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Spotify buys Megaphone in its biggest deal yet

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Spotify’s purchase of Anchor gave them a podcast host for the grass-roots of podcasting - a free host with easy, mobile-first tools. Anchor hasn’t been used by larger companies, however: even Spotify themselves haven’t been using it, preferring to host their Spotify Originals on Megaphone.

Spotify’s “Streaming Ad Insertion” technology only works within the Spotify player: instead of stitching an ad into the show when it’s downloaded, SAI allows the ad to be chosen at the very time that it’s played, according to Sounds Profitable's Bryan Barletta in a recent article. However, the rest of the podcasting world doesn’t work like that; and currently only about 10% of podcasts are consumed using Spotify. While this is important to Megaphone publishers, who will gain significantly from the acquisition, it’s a small percentage of total podcast revenue.

However, with Megaphone, Spotify can now begin to profit from their podcast investments both within the Spotify app, but also across other podcasting platforms for the first time - from Apple Podcasts to Google Podcasts, Spotify can now sell ads and benefit from the wider podcasting ecosystem.

Far from making podcasting more closed, this seems to be an investment by Spotify into the open podcast infrastructure - RSS feeds, free shows and all.

If you thought Spotify was a big part of podcasting yesterday, it’s become an awful lot bigger today.

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