Spotify Reports Surprise Profit in Q4, Announces Acquisition of Gimlet Media, Anchor


The company said it will spend up to $500 million on podcast start-ups this year; the deal with Gimlet is rumored to be in the neighborhood of $200 million.

Webster said he thought Spotify's acquisition into podcasting also could push more labels to become more open to letting podcasts use licensed music.

Today, Spotify has confirmed that it's not only in definitive agreements to buy Gimlet but also podcast creation and publishing firm Anchor. Terms were not disclosed, but industry sources have estimated the GIMLET deal at about $230 million.

Spotify won't be leaving music behind, however. That alone would be the biggest acquisition in Spotify's history.

The platform generated sales of 1.5 billion euros for the quarter, up 30 percent year-on-year, while its net profit totaled 442 million euros.

Recode points out that the acquisition puts Spotify in the content creation business for the first time - something the company hasn't done in its nearly 11 years in the music industry. Gimlet will bring to Spotify its best-in-class podcast studio with dedicated IP development, production and advertising capabilities.

Gimlet spokesman Kevin Turner said the company's 120 employees would be joining Spotify.

"These acquisitions will meaningfully accelerate our path to becoming the world's leading audio platform, give users around the world access to the best podcast content, and improve the quality of our listening experience while enhancing the Spotify brand".

"Spotify is poised to become the largest audio platform in the world and we are excited for Gimlet's award-winning podcasts to connect with new audiences around the world", Blumberg and Lieber said in a statement.

Read Ek's full letter about the acquisitions here.

"While podcasting is still a relatively small business today, I see incredible growth potential in this space", Ek said on a call with investors Wednesday morning. Ek says that he fully expects 20 percent of all Spotify listening to be non-music related content eventually.

"Gimlet is one of the best content creators in the world, with unique, celebrated podcast shows like Homecoming, which was recently adapted into a critically acclaimed show on Amazon Prime, and the internet culture hit Reply All". Anchor will bring its platform of tools for podcast creators and its established and rapidly growing creator base. Podcasters have complained that even Apple largely ignores podcasts when compared to its other services.

Spotify doesn't seem like it's finished spending money on acquisitions yet, either. The deals are expected to close in first quarter.