Welcome to Hot Pod, a newsletter about podcasts. This is issue 194, published February 5, 2019.

Happy Lunar New Year, everyone! Okay, so, obviously I’m going to go long on the Gimlet–Spotify deal this week, but we need to start with some other stories first, because plans were made.

A quick exclusive: Vox Media has added Switched On Pop, a popular independent music podcast by Charlie Harding and Nate Sloan, to its podcast network. The show will officially relaunch next month as Vox’s first music-centered podcast and will publish on a weekly basis. This is Vox Media’s first external podcast signing, though Harding and Sloan will retain ownership over the show.

Why file organization matters [by Caroline Crampton]. Preserve This Podcast exists to help podcasters protect their work against digital decay. Funded by an $142,000 grant from the Mellon Foundation, it started work in February 2018; it’s tackling a a problem they argue will hit podcasts other than other forms of mass media because cultural heritage institutions aren’t as yet focused on preserving them.

A big part of the project is improving awareness of the problem, but they’re also collecting data about how people currently create, back up, and preserve their podcasting work to get a snapshot of the status quo. To this end, they’ve conducted a survey, and I’m going to digest some findings from that work for you now.

To start, a brief note about terminology. There’s a difference between “backing up” your audio work (saving files in multiple locations to guard against a laptop failing, for instance) and properly “archiving” it. I’ll let PTP team member Molly Schwartz of the Metropolitan New York Library Council explain it.

“There’s a few things that go into it,” she told me on the phone last week. “One is having file organization in some kind of setup so that if someone else is looking at it, they would know what is where…Also, have all the necessary metadata and forms and other files with your podcast collection. Release forms, photos that you’re using, transcripts. Keeping those in a collection with the audio files is something I would consider part of archiving a podcast.” Another good archiving practice: preserving raw tape and draft cuts in uncompressed formats along with any final versions.

That said, PTP’s survey revealed some interesting insights into podcasters’ tech habits. There were 556 respondents, 72 percent of them in the U.S. Around a third produce podcasts full time and two-thirds make audio independently. With this last stat in mind, one of the biggest trends to emerge was the gap in digital preservation practices between indie producers and those working for an institution. Of the 27 percent who say the back up uncompressed versions of all of their files — what Schwartz calls “preservation completists” — 68 percent of them work for institutions.

That’s not surprising, since those working inside a media company or podcast network are more likely to have had training or guidance on how to organize their files. Within even that cohort, though, there was still a substantial knowledge deficit, Schwartz said.

“What was interesting to me was even though people who worked for institutions were more likely to have stronger preservation practices, they didn’t necessarily know what their institution’s preservation policies were,” she said. “And that’s actually a big outcome of this: It makes us aware that this should be a wider conversation within podcasting networks and public radio stations.” 28 percent of respondents said they didn’t know their institutions’ procedures, and 11 percent said their organization had no system in place.

Another trend concerned the Internet Archive: Podcasters who submitted their work for preservation there were more likely to be clued up and to feel strongly about keeping their work safe. “They were very likely to be preservation completionists and they were significantly more likely to actually back up uncompressed versions of all their files,” she said. “They’re more likely to have what I would consider their own self-made systems such as a hard drive or Apple Time Machine as opposed to relying just on cloud storage.”

The survey also threw up some intel about what PTP are calling the “precarious outliers,” the 7 percent of respondents who said that they don’t back up their files at all. Around half of those also don’t rename or organize their files and have little or no knowledge of institutional policies. Although the small size of this group is relatively positive, PTP hopes it can help these people keep their files safe.

PTP has its own podcast launching on March 21; the team is also adding resources to their website, and through 2019 they will be running in-person workshops (the first one is in New York on 22 March, keep checking the website for more dates and locations). At these events, Schwartz says, podcasters can bring all of their hard drives and equipment, and get help to put a preservation plan in place on the spot.

There’s a bigger purpose behind all of this, Schwartz says. Podcasting is a relatively accessible medium, attracting creators who wouldn’t be able to air work through traditional channels. If individuals can preserve that work for the future, it’s a way to save a record of that diversity. “Podcasting has been such an open medium, and everyone has stories to share and this space to put them, and we think it’s equally valuable,” she says. “I hate the idea that just because people aren’t aware of certain file management practices that they don’t make it into archives or in history books.”

