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

Spotify + Gimlet/Anchor Quick Take! We continue to experiment on Acquired, this time with a quick-take on Spotify’s bombshell dual-acquisition of Anchor and Gimlet Media. While we may give these deals the full Acquired treatment in the future, we wanted to share our quick thoughts with you all sooner rather than later while the Acquired research department (aka Ben & David’s free time) works through the current episode backlog. Let us know if you like this format and we’ll do more in the future! Sponsors: Vanta: https://bit.ly/acquiredvantaServiceNow: https://bit.ly/acquiredservicenow26Legora: https://bit.ly/acquiredlegoraStatsig: https://bit.ly/acquiredstatsig26 More Acquired! Get email updates https://www.acquired.fm/email with hints on next episode and follow-ups from recent episodesJoin the Slack http://acquired.fm/slackSubscribe to ACQ2 https://pod.link/acquiredlpMerch Store https://www.acquired.fm/store! © Copyright 2015-2026 ACQ, LLC

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Ben Gilbert?

  Hey Acquired listeners. We are here with you today for two reasons. First, to remind everyone about our worldwide virtual meetup. 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 of months ago, but you know, it takes us a while to plan things. It'll be at 5:30 PM Pacific time, which is 8:30 PM Eastern Time in the United States. We will be doing it on Zoom, so we're pushing the boundaries of the medium here and figuring out what it looks like when we all pile into Zoom. And we are structuring it as a Q and A with folks. So the Zoom link is available in the show notes. And if you want to send us a question or upvote somebody else's question,

• 0:43Ben Gilbert?

  which is very fancy, you can ask it in the Slack, thanks to a very cool Slack bot that David has set up.

• 0:49David Rosenthal?

  Yeah, called Slido. And we're gonna have a, there is a channel live in the Slack right now called Meetups. So head over there to ask questions.

• 0:57Ben Gilbert?

  Indeed. All right, David, so the second reason for this episode, over to you.

• 1:02David Rosenthal?

  Yes, the second reason is in true Acquired experimental fashion here. We keep getting a whole bunch of requests in Slack and elsewhere for our take on things like the Qualtrics acquisition last year, for the topic of today, Spotify's acquisition of Gimlet and Anchor. But the problem is, we can't do like a full Acquired treatment for all these companies all at once, but we keep wanting to-

• 1:29Ben Gilbert?

  Kill David, just spend that much time at the library.

• 1:33David Rosenthal?

  Indeed, indeed. The San Francisco Public Library is, I'm already public enemy number one here. So we're gonna 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. So how are we gonna do this? There is sadly gonna be no history and facts here. We'll just discuss very briefly. But we do have a bunch of thoughts we want to share and put out there and get your guys' feedback, so.

• 2:08Ben Gilbert?

  Yeah, and we should also say this does not preclude ever doing a future episode. This just sort of gives us an outlet to be able to share, share quick thoughts. And then, you know, as you guys know, we like to wait five plus years after acquisitions happen so that we can kind of have history as our guidepost to decide if something was, you know, really something we can grade, if it was a good acquisition or not. So know that that this doesn't preclude us from doing it in the future, but it is a little extra outlet for us.

• 2:36Ben Gilbert?

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

• 2:39David Rosenthal?

  Yeah. So facts are, last week, the podcasting world changed. 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.

• 3:10Ben Gilbert?

  Boom. In one day, podcasting went from an uninvestable category that has not achieved venture scale, to suddenly having, you know, a guaranteed $500 million worth of exits this year. Things can sure change on a dime, or as David has said in multiple episodes, on a knife point.

• 3:29David Rosenthal?

  On a knife point, yes. The podcasting world turned on a knife point. Yeah, I think there's, lots of people have, of course, had their takes on this, many of which I agree on. Ben Thompson wrote a great piece in the weekly, his weekly piece, Exponent, Ben and James also covered it well. It's funny, we've, I've been doing a whole kind of mapping out of the podcasting space, as lots of other people have. What's interesting to me is I, I think the focus is so much on content here. I think the analogy really is, is Netflix. And what I mean by that is like, on the one hand, Spotify just paid, we're taking, I'm talking about the Gimlet piece of this, Spotify just paid over $200

• 4:12David Rosenthal?

  million for a podcast media content company that makes just over 20

• 4:18David Rosenthal?

