Spotify is reportedly in talks to acquire The Ringer

Spotify is in talks to acquire sports and pop-culture network, The Ringer, according to a new report from The Wall Street Journal. The network currently hosts more than 30 podcasts and had revenue exceeding $15 million in 2018.

Last year, Spotify spent over $400 million in the podcasting space, acquiring Gimlet Media, also a podcast network, and Anchor, a service that makes it easy for anyone to create their own podcasts.

Music streaming services are all the same — Most music streaming services offer largely the same music catalog from the same record labels. Spotify might offer better curation, but essentially the same content is available in Apple Music. By moving into podcasts, Spotify and others hope to differentiate themselves and keep users loyal to their particular service. If your favorite podcast is exclusively available on Spotify, the thinking goes, you’ll likely stick with them for music as well.

Podcasts also offer better potential profits. Right now, Spotify gives 70 percent of its revenue straight back to the music industry — and the amount of money it must give up increases as listenership does because it pays per-listen. By owning its own podcasts, Spotify wouldn’t have to pay a middleman, and its costs wouldn’t rise with subscribers.

In a recent interview with The New York Times, Beats co-founder Jimmy Iovine pointed to this as a big problem on the horizon for streaming music. “It doesn’t scale. At Netflix, the more subscribers you have, the less your costs are. In streaming music, the costs follow you.” Netflix pays one fee to license a show for a period of time, or purchases shows outright and owns them forever.

According to the Journal, The Ringer’s downloads are greater than 100 million a month, and the company is profitable. Industrywide, podcast advertising revenue is expected to exceed $1 billion by 2021, with double-digit annual growth.