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Music streaming service Spotify is set to buy Megaphone, a podcast publishing and advertising platform.
The acquisition, which is worth $235 million, is Spotify’s most ambitious deal to date. Since last year, the company has spent millions of dollars expanding into the podcast production market.
Currently, Spotify is using Megaphone’s hosting services. The streaming company is buying Megaphone to use its advertising expertise. The audio streaming company plans to create targeted ads. It also aims to make ad monitoring tools available to third-party podcast creators, allowing them to monetize and earn more from their shows.
According to Spotify, podcast advertising has the potential to become big despite only making up a small amount of the company’s current revenue. So far, Spotify’s venture into podcasts and advertising has paid off. During 2020’s third quarter, 22% of the company’s monthly average users interacted with podcasts. Additionally, Spotify now has more than 1.9 million podcasts that feature topics like education and sports.
With Spotify’s acquisition of Megaphone, the audio streaming company now has an arsenal of podcast-related software and millions of podcast titles. Paul Vogel, Spotify’s chief financial officer, is optimistic that buying Megaphone will help the business grow.