Podcasts are all the rage, but podcast discovery is a challenge. Today, Spotify announced its acquisition of Podz, a startup that’s trying to solve the problem of podcast discovery.
“At Spotify, we are investing to build and scale the world’s best (and most personalized) podcast discovery experience,” the company said. “We believe that Podz’ technology will complement and accelerate Spotify’s focused efforts to drive discovery, deliver listeners the right content at the right time, and accelerate growth of the category worldwide.”
Since podcasts are usually upward of 30 minutes long, it’s hard for listeners to browse new shows — listening to an episode of a podcast isn’t as easy as trying out a song by a new artist. So, Podz developed what it called “the first audio newsfeed,” presenting users with 60-second clips from various shows. Podcasters often use apps like Headliner to create clips to promote on their social media accounts, and Podz follows the same idea. But instead of podcasters manually choosing how to promote their show, Podz chooses a clip using its machine learning model, which was trained on more than 100,000 hours of audio in consultation with journalists and audio editors.
Before its acquisition by Spotify, Podz raised $2.5 million in pre-seed funding from M13, Canaan Partners, Charge Ventures, and Humbition. Celebrities like Katie Couric and Paris Hilton also invested.
“Already, the average podcast listener subscribes to seven podcasts but follows almost 30 on Podz,” M13 General Partner Latif Peracha told TechCrunch via email in February. “Early signals make us optimistic the team can build a transformative product in the category.”
This acquisition marks yet another sign of Spotify’s ambition to corner the podcasting market, and audio entertainment in general — just yesterday, Spotify debuted Greenroom, its live audio Clubhouse rival. And when it comes to driving revenue from podcast subscriptions, Spotify and Apple are neck and neck. In April, Apple announced its expansion into podcast subscriptions, and the following week, Spotify began rolling out its subscription platform after teasing it in February. Apple said it will take 30% of podcast revenue in the first year, which will drop to 15% in the second. On the other hand, Spotify’s program won’t take any cut from creators until 2023, when it will take 5%.
Though podcast creators can quickly determine that it might prove more beneficial to surrender 5% of their subscription earnings than 30%, listeners will likely just flock to whatever app provides the best user experience — and if Spotify’s investment in discovery pays off, it could pose trouble for Apple’s longstanding dominance in the podcasting medium.
Update: In an SEC filing from later in the year (after publication), Spotify revealed the purchase price for Podz, Inc. The service was acquired for €45 million with €36 million in cash paid at closing and €9 million in deferred consideration