  Podcasts and the whole advertising monetization of the whole podcasting space last year was like, what, 300 million, I think?

• 4:27Ben Gilbert?

  Around there, yeah.

• 4:28David Rosenthal?

  So why does that make any sense is the question? This is where I think the Netflix analogy is it comes in. Spotify's business model is very different from anybody else in the podcasting space. Their business model is they get consumers to pay them $10 a month. Obviously, that's primarily for music, but also podcasts. 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, and we can talk about Anchor here,

• 5:09David Rosenthal?

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

• 5:18Ben Gilbert?

  Yep, it's a great point. 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. Now, if Spotify creates these podcasts or licenses them, they can pay for a certain amount upfront for the creation or license and participate in all the upside. So suddenly, this business looks like it has all the characteristics that you normally get out of a technology business.

• 5:59Ben Gilbert?

  And that is sort of why these technology businesses grow to be so valuable is because by 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.

• 6:15David Rosenthal?

  Obviously, people have talked about all this during the week, but what I haven't seen, the point that's been missed to me is The next step of that, which is, okay, this is a fixed cost for content, 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

• 6:37Ben Gilbert?

  Matters a lot.

• 6:38David Rosenthal?

  is your competitive advantage.

• 6:39Ben Gilbert?

  Yeah.

• 6:40David Rosenthal?

  Yeah. And that is, that is what is really unique here for Spotify.

• 6:43Ben Gilbert?

  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. 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, fixed cost for Spotify. 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.

• 7:13David Rosenthal?

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

• 7:20Ben Gilbert?

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

• 7:22David Rosenthal?

  But yeah, it is all about the future content. And that brings us to the other piece of the two acquisitions here, which is Anchor. This one is super interesting. I did not see this coming at all. How about you, Ben?

• 7:36Ben Gilbert?

  No, I would not have forecasted who bought them, 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, that data about what podcasts are starting today that are getting traction, that that was absolutely an acquisition target for somebody.

• 8:02David Rosenthal?

  That number, while certainly impressive, I had, thinking about, I'm pulling up a picture of a 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 to invest or build a business, because I didn't think there was any money in it.

• 8:26Ben Gilbert?

  There's not directly.

• 8:28David Rosenthal?

  Exactly. Right? So that's what's interesting about this acquisition. So, so here's how, how We viewed the space. There's, there's content itself. So you've got the Gimlets, the Ringer, you know, NPR, on down to Acquired Media LLC. 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 and like many podcasts do. Then you've got production and editing, hosting. Hosting is a really interesting piece we'll come back to. Distribution, promotion, then on the consumer side, discovery, both organic and paid, and then, and then consumption, the listener apps that you all are listening

• 9:08David Rosenthal?

  to the show in right now. Where the big dollars are in this space are certainly in content, also potentially in paid discovery on the consumption side, and potentially also in hosting, although we'll get back to that. I didn't think there was any money to be had in recording, so I thought it was not that interesting, but-

• 9:28Ben Gilbert?

  Well, it's recording, it's, it's, when it's bundled-

• 9:30David Rosenthal?

  Has a strategic lever for, for creating more supply.

• 9:34Ben Gilbert?

  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, on how that content is performing, then it's useless. But when bundled with sort of the entire creation and hosting and just, and, or I guess not distribution, but, but hosting process, well, then it's super valuable. And, 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. I think listeners are probably way ahead of us, but to put a fine point on it, the

• 10:18Ben Gilbert?

  supposition that we're making here is that Spotify bought Anchor not for any of the technology itself, like, not, not that it's necessarily specifically hard or, 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.

• 10:47David Rosenthal?

  Right. Exactly. Exactly. So, you know, Anchor by itself. Now, of course, Anchor was also a player, which is where they started before they pivoted into creating. So they were getting-

• 10:57Ben Gilbert?

