Spotify + Gimlet/Anchor Quick Take + Worldwide Meetup Details!

[0] Hey, Acquired listeners.

[1] We are here with you today for two reasons.

[2] First, to remind everyone about our worldwide virtual meetup.

[3] So this Thursday, February 21st, we will all be getting together on the internet to celebrate Acquired Passing the Million Download milestone, which at this point was like a couple months ago, but it takes us a while to plan things.

[4] It'll be at 5 .30 p .m. Pacific time, which is 8 .30 p .m. Eastern time in the United States.

[5] We'll be doing it on Zoom.

[6] So we're pushing the boundaries of the medium here and figuring out what it looks like when we all pile into Zoom.

[7] And we are structuring it as a Q &A with folks.

[8] So the Zoom link is available in the show notes.

[9] And if you want to send us a question or upvote somebody else's question, which is very fancy, you can ask it in the Slack, thanks to a very cool Slack bot that David has set up.

[10] Yeah, called Slido.

[11] And we're going to have a, there's a channel live in the Slack right now called Meetups.

[12] So head over there to ask questions.

[13] Indeed.

[14] All right, David.

[15] So the second reason for this episode, over to you.

[16] Yes.

[17] The second reason is in true acquired experimental fashion here.

[18] We keep getting a whole bunch of requests in Slack and elsewhere for our take on things like the Qualtricks acquisition last year for the topic of today, Spotify's acquisition of Gimlet and Anchor.

[19] But the problem is we can't do like a full acquired treatment for all these.

[20] companies all at once, but we keep wanting to kill David to spend that much time at the library.

[21] Indeed.

[22] Indeed, the San Francisco Public Library is, you know, I'm already public enemy number one here.

[23] So we're going to experiment today with doing more of a quick take on some really relevant acquisitions to us in the podcasting space talking about Spotify's purchase of Gimlet, media, and Anchor.

[24] So how are we going to do this?

[25] there is sadly going to be no history and facts here.

[26] We'll just discuss very briefly.

[27] But we do have a much of thoughts we want to share and put out there and get your guys feedback.

[28] So yeah.

[29] And we should also say this does not preclude ever doing a future episode.

[30] This just sort of gives us an outlet to be able to share quick thoughts.

[31] And then, you know, as you guys know, as you guys know, we like to wait five plus years after acquisitions happen so that we can kind of have history as as our guidepost to decide if something was really something we can grade if it was a good acquisition or not.

[32] So know that this doesn't preclude us from doing it in the future, but it is a little extra outlet for us.

[33] So David, let's, should we, should we hit the facts of the acquisition first?

[34] Yeah.

[35] So facts are last week, the podcasting world changed.

[36] Spotify, not only acquired Gimlet Media for now, I think we, as of today know the numbers, they paid about $230 million for Gimlet, I believe, maybe slightly less, and also acquired Anchor for just over $100 million and then pledged that they were going to spend several hundred million more this year in 2019 in podcast acquisitions.

[37] Boom.

[38] In one day, podcasting went from an uninvestable category that has not achieved venture scale to suddenly having a guaranteed $500 million worth of exits this year.

[39] Things can sure change on a dime, or as David has said in multiple episodes, on a knife point.

[40] On a knife point, yes.

[41] The podcasting world turned on a knife point.

[42] Yeah, I think there's lots of people have, of course, had their takes on this, many of which I agree on.

[43] Ben Thompson wrote a great piece in his weekly piece.

[44] Exponent, Ben and James also covered it well.

[45] It's funny, I've been doing a whole kind of mapping out of the podcasting space as lots of other people have.

[46] What's interesting to me is I think the focus is so much on content here.

[47] I think the analogy really is is Netflix and what I mean by that is like on the one hand Spotify just paid let's take I'm talking about the gimlet piece of this uh Spotify just paid over 200 million dollars for a podcast media content company that makes just over 20 podcasts and the whole advertising monetization of the whole podcasting space last year was like what 300 million I think around there yeah so why does that make any sense is the question.

[48] This is where I think the Netflix analogy is it comes in.

[49] Spotify's business model is very different from anybody else in the podcasting space.

[50] Their business model is they get consumers to pay them $10 a month.

[51] Obviously, that's primarily for music, but also podcasts.

[52] The money that Spotify can spend on content, if it drives more people to pay them $10, a month and a large portion of their user base listens to that content, whether it's Gimlet or other content they'll acquire in the future.

