion rate is.
Spotify says that in the second quarter of 2020, 22% of its total monthly average users engaged with podcasts and that podcast advertising revenue is up nearly 100% year over year.
What Changes For You?
For the podcast listener, nothing will change. When listening to podcasts on Spotify, you will continue to hear ads when they would normally crop up. However, if it's a Spotify original, or a podcast published via Megaphone, the ad should be better targeted to your interests if SAI is doing its job.
Spotify's acquisition of Megaphone is "subject to customary regulatory review", though the company expect it to go through.
In the meantime, if you discover a podcast you want to share with friends, try making use of Spotify's Promo Card feature.