  It was almost like an audio social network.

• 10:59David Rosenthal?

  Yeah, well, we were the Anchor podcast of the day way back in the day.

• 11:03Ben Gilbert?

  That's right.

• 11:04David Rosenthal?

  Shout out to our good friends at Anchor and congratulations to them. This is very different as part of Spotify than it was by itself.

• 11:11Ben Gilbert?

  And probably much more valuable. Like, it's interesting, actually, thinking about that, that like, we try to cover one plus 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.

• 11:26David Rosenthal?

  We would never use Anchor at Acquired because we care so much about highest quality audio possible and controlling every aspect of production. That's totally fine.

• 11:35Ben Gilbert?

  Which you actually, you actually can use them for, for just hosting. Like, we could record on our, you know, fancy old mics here and, 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, that could have been useful to us and is useful to friends of the show that, that we know that are putting their podcasts on Anchor. So there is sort of other reasons to be on it other than yammering into my cellphone, but that is certainly a, a large part of the new podcasts that were, were created, even though many of them only ever released one or, or two episodes.

• 12:08David Rosenthal?

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

• 12:12Ben Gilbert?

  Right, probably not. Yeah.

• 12:15David Rosenthal?

  Certainly not for that recording piece.

• 12:19Ben Gilbert?

  And hosting is basically pure commodity.

• 12:21David Rosenthal?

  Yeah, hosting is a pure commodity. We use Libsyn, which is a publicly traded company, amazingly so.

• 12:27Ben Gilbert?

  Thirty-seven million dollar cap publicly traded company.

• 12:30David Rosenthal?

  Yeah. Now, what's interesting about the hosting part of the stack is that's the substrate for analytics. Analytics are so poorly, you know, built out in this industry, as we all know. And Libsyn and others bundle analytics with hosting. So whatever insights we have, you know, about our audience and downloads and listens we get from, from that, analytics are also interesting, but I think also in and of themselves, not valuable. But again, how back to part of Spotify as a, as a content acquisition engine. You know, think about how Netflix works, right? Like, they have They host, of course, all the content that they're delivering.

• 13:14David Rosenthal?

  And then they have strong analytics on top of it that they use to inform their content, both acquisition and production decisions. So you start to see how this is really important.

• 13:24Ben Gilbert?

  So the analytics, we should say, is not all the fault of the people who make the analytics dashboards. 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 analytics. And I know that a lot of the larger networks do the same thing. And so it's kind of a, it's a funny space.

• 13:56David Rosenthal?

  It is amazing. I mean, it shows you the opportunity here for tech, both tools and software, but also platforms and large platforms maturing here. Like the gymnastics you go through, Ben, and that, you know, all sophisticated podcast creators go through and publishers is just ridiculous.

• 14:15Ben Gilbert?

  Okay, so now we have this world where Spotify has been growing in listener share. The numbers I've seen over the last several months have been somewhere in the sort of 7% to 8% range. The folks at Gimlet cited 20%, which is interesting. It must be measured either on a different axis or if Spotify sort of has different information than what I've seen from a lot of the aggregated sources.

• 14:40David Rosenthal?

  It also could be, certainly for us, it could be a segment issue. Like so many of you listeners, you know, we know, listen in Overcast, listen in Pocket Casts. That's great. I love Overcast. I mean, would never listen in just a stock app. But I think that very much is dependent on us being in the tech vertical.

• 14:59Ben Gilbert?

  Yeah, and that's not our numbers. That's sort of industry numbers that I've been seeing. Like Libsyn released something a few months ago that said 7%. So it's been growing. You know, they really only started doing podcasts like 18 months ago or 24 months ago, something like that. 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. 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. It was a reasonable supposition and is definitely bearing fruit. They've been growing and growing in share. 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 Podcasts app.

• 15:41Ben Gilbert?

  Spotify is slowly chipping away. These acquisitions, you know, if they can really produce differentiated content, you know, the, the next cereal being produced on Spotify is a very real possibility. And one could make the argument, well, the next, it won't be the next cereal if it's on Spotify because it will only reach a fraction of the people. Well, you know, there's a chicken and the egg thing here and they can kind of keep leveling up. And if they get a larger and larger percentage, there is a chance that they could create the next cereal on their platform. And the same way that when Netflix releases Bird Box, 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.