Find out more about the project at preservethispodcast.org and keep an eye out for the podcast of the same name, which drops next month.

Gimlet–Spotify, or the end (of an era). Quiet weekend, huh? In case you missed it, Spotify is reported to be in “advanced talks” to acquire Gimlet Media. Recode and The Wall Street Journal both had the story late Friday. And let me tell ya, my inbox saw more over the past 72 hours or so than it has in a long time.

If you didn’t catch the emergency newsletter I sent out on Friday, here are the beats:

• A source familiar with the matter told me that the specific price was $230 million. If the deal goes through, it would mark the biggest podcast industry acquisition to date by a long mile.
• Only two deals can serve as comparable markers: Scripps’ 2015 acquisition of Midroll Media for $50 million plus another $10 million based on milestone achievements, and iHeartMedia’s 2018 acquisition of Stuff Media for $55 million.
• Gimlet Media would be Spotify’s first content company acquisition. Also, unless I’m mistaken, it would also be Spotify’s largest acquisition ever. The largest prior was the 2014 acquisition of Echo Nest, the music intelligence technology company, for around $66 million.
• When the news broke on Friday, the deal was thought to be in its final stages, though not officially completed. However, for the purposes of grammar, I’ll proceed with today’s newsletter expecting it to close.
• Since launching in 2014, Gimlet has raised around $28.5 million in total funding from an eclectic pool of investors, including: the advertising giant WPP; Laurene Powell Jobs’ Emerson Collective; the New York City “startup studio” Betaworks; Panoply parent company Graham Holdings; Troy Carter’s Cross Culture Ventures; the Chris Sacca-founded Lowercase Capital; the private equity and venture capital firm Stripes Group; and Marco Arment. The latest raise took place the fall of 2017, on a speculated $70 million valuation, according to a Recode report from that time.

I laid out some initial analysis in Friday’s newsletter, and today, we’re going to dive deeper into a bunch of things. Given the constraints of a newsletter, I won’t be able to tackle everything in this issue, but I assure you, we’re going to talking about every implication of this for a long time.

In Friday’s emergency Hot Pod, I noted that there was a certain inevitability to Gimlet’s exit. By that I meant that, having taken substantial amounts of venture capital, the company had to operate under the assumption that its investors would want an exit in some form or another. Going public was probably never realistic, given that content-oriented companies aren’t exactly the most listable entities in public markets, and founders Blumberg and Lieber generally opted to eschew any kind of technology play fairly early on (as documented in StartUp’s first season).

One could argue that Gimlet set itself down this road once it committed to a growth plan that required what must be a blinding burn rate. The company’s headcount now numbers around 120 people, and it committed to a 10-year lease in downtown Brooklyn in 2017, where it proceeded to invest heavily in building out studio infrastructure.

All this, it should be noted, came off the strength of a three-pronged revenue stream: podcast advertising sold on its 24 owned-and-operated shows; branded podcast campaign revenues through Gimlet Creative; and IP-slingin’ through Gimlet Pictures (which I’m guessing doesn’t produce that much upfront money and may well be a comparatively unreliable revenue stream at the moment, but it’s growing nonetheless). Gimlet doesn’t make its revenues public, but there are enough clues scattered about. We know that they made at least $7 million in 2016, back when they were more transparent about its inner workings. In mid-2017, a Recode piece reported that the company was on track to bring in $15 million that year. (That’s the number, by the way, that The Ringer hit in 2018.)

We can probably assume that its revenue levels have grown since. Maybe Gimlet had figured out a growth rate that would justify its burn, to the point that, in another universe, they could have felt confident about raising another round. Or maybe they didn’t. In any case, they’re selling, and here we are.

In Spotify, Gimlet has found an attractive suitor. The Swedish music streaming platform, which has been itching to do something with podcasting for a while, isn’t just any potential buyer of a podcast company. Indeed, it’s a particularly sexy suitor that would validate the brand that Gimlet has labored so hard to build and whose disruption narrative vibes with the worldview of Gimlet’s tech-centric investors. (A thought experiment: How long is the list of possible suitors who would make an acquisition still feel like an actual achievement?)

