Spotify Technology SA agreed to acquire Megaphone, which creates tools for podcast advertisers, in a deal that values the acquisition at $235 million.
Founded by online news company Slate, Megaphone connects podcast publishers such as Vox and ESPN with networks of advertisers. Spotify will use Megaphone’s network and tools to offer advertising technology to thousands of podcasts.
After building up its podcasting operations, Spotify is trying to line up more advertising — helping it justify the investment in a still-nascent genre. The music streaming giant has now spent more than $800 million acquiring podcast firms, including Gimlet Media, Anchor and the Ringer, aiming to decrease its reliance on record companies. Podcasts generated $708.1 million in advertising sales in the US last year, according to the Interactive Advertising Bureau. That number has grown every year and should surpass $1 billion within the next year or two.
Spotify — and its investors — have been betting that podcasts will have a significant payoff in the long run.