• 16:20Ben Gilbert?

  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.

• 16:32David Rosenthal?

  The podcasting world really did fundamentally change last week with this. 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, 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.

• 17:10David Rosenthal?

  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.

• 17:21Ben Gilbert?

  There's a lot, lot happening in the podcast space. I'm so far from, from being willing to say the only viable business model. I think that lots of, there's lots of people that have lots of announcements that are.

• 17:32David Rosenthal?

  Oh, sorry. The only viable business model today, but I think that's going to change.

• 17:38Ben Gilbert?

  We're releasing this only days from now. And at the pace the space is moving right now, it wouldn't surprise me if.

• 17:45David Rosenthal?

  I don't think anybody's going to announce anything over the weekend.

• 17:50Ben Gilbert?

  That's true.

• 17:50David Rosenthal?

  What I think we should chat about next is, okay, great. This is now the Paul Revere, you know, riding through, the shots have been fired. The British are coming, you know, the Swedes are coming with Spotify. What's next for the space?

• 18:11Ben Gilbert?

  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? 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. 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, is thinking about starting a podcast, which is, I don't know, how many millennials are there?

• 18:46Ben Gilbert?

  100 million or something?

• 18:49David Rosenthal?

  The question is, how many podcasts will each millennial create?

• 18:56Ben Gilbert?

  That's a great point. My model doesn't take that into account.

• 18:59David Rosenthal?

  Yeah. What's the, what's the multiplier on there? What's the slope?

• 19:02Ben Gilbert?

  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, there's Apple, there's Spotify. Certainly there's these players that have been at it forever with Stitcher. There's, there's a lot of really great listening apps out there today like Breaker. I think we should start with listeners and creators first and then back into platforms. So I'll pose this question to you, David. Should podcasters allow their podcasts to be distributed on Spotify? Is that in their best interest?

• 19:39David Rosenthal?

  Well, we have had a bunch of conversations over the past day about this. Here's my view. 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. The answer is assuredly yes, unless and until Spotify makes a product change to go to an algorithmic feed instead of a subscription model. 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.

• 20:21Ben Gilbert?

  Like, hey, what should you listen to right now? Hey, this is what we recommend, based on things that you've given a signal to over time.

• 20:26David Rosenthal?

  Exactly. And there's nothing wrong with that for discovery. I mean, that's what Breaker does, but it's when that becomes the primary listen mode, like on YouTube. And this is why YouTube creators are so upset at the platform is they say like, hey, I have my audience, people subscribe to me, people follow me, and then you intermediate that and then I don't reach them anymore. If Spotify does that, I think then there's a question, should you be on it? I don't know that they will, and they certainly aren't going to anytime soon.

• 20:54Ben Gilbert?

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

• 21:04David Rosenthal?

  The reason I don't think they will is, or 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 AAA 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 a month per subscriber. 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. Spotify just wants you to pay them $10 a month.

• 21:46Ben Gilbert?

  Spotify wants you to be the, have the highest, as Tim Cook says, customer sat with your experience. As long as Spotify believes that is getting surfaced, the content that you have subscribed to, then it will stay that way. To the extent that it ever changes, and they're like, actually, a newsfeed of content that is really well tailored for you. Also, we happen to put our first-party content in it. Also, we happen to, for whatever other reasons, put other things in it. That is the scenario where-

• 22:16David Rosenthal?

  Right. That's the danger. Where you become, you know, a journalist on Facebook.

• 22:22Ben Gilbert?

  Yes, yes. You make a really good point that I actually have not heard anyone make yet, that is their business model. So if we walk backwards from like, why does Facebook have a newsfeed? Or why do they still have a newsfeed? Let's not take it from the initial implementation of it. But, you know, why have they doubled down so hard on the feed? It's because it happens to be the greatest format in humanity to show ads.

• 22:44David Rosenthal?