Gimlet’s exit might also be well-timed, given the probability of future turbulence. As I brought up last week, some smart folks argue that there’s a good chance of a recession in the coming years. That would bring significant uncertainty to podcast-land as we know it. Such an event would impose considerable pressure on podcast advertising rates, challenge the optimism and confidence around the industry, and truly force the question on whether there’s a podcast bubble. The opportunity to cash out now feels like an understandable choice.

This newsletter has already spent quite a bit of digital ink thinking through Spotify’s angle with podcasting, most recently in an issue that came out just last month.

But to quickly recap: Spotify is looking to diversify away from purely focusing on music, where it’s been long locked into bruising rivalries with other streaming platforms (Pandora, Apple Music) and traditional music industry Powers That Be (labels). Podcasts, or talk content more broadly, offers the Swedish tech giant two things: first, a completely new growth channel for investors to get excited about, and second, the opportunity to differentiate its product, deepen its value to the user, and increase the friction of shifting away to another service. (Until competing services ramp up their own respective podcast plays, of course.)

So I wasn’t particularly surprised to hear that Spotify was acquiring Gimlet. First of all, there had been rumors floating around for a while. But there’s also an apparent superficial logic behind it: Gimlet would give Spotify a buzzy portfolio of shows with which the platform can focus attention on and build a narrative around its podcast offerings.

What did surprise me, though, was the $230 million price tag, which was significantly higher than I was expecting. I’d expected a sale around the $70–$100 million range, if only because of Recode’s reporting on the company’s $70 million valuation after its most recent fundraise. Maybe I’m just a naive small business owner who knows nothing about scale or corporate development, but holy shit does $230 million feel like a stretch. Especially when contextualized against iHeartMedia’s $55 million acquisition of Stuff Media, a pure podcast content company, last fall. And your suspicion lies somewhere along the lines of differences in infrastructure, a data point to note: Stuff Media had around 50 employees powering production slate of around 25 shows at the time of acquisition; as mentioned previously, Gimlet has over 100 staffers powering 24 shows.

Which prompts the question: What, exactly, is the specific value that Spotify sees in picking up Gimlet? (An alternative theory is, of course, a simple bidding war. But I haven’t picked up any signs of such a thing, and until we see reliable reporting on the matter, let’s proceed with the assumption of Spotify as the sole suitor.)

So the major assumption I’ve been seeing around this deal is that in Gimlet, Spotify is primarily getting a show portfolio to use as the cornerstone of their “original podcast programming,” with which they could push more of its users towards consuming podcasts on its platform. That push may or may not take the form of Gimlet’s shows becoming Spotify exclusives, but I’m pretty comfortable betting it will.

But I also think Gimlet Creative, the company’s advertising division, is another key piece to appraise here. Consider that Spotify’s core competency isn’t content, but distribution, engagement, and monetization — and that monetization, in particular, is both a podcast problem a good deal of people are fixated on and the one that established media platforms (like Spotify, but also Pandora) fancy themselves well-positioned to solve with their existing assets.

We know that Spotify has been tinkering with podcast monetization; a recent press push noted that the company was experimenting with selling ads on its own original podcasts and that it’s currently exploring the possibility of building out its own ad-insertion tech. And I continue to be convinced that all of this is going to link back to, or draw lessons from, Spotify’s adventures in building direct relationships with musicians — first by striking deals with independent artists and then by rolling out a feature that allows artists to upload music directly and automatically receive royalty payouts. In other words, they’ve been trying to become the monetization layer for musicians straight-up. I imagine they would want to do the same for podcasts.

But of course, podcast advertising is a completely different animal from digital audio advertising as they would know it. (For now, anyway.) Which brings me to my tinfoil-hat theory: One possible future sees the Gimlet Creative team being diverted to focus on developing new-age advertising experiences for Spotify to inject into its original programs and to supply its future podcast monetization tools.

To put it another way, instead of seeing Spotify picking up one end-to-end podcast company, you could also perhaps see it as picking two different (albeit conjoined) assets that can each be applied to different aspects of its business: a publisher and a creative agency.

