What is Spotify may buy The Ringer. Here’s why that makes sense.

What is Spotify may buy The Ringer. Here’s why that makes sense.

Last year, Spotify achieved its grandeur when it bought a series of broadcasters. Now it can happen again: The company is in talks to buy The Ringer, a startup podcast-focused firm, by Bill Simmons, a sports media pioneer.

Spotify, which spent $ 400 million in 2019 on three podcast companies – Jimlet Media, Anchor FM and Parkcast – discussed dating back at least in October 2019 with Simons, who were familiar with the public. It is unclear how much progress the negotiations are making now, with Spotify may also be interested in purchasing other podcast companies.

In the event of the Spotify-Ringer deal, it shows that Spotify believes that the podcast deals it made last year were well spent and that podcasts would be an important part of the music company’s future. What he wouldn’t suggest is what could happen to Ringer’s games and popular cultural podcasts, which are now freely available on every platform, including the Apple Podcast app.

This is a good bet, though Spotify would be interested in acquiring at least one Simmons collection to produce more Spotify exclusive podcasts, like the “Hottest Tech” series that began production for Spotify last September.

The Wall Street Journal first reported the talks. Representatives of Spotify and Ringer declined to comment; Simmons did not respond to a request for comment.

There is some basic rationale for the potential deal: Last year, Spotify announced that radio broadcasting would become an important part of its business, and it took steps to pursue both of its exclusive podcasts and also promote podcasts in general. .

And although The Ringer has a web post and has visited videos and TV shows, the bulk of its revenue comes from broadcasting. Last year, the magazine reported that the company was generating more than $ 15 million of audio per year.

Simmons has been immersed in podcasting since 2007, when he was a rising star on Disney’s ESPN unit. In 2015, after ESPN allowed him to leave, Simmons started his website. HBO initially supported the site, and employed it to host a short-lived TV show, among other programs. Simmons did not disclose whether it had other investors.

Simmons first talked about selling his company. Last year he discussed a sale with WarnerMedia of AT&T, and suggested a price of about $ 100 million, according to a source familiar with the discussions. WarnerMedia was already working with Simmons through its HBO unit; It also owns Turner, the television network that owns Bleacher Report, and a digital sports publisher that it acquired in 2012.

Negotiations between WarnerMedia and Simmons stalled before news that Spotify was buying the gimlet. As Spotify has started its podcast spree, many podcast-related companies have imagined that their value has increased, so Simmons is likely to feel the same.

Spotify said that she wanted to invest in radio broadcasting for several reasons. You would think that Spotify would potentially pay users who listen to podcasts for the premium version of Spotify and are less likely to stop using the service.

Spotify wanted to use podcasts to build its advertising business, earlier this month, it announced plans to provide ad targeting for podcast advertisers with demographics and Spotify listener behavior. This is what data marketers are already using for standard web ads – using the same technology that tells advertisers if you’ve seen slippers on Zappos, or before you visit Vox.com. Any website visited by – but this podcast was not widely available to advertisers. If distributed, as traditional businesses assume, these advertisements will register a lot of money.

Podcasts grow rapidly, but it is still a good activity compared to the rest of the advertising world. Last year, Edison Research estimated that 32 percent of people in the US are over the age of twelve – i.e. 90 million people – listen to podcasts every month. This is 11 percent higher than a decade ago.

But advertisers usually take some time to follow users. Audio ads are set to generate more than $ 860 million this year and $ 1 billion in 2021. But the rest of digital advertising brings more than $ 107 billion to the United States.

Spotify believes that she can achieve better economics than podcasts, from the music posters responsible for much of her work. Ultimately – in theory – if radio broadcasting becomes large enough, Spotify’s overall margin may improve, and this may lead Wall Street to believe that Spotify is more valuable.

To date, Apple has dominated podcasts, mainly due to the popularity of iOS, which is a built-in podcast app.

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