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Spotify wants to build a podcast empire, starts by buying Gimlet and Anchor

It's not all talk.

Spotify's Daniel Ek presents on stage

Spotify CEO Daniel Ek says podcasts can draw in new listeners.

Spotify

Spotify picked up podcast companies Gimlet and Anchor as it looks for new listeners, the streaming service said Wednesday. 

"Our podcast users spend almost twice the time on the platform, and spend even more time listening to music," Spotify CEO Daniel Ek said in a statement. "We have also seen that by having unique programming, people who previously thought Spotify was not right for them will give it a try."

The announcement came as Spotify released its quarterly financial results,  

Amid the cultural shift to streaming as the most common way people listen to musicSpotify and Apple Music have emerged as the leaders in the race to dominate subscription tunes. Though Spotify remains the biggest streaming service by both subscribers and those who listen for free, Apple Music has been growing quickly and its iTunes service remains the world's de facto place to find and download podcasts. 

On Wednesday, Spotify reported that its paid subscribers rose to 96 million at the end of 2018 -- a 36 percent increase from a year earlier. Including all the people who listen to Spotify free with ads, Spotify had 207 million using its service at least once a month at the end of 2018. That's a 29 percent jump from a year earlier. The new figures met or beat the high end of what the company predicted in November. 

By comparison, Apple Music has more than 50 million paid subscribers, Apple said during its own earnings call last week. Because it lacks a free tier that lets anyone listen to music on demand, Apple has never disclosed a monthly-active-user stat; almost all people who use Apple Music are paid subscribers. 

Expecting non-music listening to eventually make up 20 percent of listening, Spotify said that Gimlet and Anchor will serve two podcasting roles for its service, as a platform for podcast creators and as the leading producer of podcasts.

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"Gimlet is one of the best content creators in the world, with unique, celebrated podcast shows like Homecoming ... and the internet culture hit Reply All," Ek said. "And Anchor has completely reimagined the path to audio creation, enabling creation for the next generation of podcasters worldwide --15 billion hours of content on the platform during [the fourth quarter]."

Financial terms of the deals weren't disclosed, but Spotify said that it was aiming to spend $400 million to $500 million on multiple acquisitions this year. Recode earlier reported that Spotify was expected to buy Gimlet for $230 million

Looking ahead, Spotify predicted that it will have 97 million to 100 million paid subscribers by the end of March and that its monthly active users will increase to between 215 million and 220 million.

In the fourth quarter, Sweden-based Spotify reported a profit of 442 million euros ($505 million), or 36 euros a share, swinging from a loss of 596 million euros, or 3.87 euros a share, a year earlier. Spotify posted an operating profit for the first time, but most of its bottom-line profit stemmed from a decline in its share price, which reduced the taxes Spotify had to pay on workers' stock-based compensation.

Revenue rose 30 percent to 1.5 billion euros in the quarter.

Originally published Feb. 6 at 5:25 a.m. PT.
Updated at 6:57 a.m. PT: With more details. 

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