And what an agency. One can debate whether Gimlet is a category leader in original podcast content — and it’s a debate worth having, competition’s mad fierce — but the way I see it, Gimlet Creative is the company’s most notable creation and quite far ahead of its peer group. This is a creative agency that has developed relationships with, built advertising experiences for (both branded podcasts and in-episode spots), and extracted a ton of money from an array of attractive advertisers, including Ford, Gatorade, Virgin Atlantic, MasterCard, Google, Microsoft, eBay, and Reebok. I imagine that all makes for a pretty attractive asset to somebody. (Not unrelated: Spotify itself has been experimenting with branded podcast production.)

Or maybe it’s all not that complicated. Maybe it really is the simplest version of the situation: a big entity acquires a smaller entity, provides it with resources and support but generally leaves it alone, and reaps whatever benefits that can be generated. Disney–Pixar, essentially.

Maybe. But I never really liked Occam or his razor anyway.

Miscellaneous notes:

• The ripple effects of this deal are going to be wild. What might come next is a minor arms race, with other companies — from direct Spotify competitors like Pandora to media companies more broadly — feeling the sweaty heat of FOMO and exploring the possibility of bringing in their own podcast asset…regardless of whether they have an actual, informed strategy around such an acquisition. It would be, in some ways, a more extreme version of what we’ve already been seeing for a while now: media companies rapidly assembling podcast operations without quite knowing how podcasting works, except with added pressure to buy their way into expertise rather than develop it on their own.

  The next few months will prove to be interesting, with an array of podcast companies perhaps seeing it as a strong opportunity to cash out. (I’d keep an eye on other venture capital-backed content companies, if I were you.) And given the high $230 million watermark that was just set, those companies could be emboldened to ask for high prices. What I can’t tell, though, is the actual extent to which it’s a seller’s market. On the one hand, FOMO is a powerful force. On the other, as established earlier, the future is more uncertain than it ever was, and it’s quite possible both sides of the table will know it.

• Count me as someone who doesn’t think there’ll be any layoffs or trims as Spotify brings Gimlet into the fold. In the immediate future, anyway. For one thing, this doesn’t strike me as a straightforward “Team A absorbing Team B” sort of acquisition, where audio producers will now be made to sit next to the content partnerships team and work together or whatever, thus resulting in some cuts due to redundancies. And for another, Spotify isn’t exactly a struggling media conglomerate fighting against the march of technological apocalypse — quite the opposite. I imagine they have the money and patience to spend on the whole cloth for now.

  Something to consider, though: Unless I’m overlooking some obscure part of its history, Spotify hasn’t governed a big editorial staff before. (They have, however, governed a small staff: that of Dissect, the music podcast it acquired last year.) That could lead to complications. Anyway, keep an eye on how that shakes out. In any case, I’m crossing my fingers that Gimlet and its new Swedish overlords will do good by its producer workforce, and I hope that everybody gets to keep doing what they signed up to do. Unless, of course, they came in for the money, in which case, good for you.