[53] And we can talk about Anchor here.

[54] That is on a marginal per subscriber basis, very low and much lower than basically anybody else could pay in the space.

[55] Yep.

[56] It's a great point.

[57] And it's also worth pointing out, as many other smart people have on the internet all week, this could prove to be a dramatically better business model for Spotify than they have with music, where because there are so few providers of music out there, they basically have Spotify negotiated into a position where they must give the labels a revenue share on every song played.

[58] Now, Spotify creates these podcasts or licenses them, they can pay for a certain amount up front for the creation or license and participate in all the upside.

[59] So suddenly, you know, this business looks like it has all the characteristics that you normally get out of a technology business.

[60] And that is sort of why these technology businesses grow to be so valuable is because by, you know, having the characteristics of having high fixed costs, but then getting to spread that out over just an enormous amount of people where distribution costs are free.

[61] Obviously, people have talked about all this during the week.

[62] But what I haven't seen the point that's been missed to me is, is the next step of that, which is, okay, this is a fixed cost for content.

[63] But when you have fixed costs for any input into a business, the breadth of your customer base that you're amortizing those fixed costs over is your competitive advantage.

[64] Yeah.

[65] And that is what is really unique here for Spotify.

[66] And so we should clarify, too, that we're talking about that Spotify bought Gimlet, not for the content that they have today, but their ability to create exclusive content in the future.

[67] and the fact that sort of Gimlet is now this 100 -plus person organization that is close to best in class at producing content that will be, you know, fix costs for Spotify.

[68] And when they start producing, you know, more exclusive shows out of Gimlet, it'll be enormously differentiating for Spotify over Apple Music where they need strong differentiation.

[69] I would be very surprised if they take any of the existing Gimlet content and make it exclusive to Spotify.

[70] I think they've already announced they're not going to.

[71] Yeah.

[72] But yeah, it is all about the future content.

[73] And that brings us to the other piece of the two acquisitions here, which is Anchor.

[74] This one is super interesting.

[75] I did not see this coming at all.

[76] How about you, Ben?

[77] No, I would not have forecasted who bought them.

[78] But when it became clear that Anchor, Anchor sort of had that very excellently braggadocious announcement that they made recently that over 40 % of new podcasts are created using their platform.

[79] that data about what podcasts are starting today that are getting traction, that that was absolutely an acquisition target for somebody.

[80] That number, while certainly impressive, I had thinking about, I'm pulling up a picture of market map of the podcasting space that we drew out on the whiteboard here at Wave, I had viewed the recording and production segments of the market as not good places.

[81] to invest or build a business because I didn't think there was any money in it.

[82] There's not directly.

[83] Exactly, right?

[84] So that's what's interesting about this acquisition.

[85] So here's how we viewed the space.

[86] There's content itself.

[87] So you've got the gimlets, the ringer, MPR, on down to Acquired Media LLC.

[88] Then you've got recording, which Anchor was really the only player in outside of, you know, do your own, roll it yourself like we do here at Acquired.

[89] like many podcasts do.

[90] Then you've got production and editing, hosting.

[91] Hosting is a really interesting piece.

[92] We'll come back to.

[93] Distribution, promotion.

[94] Then on the consumer side, discovery, both organic and paid and then consumption, the listener apps that you all are listening to this show and right now.

[95] Where the big dollars are in this space are certainly in content, also potentially in paid discovery on the consumption side, and potentially also.

[96] in hosting, although we'll get back to that, I didn't think there was any money to be had in recording, and so I thought it was not that interesting.

[97] Well, it's recording, when it's bundled...

[98] As a strategic lever for creating more supply.

[99] So if it was a recording app that that's all it did, and then it handed it off to someone else to sort of host and be able to have insights on how that content is performing, then it's useless.

[100] But when bundled with sort of the entire creation and hosting and or I guess not distribution, but hosting process, well, then it's super valuable.

[101] And it's interesting to think about these businesses where if you can do something that doesn't capture a lot of value, but you can do it the best in the world, then it earns you the right to be able to get customers to use it and own another piece of the value chain that is differentiated and super valuable.

[102] I think listeners are probably way ahead of us, but to put a fine point on it, the supposition that we're making here is that Spotify bought Anchor not for any of the technology itself, not that it's necessarily specifically hard or highly, highly differentiated tech, but what the tech had managed to accomplish, and that was making it easy for anyone to podcast and getting a large number of new podcasts to start on the platform, which gives them a tremendous look at the data of what podcasts will be successful as they start to do more and more licensing and show creation themselves.

