Spotify to Buy Ad Tech Firm Megaphone to Monetize Podcasts

Spotify to Buy Ad Tech Firm Megaphone to Monetize Podcasts
The Spotify logo hangs on the facade of the New York Stock Exchange with U.S. and a Swiss flag in New York on April 3, 2018. (Lucas Jackson/Reuters)

Sweden-based Spotify Technology SA has agreed to buy podcast advertising and publishing platform Megaphone, Spotify said on Nov. 10.

The deal, Spotify’s latest to boost its podcast platform, values Megaphone at $235 million, a spokesman said.

Megaphone’s technology will be used to create targeted ads, said Spotify, which will make its proprietary ad monitoring tools available to third-party podcast publishers.

Spotify, which earns revenue from paid subscriptions and by disseminating ads to non-paying users, saw its advertising business return to growth in the third quarter after it was hit by the pandemic earlier this year. Executives have said ad growth will accelerate in the current quarter.

The company’s heavy investments in podcasts, in an effort to become the Netflix of audio content, have helped drive subscriber growth at a time when many people are homebound due to the coronavirus outbreak.

Since last year, Spotify has spent hundreds of millions of dollars to buy companies such as Gimlet Media, a podcast producer, and Ringer, the sports and entertainment podcast network founded by sports writer Bill Simmons.

The company said the new technology will help podcast publishers earn more from their work.

“We are still in the early chapters of the streaming audio industry story, but it is absolutely clear that the potential is significant,” said Dawn Ostroff, Spotify’s chief content and advertising business officer.

Spotify now has 1.9 million podcasts, up from 1.5 million in the second quarter.

By Supantha Mukherjee and Ken Li