We’ve talked a lot in JRN 450 about podcasts and how successful they are becoming. Recently, Spotify bought Gimlet Media for around $230 million. That’s a lot of money.
In a Vulture article first announcing that the deal might happen, it’s said that acquiring Gimlet will help in Spotify’s push into podcasting. Because there is a growing demand—or audience interest—in podcasts, will obtaining Gimlet help Spotify meet that demand and ultimately make money?
“Podcasting, in theory, offers Spotify a new growth channel that’s still relatively untouched pasture,” the article said. “Distributing the wider world of podcasts won’t cost the platform much up front, and original content is thought to be comparatively cheap to produce, though that might change as quality expectations increase over time.”
The article talked about how Spotify is raising the stakes by investing in podcasts. It’s kind of a newer thing to do. Could this lead to more competition? Will Spotify competitors want to do the same thing and also invest in podcasts? As we’ve learned in class and on our group journeys to investigate the differences between three separate Coney Island locations, competition is very alive. I’m interested to see what the outcome of this deal will be and what it will mean for media startups similar to Gimlet.
When it comes to Alex Blumberg and Matt Lieber’s perspectives in selling Gimlet Media, they said in a Recode interview that joining with Spotify—a platform with global distribution and billions in revenue—would allow them to do more and make money for their investors.
It seems like the deal is benefiting both parties when it comes to money and creating a better platform.
“I’m not going to sit here and tell you that the money doesn’t matter, because obviously the money matters,” Blumberg said to Recode. “I don’t think you start a company and just be like, ‘I don’t care at all if I will eventually get rich from this company.’ But I can also honestly say that the money was far and away not the driving factor. To me, the driving factor was, will this be better for the work we’re trying to do? And will this be better for the employees that have trusted us to come to the company?”
Blumberg says that money wasn’t the “driving factor” in the decision to make the deal with Spotify. Although money is an important factor in being able to create and distribute good content; it’s not the primary reason why someone decides to sell their company. It has to be more than that—selling has to benefit your company’s work.
In a Recode interview with Fortune CEO Alan Murray, Murray talks about where Fortune magazine’s revenue comes from. He said the magazine makes up less than half of the revenue. Instead, 20 million people a month are reached digitally and they have “fast-growing” business events that make more revenue. Murray said these events aren’t purely about selling tickets and putting people on a stage. He said it’s rather about “creating a community of people.”
It seems like a lot of things are changing when it comes to journalism. I don’t entirely understand the economics of it all, but it’s interesting to learn about how newspapers and magazines are getting most of their revenue nowadays and about media company mergers and sales.
One thought on “Money might be important, but it’s not the ‘driving factor’”
I agree that it is fascinating to see how media companies really make money. So many journalism classes are focused on the content, but we have started to see that even some good content can fail if the money isn’t there. It will definitely be interesting to see how Gimlet and Fortune move forward now that they are part of a bigger company. I’m not sure what this will mean for the world of podcasting or magazines, but I hope that both entities are able to maintain their individuality.