[103] Right.

[104] Exactly.

[105] Exactly.

[106] So, you know, Anchor by itself.

[107] Now, of course, Anchor was also a player, which is where they started before they pivoted into creating.

[108] So they were getting.

[109] It was almost like an audio social network.

[110] Yeah.

[111] Well, we were the Anchor podcast of the day way back in the day.

[112] That's right.

[113] Shout out to our good friends at Anchor.

[114] And congratulations to them.

[115] This is very different as part of Spotify than it was by itself.

[116] And probably much more valuable.

[117] It's interesting actually thinking about that that like we try to cover One Plus.

[118] one equals three things on the show, it strikes me that Spotify can extract a lot more value with Anchor as a part of them than Anchor ever could have created on their own.

[119] We would never use Anchor at Acquired because we care so much about highest quality audio possible and controlling every aspect of production.

[120] That's totally fine.

[121] Which you actually can use them for just hosting.

[122] Like we could record on our, you know, fancy old mics here and, you know, upload the audio content to them and allow them to do a lot of the cool stuff that they're doing with, you know, dynamic ad insertion, and there's a lot of other technology in there that could have been useful to us and is useful to friends of the show that we know that are putting their podcasts on anchor.

[123] So there is sort of other reasons to be on it other than yammering into my cell phone, but that is certainly a large part of the new podcast that were created, even though many of them only ever released one or two episodes.

[124] But where I was going with it is I don't think we ever would have paid them.

[125] Right.

[126] Probably not.

[127] yeah certainly not for that recording piece and hosting is basically pure commodity yeah hosting is a pure commodity we use libsen which is a publicly traded company amazingly so 37 million dollar cap publicly traded company yeah now what's interesting about the hosting part of the stack is that's the substrate for analytics.

[128] Analytics are so poorly built out in this industry, as we all know, and Lipson and others bundle analytics with hosting.

[129] So whatever insights we have, you know, about our audience and downloads and listens we get from that, analytics are also interesting, but I think also in and of themselves, not valuable.

[130] But again, back to part of Spotify as a content acquisition engine, you know, think about how Netflix works, right?

[131] Like they have, they host, of course, all the content that they're delivering.

[132] And then they have strong analytics on top of it that they use to inform their content, both acquisition and production decisions.

[133] So you start to see how this is really important.

[134] So the analytics, we should say, is not all the fault of the people who make the analytics dashboards.

[135] The vast majority of them don't have access to client side data so you only get the information that the server sees which is pretty small but there's a lot more that you sort of could do and the virtue of that is extolled in the many many tab spreadsheet that I have to export data from various sources and agglomerate our own our own analytics and I know that a lot of the um the larger networks do the same thing and so it's kind of a it's a funny space it is amazing I mean it shows you know the opportunity here for tech, both tools and software, but also platforms and large platforms maturing here.

[136] Like the gymnastics you go through, Ben, and that, you know, all sophisticated podcast creators go through and publishers is just ridiculous.

[137] Okay.

[138] So now we have this world where Spotify has been growing in listener share.

[139] The numbers I've seen over the last several months have been somewhere in the sort of 7 to 8 % range.

[140] The folks that, you know, Gimlet cited 20%, which is interesting.

[141] It must be measured either on a different access or if Spotify sort of has different information than what I've seen from a lot of the aggregated sources.

[142] It also could be, certainly for us, it could be a segment issue.

[143] Like so many of you listeners, you know, we know listen in Overcast, listen in Pocketcast.

[144] That's great.

[145] I love Overcast.

[146] I mean, would never listen in just a stock app.

[147] But I think that very much, you know, is dependent on us being in the, tech vertical.

[148] Yeah.

[149] And that's not our numbers.

[150] That's sort of industry numbers that I've been seeing, like Libson released something a few months ago that said 7%.

[151] So it's been growing.

[152] You know, they really only started doing podcasts like 18 months ago or 24 months ago, something like that.

[153] And so already getting meaningful share because, oh my gosh, when you have an app that everyone already clicks on to listen to stuff, it turns out if you give them different stuff to listen to, that's not so different.

[154] And that was the bet is that people who listen to music in your app will also want to listen to podcasts in your app.

[155] It was a reasonable supposition and is definitely bearing fruit.

[156] They've been growing and growing and share.