  Yep. And to keep your attention.

• 22:47Ben Gilbert?

  Right. Spotify, their business model is completely different, where, you know, they're not trying to show you ads. Also, the way that they keep your attention is not visually. So there's not like that, that sort of feed metaphor. The question is, is there like, you know, there were these great apps that happened, Swell, 60DB, that were sort of these like algorithmic short-form audio. We're just going to play stuff that we think you like. 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, here's the latest episode of a thing that you have directly created a relationship with and subscribed to?

• 23:29David Rosenthal?

  Perhaps. And that's why I say perhaps. But, but I don't think they have a, nearly as much of a, like, if Google had bought Gimlet, or Facebook had bought Gimlet, yeah, I'd be super worried as a podcaster about putting my content on those platforms. Spotify, we'll see, we'll see.

• 23:47Ben Gilbert?

  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 Netflix, here's a way to. Like, that's what happened to us in Spotify. We got the opportunity to just say, cool, yeah, we can put it there too and reach their audience. Why hasn't Netflix decided that any freely available content on other platforms should also be available on ours?

• 24:10David Rosenthal?

  I wonder if with video, it's a bandwidth and hosting issue.

• 24:14Ben Gilbert?

  Like, No.

• 24:15David Rosenthal?

  That actually, that costs a lot of money. Remember, that's why, perhaps misguidedly, that's why I gave YouTube a C, right?

• 24:23Ben Gilbert?

  That's probably our worst grading ever.

• 24:26David Rosenthal?

  Yeah, we're definitely gonna have to redo that one.

• 24:28Ben Gilbert?

  The question is, like, does Netflix believe that that will increase subscriber acquisition or retention? Probably not. If it's content I can get elsewhere, probably not. And so Spotify looked at it as it's super cheap, so why not? 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. That's probably more of what it is.

• 24:57David Rosenthal?

  I'm sure they didn't emerge from the womb with their strategy fully formed around podcasting. They, I'm sure they were experimenting too.

• 25:04Ben Gilbert?

  Yeah.

• 25:06David Rosenthal?

  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? What's changed there?

• 25:19Ben Gilbert?

  Well, we are living proof. So, a lot of folks know this, but LPs definitely know this. The LP show is going really well. 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. 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 US. Like, all these cool topics that, like, David, you and I are curious about, but, you know, don't really

• 25:57Ben Gilbert?

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

• 26:26David Rosenthal?

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

• 26:46Ben Gilbert?

  Yeah, we're super pumped.

• 26:48David Rosenthal?

  Super, super pumped. And so now, you know, this is the other, I think, major that 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 an acquired 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 supporting, you know, your fans and your community. And as we've seen on acquired, you know, again, we started the limited partner program for two reasons.

• 27:32David Rosenthal?

  One, we wanted to do it. Two, we wanted to experiment and see, you know, the market opportunity here. But it's going to be at least it's it's on track. It's growing way faster than our advertising revenue did. And we'll become our primary business model over time.

• 27:47Ben Gilbert?

  And that's not to say we don't love our sponsors. We actually think we have this like crazy also aligned sponsorship model on the show. But like, it is so cool to both be able to produce this second stream of content that we've been wanting to do for a while. And it feels like it's just it's it's a really good sort of value alignment with the audience, you know, not to be on our soapbox. About like Kimberlite specifically, 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. 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, with audience and have sort of sustainable business models where content can be directly funded by folks that it is most resonant with. It's just a cool, cool era to be in.

• 28:31David Rosenthal?

  Yeah. 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 podcasting? Like, is this just a bad space? Like?

• 28:50Ben Gilbert?

  All this attention, but somehow no monetization.

• 28:52David Rosenthal?

  Yeah. It's all this attention and 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.

• 29:23Ben Gilbert?

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

• 29:40David Rosenthal?

  Someone could use Kimberlite like we are to do an extra show. You could do it for a whole show. You could do it for every other episode of a show. We won't be doing those things at acquired, but anybody could use it how they want.

• 29:54Ben Gilbert?

  Don't make promises, David. We don't know yet.

