Spotify (NYSE: SPOT) announced Tuesday it is set to acquire podcast ad company Megaphone for USD235 Million. Neither company has commented on whether the agreement will be in cash, stock or a combination of both. The company’s stock fell 1% following the market open.
Megaphone was first launched in 2015 under the name Panopoly before officially rebranding in 2019. The technology company originally produced several podcasts for big name brands such as Buzzfeed, The Wall Street Journal and Vox. However, as of late, it is solely focused on back end concerns like hosting, ad tools and distribution.
Spotify has acquired several other podcasts over the years and has reached agreements with shows which included public figures such as Joe Rogan, Kim Kardashian and Michelle Obama. Furthermore, the audio streaming and media company has bought out companies like The Ringer and Gimlet Media.
“Together, Spotify and Megaphone will offer podcast publishers innovative tools that will help them earn more from their work,” Spotify said in a press release. “This includes the opportunity to opt in to have their content monetized, matching their loyal listeners with even greater demand from advertisers.”
The deal is expected to provide advertisers with a greater reach on Spotify and will permit podcast publishers to possibly monetize their shows.
“I think there’s been very little innovation, particularly on the podcasting side in terms of how to better target advertising and allow creators to actually monetize their product in a much higher way,” Spotify’s CFO Paul Vogel said on its recent third quarter earnings call. “And I think our ability to help bring those tools and services into the ecosystem will be great for the overall growth of business, it will allow creators to actually make more money off of their podcasts. And I think it will benefit us as well.”