[157] Now, Apple has historically been the elephant in the space with 50, 60, it used to be like 80 % of listens happening in the Apple podcast app.

[158] Spotify is slowly chipping away.

[159] These acquisitions, you know, if they can really produce differentiated content, you know, the next serial being produced on Spotify is a very real possibility.

[160] And one could make the argument, well, it won't be the next serial if it's on Spotify because it will only reach a fraction of the people.

[161] Well, you know, there's a chicken and the egg thing here and they can kind of keep leveling up.

[162] And if they get a larger and larger percentage, there is a chance that they could create the next serial on their platform.

[163] And the same way that when Netflix releases Birdbox, if they have a hit that they are able to release the content access marketing and could go drive a bunch of people to sign up for Spotify, purely to get access to that exclusive and differentiated content.

[164] So that is sort of the white whale that they are chasing here is that differentiated content will accelerate the pace of Spotify having listener share and get closer to be the largest player in the market.

[165] The podcasting world really did fundamentally change last week with this.

[166] And it's because of this business model point, which is Spotify is the only player that now has a very, not only a very different business model from anyone else in the podcasting space, but I would argue really the only viable business model.

[167] Like Apple, unless they change their, their model, Apple has no incentive to go invest 200 million in content for podcasts because they're not making any money off of that, whereas Spotify is doing the math and running the analytics and saying like, okay, great, if we can produce or acquire this compelling content, and we're willing to spend a lot on it and that drives enough subscriptions for us, like we'll take that all day.

[168] And There's a lot, a lot happening in the podcast space.

[169] I'm so far from being willing to say the only viable business model.

[170] I think that lots of, there's lots of people that have lots of announcements that are.

[171] Oh, sorry, the only viable business model today.

[172] But I think that's going to change.

[173] We're releasing this only days from now.

[174] And at the pace of the space is moving right now, it wouldn't surprise me if, uh, I don't think anybody's going to announce anything over the weekend.

[175] That's true.

[176] What I think we should chat about next is, okay, great.

[177] This is now the Paul Revere, you know, riding through the shots have been fired.

[178] The British are coming, you know, the Swedes are coming with Spotify.

[179] What's next for the space?

[180] I think the question, what's next and what will happen can be broken down into who are the stakeholders and what do they all want.

[181] and if you look at the alignment of incentives and you sort of form some beliefs around how the sequencing will happen based on what those incentives are, you can sort of come out to what possible scenarios for the future are.

[182] So if you look at the stakeholders, there's people who produce audio, so everyone from networks to acquired to somebody who is producing audio for the first time and someone who, you know, it's thinking about starting a podcast, which is, I don't know, how many millennials are there?

[183] 100 million or something the question is how many podcasts will each millennial create that's a great point my model doesn't take that into account yeah what's the what's the multiplier on there what's the slope 1 .2 something like that so there's the audio creators there's the listeners and then there's these businesses that are trying to sort of sit in the middle of these things so there's Apple there's Spotify certainly there's these players that have been at it forever with, you know, Stitcher.

[184] There's a lot of really great listening apps out there today like Breaker.

[185] I think we should start with listeners and creators first and then back into platforms.

[186] So I'll pose this question to you, David.

[187] Should podcasters allow their podcast to be distributed on Spotify?

[188] Is that in their best interest?

[189] Well, we have had a bunch of conversations over the past about this.

[190] Here's my view.

[191] I think yes, 100 % because any incremental audience is great audience, and we'll come back in one sec to why that is going to get even more important.

[192] The answer is assuredly yes, unless and until Spotify makes a product change to go to an algorithmic feed instead of a subscription model.

[193] So if Spotify starts looking more like YouTube where they control access, they intermediate access between you and your listeners, that's a dangerous place for podcasters.

[194] Like, hey, what should you listen to right now?

[195] Hey, this is what we recommend based on things that you've given a signal to over time.

[196] Exactly.

[197] And there's nothing wrong with that for discovery.

[198] I mean, that's what Breaker does.

[199] But it's when that becomes the primary listen mode like on YouTube.

[200] And this is why YouTube creators are so upset at the podcast.

[201] platform is they say like, hey, I have my audience.

[202] People subscribe to me. People follow me. And then you intermediate that and then I don't reach them anymore.

[203] If Spotify does that, I think then there's a question, should you be on it?

[204] I don't know that they will.

[205] And they certainly, you know, aren't going to anytime soon.

[206] Right.