• 29:56David Rosenthal?

  That's right. Don't worry, listeners. The main show will always be free and always, well, I was gonna say hopefully always as great as.

• 30:04Ben Gilbert?

  Oh, I didn't, I didn't even mean that. Not, not in like a threatening way and like a, like, have you and I ever actually like stuck to something? It's like, oh, the show's just about acquisitions that actually went well. Wait, it's about all acquisitions. Oh, my gosh, add IPOs. Wait, also, we tell the story of definitive companies.

• 30:18David Rosenthal?

  Right. Yeah. We, like we are in this very moment, we always reserve the right to add more to acquired. But don't worry, the core acquired show will always, will always be what it is and will always be open and free to everyone.

• 30:32Ben Gilbert?

  Indeed. Okay, so we covered the creator side. 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. So it wasn't like, why did they go on that big, long tangent then end? So the audience side, I think it's a win for listeners who want to, 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. So it can kind of be a gateway to sort of more dedicated podcast playing experiences. At least short term, it is a really good thing for podcasting to be available in Spotify. Longer term, I think there's sort of an open question of, and this gets into sort of like the philosophical dueling that happens

• 31:14Ben Gilbert?

  on the internet, but is it better to have this sort of all open ecosystem? 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? You know, I think there's lots of discussion and crosstalk that could happen there, but I think listeners want to listen to content that they like in the most frictionless way possible. And so every step that we have toward that seems like a good thing for, for listeners.

• 31:41David Rosenthal?

  And there 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. Podcasting content available to listeners has grown exponentially over the last few years. And just think about now-

• 31:59Ben Gilbert?

  It's insane looking at graphs.

• 32:00David Rosenthal?

  It's insane, right? 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, but now there's, now that there are business models to support people investing in content, that's only going to mean more quality content. Just like we've had the renaissance in television over the last few years with Netflix and Amazon Video.

• 32:27Ben Gilbert?

  I'm very curious to see, 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? And they ask things like, how many people listen weekly? How many people listen monthly? There are some staggering stats around how mainstream podcasting is now that almost 80 million people listen monthly, almost 50 million people listen weekly. When people listen to podcasts, they spend an average of like six and a half hours a week listening to podcasts. So that's, that applies to weekly listeners. The growth rate of podcasts among Americans is modest. It's like 15% per year, but the number of new podcasts created is like exponentially growing, something like, I don't know, it's like 10 to 15,000 podcasts created a month, which, you know, I'm sure most of have one or two episodes, but, and are not saying there's

• 33:12Ben Gilbert?

  10 or 15,000 reply alls 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, audience base is relatively large, 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. And also I think Spotify will probably deserve a lot of the credit for a bigger than, than normal year in podcast listenership in the US.

• 33:43David Rosenthal?

  Podcast listenership has grown all completely organically. 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. That has changed now. 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?

• 34:07Ben Gilbert?

  Especially if you're driving through LA.

• 34:09David Rosenthal?

  Yeah, exactly.

• 34:11Ben Gilbert?

  The way that we've been thinking about this in the world of Kimberly 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.

• 34:32David Rosenthal?

  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 Kimberly or a similar platform, you are getting ROI on that spend.

• 34:47David Rosenthal?

  You know, I didn't put two and two together till now, but Ben, one of your carve outs from perhaps years ago at this point, the dissect podcast, which is unbelievable. I finally started listening.

• 34:59Ben Gilbert?

  Oh, yeah.

• 35:00David Rosenthal?

  That was the blueprint, right? That's what you're gonna see.

• 35:03Ben Gilbert?

  That was.

• 35:03David Rosenthal?

  Cole.

• 35:04Ben Gilbert?

  Spotify licensed.

• 35:05David Rosenthal?

  Cole created this amazing content. He was an independent creator, just incredible. If you haven't listened to the dissect podcast, by the way, season two, I mean, you know, who could not love diving into?

• 35:16Ben Gilbert?

  Beautiful, dark, twisted fantasy.

• 35:19David Rosenthal?

  I have so much more appreciation for Kanye now than before I listened to that.