• I wonder if Gimlet will be made to considerably expand its publishing portfolio and volume. Such an imperative might prove challenging, given that the company has generally tended to favor seasonal or limited-run productions that tend to cost a lot of time and money to make. The task of either scaling up that process or expanding into higher-volume shows that are not its core competency is a tricky one, though any success in such a move would hopefully be captured in a business school case study. (Also, if Spotify puts them down this course, there would be some interesting poetry here. Gimlet once sought to brand itself as the “HBO of audio,” and as fate would have it, HBO, that premium cable darling, is being made to greatly expand its publishing volume by its new corporate overlords, AT&T.)
• Here’s a thread of commentary I’ve been seeing around the news: What an oasis of good news in a desert of shitty media stories, with companies laying off staffers left and right! I share the thirst-quenching, but only to an extent. To be honest, I just don’t see Podcast Company stories as being in the same universe as Digital Media Company stories. (Unless, of course, it’s a Digital Media Company Making Podcasts story, which is a different kind of story altogether.) Also, personally speaking, I don’t see acquisition-exits as an automatically good thing, but that’s just me speaking as a person who sees independence as an ultimate value. For Gimlet, though, it’s probably definitely a good thing, and as previously discussed, perhaps the only possible end.
• I’ve seen some Twitter chatter — suddenly everybody’s a podcast expert? — debating the tenability of Spotify pulling off an exclusives-driven strategy. I don’t have much to say on that other than, as always, it depends on the execution, which itself depends on a string of a hundred different design choices. Refer back to my January column for a spread of questions thinking through those.
• Let’s do some reader mail. A long-time-reader-first-time-writer asks: “What’s going to be the deal with Gimlet Pictures?” The specific curiosity being, it’s one thing for Chris Giliberti to be slingin’ IP on behalf of a ~quirky content studio~, but another thing altogether when it’s behalf of a giant music platform. Somehow I don’t think IP-buyers will get too hung up on the differences. But if you’re a talent agent reading this who disagrees, @ me.
• Got more than a few questions around this idea: “Will Spotify usher in a world of closed podcast platforms? Is this the end of open podcasting?” Probably, and who knows. A while back — and, my apologies, I can’t find the exact column to link — I wrote a long, rambly newsletter (much like this one) arguing my suspicion that the long-arc of open podcasting is one where it ends up not being the default definition of the term, but a genre of it. (Don’t tell me that the word “podcasting” would lose all meaning in that scenario; the iPod is literally dead, for goodness sakes.) I think I stand by that assessment. In any case, you can bet that we’ll be revisiting this topic over and over again in the coming months, as we are most certainly, barring ecological catastrophe, drifting deeper into a world of fragmented walled gardens.
• On that note, a reader raised a good question in my Twitter DMs: “Does podcast industry growth depend on a revamp of the distribution model, and/or walled gardens, and/or fragmentation, etc? Or can the status quo be highly profitable?” I’m sure other people have their own takes on this, but my own amateur-expert opinion is: I don’t think the answer is structural. By which I mean, if a status quo is allowed to grow on its own terms on a long enough timescale without existentially-threatening competition or external expectations, that status quo can grow to become at least comfortable. That was the story of podcasting, more or less, immediately after the 2008 recession, when the ecosystem as we knew it started to develop. But people got employees to feed, managers, investors, quarterly earning expectations, burn rates. So I can see how the Original Condition might not work for everybody — hence the push to reject and impact the status quo to briskly pursue profitability.
• A text message from an independent producer: “I can’t tell if this is a good or bad thing.” Like much of modernity, it’s almost certainly both. More to the point, it’s change — in this specific instance, the neck-aching kind that only a sudden insane burst of money can bring.
• Finally, an aside: I spent some of the weekend re-listening to Alex Blumberg’s old stories from This American Life, Planet Money, and StartUp’s first season. And man, I wonder if that dude is going to be able to keep making the stuff that he was so good at making before. They feel so different now.

Make no mistake: Should the acquisition close, this deal would be an unambiguously important moment in the young history of podcasting, even if it doesn’t work out. Gimlet-Spotify would be podcasting’s first true blockbuster acquisition, a potential major turning point for the ecosystem (for better or worse), and the beginning of something…else. But as the poets of Semisonic once observed, every new beginning comes from some other beginning’s end. In this case, this is the end of an era, the one that was kicked off in 2014 with the Serial Boom. I’ll miss it.

Tracking

• Sunday’s Super Bowl may have been a bore/punter’s delight, but hey, did you catch Criminal in an Amazon ad?
• BBC executive James Purnell has published an update on how the BBC Sounds app is faring and promised that new features are launching soon. The last week of January was the best week to date, he says, with “a record-high 1.36 million listeners [listening] for an average 2 hours 40 minutes.”
• And while we’re here, the BBC also appears to be on the hunt for folks to staff up a new daily podcast aimed at the youths.
• NPR debuts a new narrative show: Throughline, hosted by Ramtin Arablouei and Rund Abdelfatah.
• Twitter CEO Jack Dorsey continues his tour on the podcast circuit, popping up most recently on The Joe Rogan Experience.
• The Daily now comes with transcipts! For those interested, they’re using 3Play, a third-party service.
• Over at Vulture, I reviewed WNYC Studios’ 10 Things That Scare Me.

This time last year. To refresh: I’m copping this new feature from the very smart Ali Griswold, who writes a damn good newsletter on the sharing economy called Oversharing, where we go over the headlines from this point last year.

In the February 6, 2018 issue, New York Public Radio was three months into its organizational culture crisis, RadioPublic launched its Paid Listens program, Gimlet (remember them?) formed Gimlet Pictures (awww), and Pandora was reorganizing its business, implementing cost-saving measures to fund new bets on ad tech…and non-music content.