[207] It's, I mean, Spotify today looks basically like a glorified RSS reader that, you know, hey, look, a feed that you subscribe to, got a new thing that, go listen to it.

[208] The reason I don't think they will is, or, or, or, or, you know, it's not a slam dunk that they will is because again think think back to the netflix analogy like they are going to invest a lot in creating tent pole triple a content great they're obviously going to make that discoverable and merchandise that in the app but they're they're not like youtube right they're not trying to maximize number of listens to show ads alongside their business model is a 10 dollars a month per subscriber.

[209] Like YouTube, they want you to watch as much content as possible for as long as possible so they can show you as many ads as possible.

[210] Spotify just wants you to pay them 10 bucks a month.

[211] Spotify wants you to be the, have the highest, as Tim Cook says, customer sat with your experience.

[212] As long as Spotify believes that is getting surfaced the content that you have subscribed to, then it will stay that way.

[213] To the extent that it ever changes, and they're like actually a news feed of content that is really well tailored for you.

[214] Also, we happen to put our first party content in it.

[215] Also, we happen to, for whatever other reasons, put other things in it.

[216] That is the scenario where...

[217] Right.

[218] That's the danger.

[219] Where you become, you know, a journalist on Facebook.

[220] Yes, yes.

[221] You make a really good point that I actually have not heard anyone make yet.

[222] That is, their business model.

[223] So if we walk backwards from like, why does Facebook have a news feed?

[224] Or why do they still have a news feed.

[225] Let's not take it from the initial implementation of it.

[226] But, you know, why have they doubled down so hard on the feed?

[227] It's because it happens to be the greatest format in humanity to show ads.

[228] Yep.

[229] And to keep your attention.

[230] Right.

[231] Spotify, their business model is completely different where, you know, they're not trying to show you ads.

[232] Also, the way that they keep your attention is not visually.

[233] So there's not like that, that sort of feed metaphor.

[234] The question is, is there like, you know, there were these great apps that happened, swell, 60 dB that were sort of these like algorithmic short form audio.

[235] We're just going to play stuff that we think you like.

[236] The question is, will Spotify's $10 a month customers be more delighted with a primary experience around here's some stuff you like than they will with.

[237] Here's the latest episode of a thing that you have directly created a relationship with and subscribe to.

[238] Perhaps.

[239] And that's why I say perhaps.

[240] But I don't think they have a nearly as much of a like if google had bought gimlet or facebook had bought gimlet uh yeah i'd be super worried as a podcaster about putting my content on those platforms spotify yeah we'll see we'll see like what if netflix opened up the door for anybody creating video why hasn't netflix done this if you're on youtube and you also want to upload your content to spot to netflix here's a way to like that's what happened to us in spotify we we got the opportunity to just say, cool, yeah, we can put it there, too, and reach their audience.

[241] Why hasn't Netflix decided that any freely available content on other platforms should also be available on ours?

[242] I wonder if with video it's a bandwidth and hosting issue.

[243] Like, that actually, that it costs a lot of money.

[244] Remember, that's why perhaps misguidedly, that's why I gave YouTube a C, right?

[245] That's probably our worst grading ever.

[246] Yeah, we're definitely going to have to redo that one.

[247] The question is like, does Netflix believe that that will increase subscriber acquisition or retention?

[248] Probably not.

[249] If it's content I can get elsewhere, probably not.

[250] And so Spotify looked at it as it's super cheap, so why not?

[251] Or Spotify probably looked at it as, well, we want to have exclusive differentiated content and the way to train people to listen to spoken audio content here at all, at all is to index the publicly available stuff.

[252] That's probably more of what it is.

[253] I'm sure they didn't emerge from the womb with their strategy fully formed around podcasting.

[254] I'm sure they were experimenting too.

[255] But okay, so why, as a podcaster, do I really, you know, in the world of 2019, why do I really care about getting more listeners?

[256] What's changed there?

[257] Well, we are living proof.

[258] So a lot of folks know this, but LPs definitely know this.

[259] The LP show is going really, well.

[260] If you look at sort of podcasting as a funnel, our bottom of funnel is folks that are directly paying to access bonus content and go deeper on the show.

[261] So you can pay $5 a month and go beyond the standard episode format that David and I do and listen to us, talk about stuff like product market fit and interview awesome people like Doug Rand, who talked to us about the supply chain of clean energy funding in the U .S., like all these cool topics that like, David, you and I are curious about, but, you know, don't really have an opportunity to do on the show.