• 35:23Ben Gilbert?

  For folks who weren't listening a season or two ago, when that was my carve out, it is every single episode. So the season is an album. So they, Cole Kutchner analyzes the Kanye West album, My Beautiful Dark Twisted Fantasy. 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. 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, the sort of artistry of the vocals. And it is completely bananas.

• 36:00David Rosenthal?

  It's incredible. Yeah. So, yeah, so Spotify, I think it was right after season two, at the end of season two, Cole was just a guy like us, had a day job and did this on nights and weekends and Spotify hired him and now he creates it full time for Spotify, but it's still accessible to everyone in every feed.

• 36:20Ben Gilbert?

  It's a very soft hammer they're brandishing. It's like, oh, it's produced by us, but you can listen anywhere. Oh, it's windowed a little bit. Oh, you can hear it for the first week here on Spotify, but, but still everywhere. 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, to have her come to a show with us. And of course, all the billboards say you should listen to the Amy Schumer podcast on Spotify. Of course you can listen everywhere else. 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. Like it is, it's a pretty well executed plan.

• 36:55David Rosenthal?

  Mm hmm, mm hmm. This is a huge moment for them and the industry, as we've been saying.

• 37:01Ben Gilbert?

  All right. So David, you asked the original question, then I danced around it of sort of what's next for the ecosystem. And we've talked about now what's good for listeners, what's good for creators. I don't know. What do you think?

• 37:11David Rosenthal?

  I think this is the beginning of the golden age of, I would call it the golden age of radio, right? Like, people talking about the golden age of television. It's not television anymore. You know, Netflix and Prime Video are to television what podcasting is to radio. It's been bubbling up slowly over the last, gosh, 15 years, right? The podcasting has been a thing.

• 37:32Ben Gilbert?

  2006, I believe. Yeah.

• 37:34David Rosenthal?

  Yeah, so 13 years. Kind of just like online video was a thing for a long time before, before the golden age really emerged. But I think that's, I think that's what we're heading into.

• 37:46Ben Gilbert?

  And I do think even though Spotify is doing a, you know, a great job of really getting more listener share, there's quite a bit of pie growth. So like more people listening to podcasts. You know, I do think there's some steady state where I don't think this will be entirely owned by one player. I do think players and other large companies are going to continue to do things, particularly now that the Spotify thing has happened. It's probably woken a lot of folks up. But I do think we'll kind of continue to see a fragmented player experience for a long time. 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? Everybody's kind of finicky around like, what's the best productivity software? Ask

• 38:28Ben Gilbert?

  10 people, get 14 answers. And so I think there's definitely an amount here where we'll continue to see fragmentation for a long time. Spotify will build an excellent business in podcasting. It will bolster their whole business. It may even be bigger than music at some point. Who knows?

• 38:42David Rosenthal?

  Yeah, other companies will too, for sure. This is not a winner take all space on the, on the content side. This hasn't happened yet, but I think it's going to now. Just like multi-homing is super easy in video. You know, I watch stuff on Netflix and Amazon and YouTube and, you know, whatever. I don't really care where it is. I just watch great content. You know, and Apple and Disney when they launch their streaming service.

• 39:09Ben Gilbert?

  Disney Plus, the best, best name ever.

• 39:14Ben Gilbert?

  Indeed. All right. Do we have anything else? Have we navel gazed sufficiently here into the world of podcasting?

• 39:22David Rosenthal?

  I think that's it. So listeners, we hope to see you, hear from you at the meetup, Worldwide Virtual Meetup next week. We would especially love to hear your thoughts and feedback and questions on this topic and this format. Do you want to see us do more of these short episodes around big announcements? Would you rather us not clutter your feed? Let us know.

• 39:45Ben Gilbert?

  And these will be weird. 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, I would guess this one's longer than a normal Quick Take episode. They'll probably be this sort of 10 to 20 minute, but honestly, who knows? 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/acquired. We would love to have you.

• 40:16David Rosenthal?

  Indeed. We'll see you on Thursday.

• 40:19Ben Gilbert?

  See you on Thursday.