Earlier this week, Spotify announced that it has acquired Parcast, a “premier storytelling-driven” podcast studio that specializes in crime and mystery series. The news comes shortly after the music streaming services acquisitions of Gimlet and Anchor, two other podcast networks.
Spotify has offered the ability to stream podcasts via its app for a while now, but it’s purchasing of three podcast networks and studios means that some of this content will now be developed in-house. Parcast was founded in 2016 and has since become extremely popular, particularly with women, who make up 75% of its audience. Since Parcast launched three years ago it has already developed 18 original series, such as “Unsolved Murders”, “Cult”, “Serial Killers” and “Conspiracy”.
The three recent acquisitions highlight Spotify’s growing desire to move its business model beyond music streaming and instead provide a range of audio content for a wide variety of people. As the CEO Daniel Ek said in a recent blog-post: “I’m proud of what we’ve accomplished, but what I didn’t know when we launched to consumers in 2008 was that audio — not just music — would be the future of Spotify.”
Parcast’s proven success makes the deal between the two audio companies make sense for Spotify, as it provides little risk and potentially high reward. Over the years podcasts have become integral to millions of people’s daily routines and, as The New York Times points out, podcasts are also cheap to produce and can, therefore, bring in loyal subscribers to Spotify without relying on expensive music licensing rights.
And this is where the real incentive lies: as Owen Grover, the chief executive of Pocket Casts, a podcast app, said: “I don’t think Spotify woke up one day and realized that audio storytelling has some incredible emotional place in the life of their brand. Strategically, if they can get their users to listen to podcasts in place of music, it improves their margins.”
The move also highlights the growing competition between Apple and Spotify as they battle for top spot in the audio streaming business. Apple has so far provided the main international platform for podcasts, but Spotify’s recent expansion shows that it believes it can challenge Apple for this title. Spotify has also recently announced that it aims to spend $500 million on podcast-related deals over the next couple of years, so expect the competition to heat up.