[262] And so, like, oh, my gosh, there's a business model now to be able to directly monetize some percent of your audience in a super aligned way with, with their interests.

[263] And by having more listeners, you now have this business model available to you, either on top of sponsorship or in addition to sponsorship, where the larger your, whatever that percentage is that a show is able to convert to, you know, something like a limited partner program, the more.

[264] more of the top of funnel matters, too.

[265] As listeners of the show probably know, Ben and I started thinking about this last summer.

[266] And, you know, the outcome of that, of course, is the limited partner program, but also the company, Kimberlite, which we've been building, Ben's been building inside of PSL that is powering the limited partner program and is soon going to be available to any podcast to use.

[267] Yeah, we're super pumped.

[268] I was super, super pumped.

[269] And so now, you know, this is the other, I think, major, you know, that is, is happening in parallel to the world -changing announcement of Spotify last week is that as a podcaster now, no matter what size you are, whether you know, you're unacquired and you have tens of thousands of listeners or you're a, you know, small podcast that has hundreds of listeners or even you're a Joe Rogan that has millions of listeners, you can implement a business model that is aligned with creating great content, aligned with connecting with and You know, your fans and your community.

[270] And as we've seen on Acquired, you know, again, we started the limited partner program for two reasons.

[271] One, we wanted to do it.

[272] Two, we wanted to experiment and see, you know, the market opportunity here.

[273] But it's going to be at least, it's on track.

[274] It's growing way faster than our advertising revenue did.

[275] And we'll become our primary business model over time.

[276] And that's not to say we don't love our sponsors.

[277] We actually think we have this like A crazy also aligned sponsorship model on the show, but like it is so cool to both be able to produce the second stream of content that we've been wanting to do for a while and it feels like it's just it's a really good sort of value alignment with the audience.

[278] You know, not to be on our soapbox about like Kimberlite specifically.

[279] I think obviously if you're interested, you should definitely go to Kimberlite .fm and check it out and we'd of course love feedback or if you want to use it, anything like that.

[280] But this, the notion generally that, you know, we're moving to an era where, you know, independent creators can can have this relationship with audience and have sort of sustainable business models where content can be directly funded by folks that it is most resonant with.

[281] It's just a cool, cool era to be in.

[282] Yeah.

[283] Well, that's what's part also why we wanted to do this as our first, you know, sort of mini episode and get our thoughts out there is, you know, for so many years, and especially all of last year in 2018, everybody was talking about what's up with podcasts?

[284] like is this just a bad space like all this attention but somehow no monetization yes all this attention and uh billions of listener hours and yet only 300 million in you know monetization for the whole space what's going on here well now all of a sudden there are two extremely viable business models in the space at totally different ends of the spectrum and i think they're going to coexist completely which is tent pole big content you know Spotify paving the way there but also bottoms up direct monetization for podcasts of any scale.

[285] And interestingly, yeah, with the same business model of this direct pay for content, albeit different, you know, one is pay to get access at all and the other is sort of pay to either go deeper or, but who's to say people won't use Kimberlite to do all sorts of interesting things with structuring how you pay for content.

[286] Someone could use Kimberlite like we are to do an extra show.

[287] You could do it for a whole show.

[288] you could do it for every other episode of a show.

[289] We won't be doing those things that acquired, but anybody could use it how they want.

[290] Don't make promises, David.

[291] We don't know yet.

[292] That's right.

[293] Don't worry, listeners.

[294] The main show will always be free and always, well, I was going to say, hopefully, always as great as it's been.

[295] Not in like a threatening way.

[296] And like, have you and I ever actually like stuck to something?

[297] It's like, oh, this show's just about acquisitions that actually went well.

[298] Wait, it's about all acquisitions.

[299] Oh my gosh, add IPOs.

[300] Wait, also.

[301] we tell the story of definitive companies.

[302] Right.

[303] We, we, uh, like we are in this very moment, we always reserve the right to add more to acquired.

[304] But don't worry, the core acquired show, uh, will always, um, will always be what it is and will always be open and free to everyone.

[305] Indeed.

[306] Okay.

[307] So we cover the creator side.

[308] I don't think we need to spend as much time on the rest of the ecosystem, but I do want to make sure we round it out.

[309] So it wasn't like, why did they go on that big long tangent and then end?

