Streaming giant Spotify has announced plans to purchase podcast hosting company Megaphone for $235 million, which will grant the podcasting service to use a new assortment of tools for advertisers and podcast makers. One of these tools will allow Megaphone-hosted podcasts to utilize Spotify’s streaming ad insertion technology (SAI), which replaces normal podcast ads for real-time selections based on listener data.
According to Pitchfork, Spotify boasted 320 million monthly active users, with reported 22 percent engaging with podcasts on the platform. The platform started making gains in the podcast industry last year, when it purchased Gimlet and Anchor for a reported total of $340 million. It made another huge gain earlier this year, when podcast host Joe Rogan, who runs the most successful podcast in history, signed an exclusive multi-year deal with the platform.
“We believe that Megaphone and Spotify’s shared value in innovation will drive the podcast ecosystem forward around the world,” Megaphone’s chief executive Brendan Monaghan stated.
Spotify announced a plan earlier this year to allow artists and labels to promote their music on the platform, in return for a smaller royalty rate. This feature was set to be used on authoplay and Spotify’s radio service however and was not intended for the Spotify users’ Discover Weekly playlist.
The Union of Musicians and Allied Workers, which includes performers such as Sad13, Deerhoof and King Gizzard and The Lizard Wizard have demanded that Spotify increase royalty rates and eliminate pay-to-play arrangements on the platform. The platform’s CEO Daniel Ek attracted controversy regarding his comments on artist royalties, leading to condemnations from across the music industry.
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