[310] So the audience side, I think it's a win for listeners who want to, uh, particularly listeners who aren't enormous podcast fans and aren't going to have a dedicated app for it, but have one or two that they want to listen to or potentially be exposed to podcasting when they otherwise wouldn't have been exposed to it.

[311] So it can kind of be a gateway to sort of more dedicated podcast playing experiences.

[312] At least short term, it is a really good thing for podcasting to be available in Spotify.

[313] Longer term, I think there's sort of an open question of, and this gets into sort of like the philosophical dueling that happens on the internet, but is it better to have this sort of all open ecosystem?

[314] Is it better for a company to have a lot of control and be able to like really deeply optimize the experience, but at the benefit of their own business?

[315] You know, I think there's lots of discussion and cross talk that could happen there, but I think listeners want to listen to content that they like in the most frictionless way possible.

[316] And so every step that we have toward that seems like a good thing for, for listeners.

[317] And they're now being two, at least two and perhaps more, but I think probably two core viable business models in the space to support it is only going to be great for listeners.

[318] Podcasting content available to listeners has grown exponentially over the last few years.

[319] And just think about now.

[320] It's insane looking at graphs.

[321] It's insane, right?

[322] But how much of that content has been of the quality of Gimlet, of the quality of, you know, I won't say acquired, but people, you know, there's a lot out there.

[323] But now there's, now that they're business models to support people investing in content, that's only going to mean more quality content.

[324] Just like we've had the renaissance in television over the last few years with Netflix and Amazon video.

[325] I'm very curious to see.

[326] So Edison Research does a survey every year to see sort of like are more people, you know, what's the current state of podcasting?

[327] And they ask things like how many people listen weekly, how many people listen monthly.

[328] There are some staggering stats around how mainstream podcasting is now that almost 80 million people listen monthly, almost 50 million people listen weekly.

[329] When people listen to podcasts, they spend an average of like six and a half hours a week listening to podcasts.

[330] So that applies to weekly listeners.

[331] The growth rate of podcast among Americans is modest.

[332] It's like 15 % per year, but the number of new podcasts created is like exponentially growing.

[333] Something like, I don't know, it's like 10 to 15 ,000 podcasts created a month, which I'm sure most of have one or two episodes, but, and are not saying there's 10 or 15 ,000 reply all is created every month, but, you know, there's one, but it's interesting to look at the growth of the space across all those different vectors of number of shows is huge.

[334] Audience space is relatively large.

[335] Growth of audience base is relatively modest, but I think this year, I bet we'll have a jump by it really entering the public consciousness.

[336] And also, I think Spotify will probably deserve a lot of the credit for a bigger than normal year in podcast listenership in the U .S. Podcast listenership has grown all completely organically.

[337] Again, because there haven't been viable business models, there has been no ability or incentive for anyone to spend on advertising and marketing for podcasts.

[338] That has changed now.

[339] You're going to start seeing, certainly Spotify, but podcasts being marketed to you on television, on billboards, on, you know, where do you see movies marketed to you?

[340] Especially if you're driving through L .A. yeah exactly the way that we've been thinking about this in the world of kimberlite is like people can't be trusted to spend money or you can't expect people to spend money when they don't have trust that that money is well spent it's definitely a flywheel of enabling confidence that there's an ROI on your spend will dramatically increase the the amount of money flowing through an ecosystem and that just wasn't the case before but now you know again even down to the smallest podcast every incremental listener that comes to your show if you're monetizing via kimberlite uh or or a similar platform you are getting ROI on that spend you know i didn't put two and two together till now but uh ben one of your one of your carve outs uh from perhaps years ago at this point uh the dissect podcast which is unbelievable i finally started listening oh yeah that was the blueprint right uh that's what you're going to see like cole spotify licensed cold Cole Cole created this amazing content.

[341] It was an independent creator.

[342] Just incredible.

[343] If you haven't listened to the Dysack podcast, by the way, season two, I mean, you know, who could not love diving into my beautiful, dark, twisted fantasy.

[344] I have so much more appreciation for Kanye now than before I listen to that.

[345] For folks who weren't listening a season or two ago when that was my, my carve out, it is every single episode.

[346] So the season is an album.

[347] So they, the Cole Cuchinad analyzes the Kanye West album, my beautiful.

[348] Dark, Twisted Fantasy.

[349] Every episode is a song and it's an hour long and he basically, he's both a great storyteller and also a music producer.

[350] So he dissects all the lyrics and then he dissects the beat and he basically builds up the entire instrumental track for you to talk about where every bit of it came from and how it all sort of aligns with the, um, the sort of artistry of the vocals and it is completely bananas.

[351] It's incredible.

[352] Yeah.

[353] So yeah, so Spotify, I think it was right after season two at the end of season two.

[354] Cole was just a guy like us, had a day job and did this on nights and weekends, and Spotify hired him.

[355] And now he creates it full time for Spotify, but it's still accessible to everyone in every feed.

[356] It's a very soft hammer they're brandishing.

[357] It's like, oh, it's produced by us, but you can listen anywhere.

[358] Oh, it's windowed a little bit.

[359] Oh, you can hear it for the first week here on Spotify, but still everywhere.

[360] I mean, there's definitely, oh, we're putting up a billboard for the Amy Schumer show that we paid a rumored million dollars to have her come to a show with us.

[361] And of course, all the billboards say, you should listen to the Amy Schumer podcast on Spotify.

[362] Of course, you can listen everywhere else.

[363] We're not going to take it off everywhere else, but like everyone ends up listening on Spotify because all the billboards say to listen on Spotify.

[364] Like, it is a pretty well executed plan.

[365] Mm -hmm.

[366] Mm -hmm.

[367] This is a huge moment for them in the industry, as we've been saying.

[368] All right.

[369] So, David, you asked the original question and then I danced around.

[370] it of sort of what's next for the ecosystem.

[371] And we've talked about now what's good for listeners, what's good for creators?

[372] I don't know.

[373] What do you think?

[374] I think this is the beginning of the golden age of, I would call it the golden age of radio, right?

[375] Like people talking about the golden age of television, it's not television anymore.

[376] You know, Netflix and Prime Video are to television, what podcasting is to radio.

[377] It's been bubbling up slowly over the last, gosh, 15 years, right?

[378] The podcasting has been a thing.

[379] 2006, I believe, yeah.

[380] Yeah, so 13 years.

[381] Kind of just like online video was a thing for a long time before the golden age really emerged.

[382] But I think that's what we're heading into.

[383] And I do think even though Spotify is doing a great job of really getting more listener share, there's quite a bit of pie growth.

[384] So like more people listening to podcasts.

[385] You know, I do think there's some steady state where I don't think this will be entirely owned by one place.

[386] I do think players and other large companies are going to continue to do things, particularly now that the Spotify thing has happened.

[387] It's probably woken a lot of folks up.

[388] But I do think we'll kind of continue to see a fragmented player experience for a long time.

[389] And I think in some ways, podcasting apps are a lot like to -do list apps or weather apps or what are the other sort of like UI playgrounds?

[390] Everybody's kind of finicky around like, what's the best productivity software?

[391] Ask 10 people get 14 answers.

[392] And so I think there's definitely an amount here.

[393] where we'll continue to see fragmentation for a long time.

[394] Spotify will build an excellent business in podcasting.

[395] It will bolster their whole business.

[396] It may even be bigger than music at some point.

[397] Who knows?

[398] But yeah, other companies will too for sure.

[399] This is not a winner take all space on the content side.

[400] This hasn't happened yet, but I think it's going to now.

[401] Just like multi -homing is super easy in video, you know, I watch stuff on Netflix and Amazon and YouTube and, you know, whatever.

[402] I don't really care where it is.

[403] I would just watch great content, you know, and Apple and Disney when they launched their streaming service.

[404] Disney Plus, the best name ever.

[405] Indeed.

[406] All right.

[407] Do we have anything else?

[408] Have we navel gaze sufficiently here into the world of podcasting?

[409] I think that's it.

[410] So, listeners, we hope to see you, hear from you at the meetup, worldwide virtual meetup next week.

[411] We would especially love to hear your thoughts and feedback and questions on this topic and this format.

[412] Do you want to see us do more of these short episodes around big announcements?

[413] Would you rather us not clutter your feed?

[414] Let us know.

[415] And these will be weird.

[416] They'll be like podcasts that are released that are not numbered, that say quick take, that don't have the research we normally do, but probably do have this kind of, I would guess this one's longer than a normal quick take episode.

[417] They'll probably be this sort of 10 to 20 minute.

[418] But honestly, who knows?

[419] we would love your feedback if you want to go deeper with us on on tech and VC you should definitely consider becoming a prestigious prestigious acquired limited partner you can click the link in the show notes or go to kimberlite .fm slash acquired we would love to have you indeed we'll see you on thursday see you on thursday