Spotify bought an Australian podcasting company yesterday. Here’s the reason
Welcome to Unmade, written in the UK while you were sleeping on Saturday morning.
Happy National Twin Day. Happy National Twin Day. (Sorry.)
Today’s writing soundtrack is a trip back to the 70s with Mike Oldfield’s Tubular Bells, admittedly for no particular reason.
First things first. This edition of Unmade is for paying subscribers. If you haven’t signed up yet, further down this post, you’ll hit a paywall.
And on that topic, I realised that our (really, rather good) end-of-year offer was due to expire about ten minutes before this email was going to land in your inbox, which seemed a tad harsh. So I’ve pushed the deadline back until tomorrow morning to give you one final opportunity to get the deal. If you sign up now you’ll get the $650 annual subscription for just $169. That price will never be as low again.
Today’s main topic is Spotify’s acquisition of Australian podcasting company Whooshkaa. I’ll also briefly cover off Nic Christensen, Erin Molan and James Hennessy’s (separate) exits from Nine, and the Lad Bible float.
Spotify’s local deal
We’re at that time of year for the media industry: Deal completion time.
Back when we were at the early stages of selling Mumbrella, a wise person gave us a piece of advice: “Deals with momentum get done. Whatever you do, get it done before everyone goes on their Christmas holiday.”
It was probably something like July when this advice was given, so that seemed easy. We finally got our deal signed on December 22. Next week, it will be the fourth anniversary. Time flies when you’re on a non-compete.
So it’s no surprise that we’re in the midst of the pre-Christmas closing rush. Nobody wants to come back after Australia Day and try to get things moving again.
The lawyers’ Christmas has come early too. I can think of five examples from our world where the principals have raced to beat this year’s earlier than usual Christmas closedown.
Seven West Media and Prime Media will both hold their extraordinary general meetings next Thursday to get the takeover legalities wrapped up before the end of the year, to create Australia’s first fully national TV network.
HT&E is racing to complete its $300m cash-and-shares acquisition of Grant Broadcasters, to create Australia’s second fully national radio network, after Southern Cross Austereo. HT&E, parent company of Australian Radio Network, told the ASX a fortnight ago that it wants to get the paperwork done by the end of the year to formally issue $69m in new shares on January 4.
A third example, and another one from the audio space, was last week’s announcement from SCA that it had bought kids audio content specialist Kinderling.
And number four: On Thursday we saw the announcement of another Australian marketing technology deal. The Sydney-based Playground XYZ, which specialises in high impact mobile ad formats, has sold to contextual advertising company GumGum, for cash and stock.
And yesterday came one more exit, a significant one.
Whooshkaa, the podcasting company founded by former Macquarie Radio boss Rob Loewenthal six years ago, has been bought by Spotify. It’s Spotify’s first Australian acquisition.
It speaks to the speed with which things are moving around the audio boom.
The obvious thing about the deal is that it aligns with Spotify’s strategy of pursuing as dominant position in podcasting as it does in music streaming.
Podcast content still comes cheaper than music rights. So the more that Spotify can engage its 172m premium subscribers via podcasts instead of music, the more it can improve its profit margin.
That’s why the company bought Gimlet Media for more than $200m back in 2019, and (I guess) why it bought the rights to The Joe Rogan Experience last year for $100m.
Compared to those deals, the Whooshkaa deal is relatively minor. Spotify hasn’t even bothered to put out a stock market update on the acquisition. No price has yet been disclosed, although these things do have a way of emerging in time.
So what exactly has Spotify bought? Over its six years, Whooshkaa, like many start ups, has pivoted. Which is Startup World’s way of saying thinking again, in order to survive.
To begin with, Whooshkaa looked much like a sales representation operation, disguised as a technology play.
That narrative played into Loewenthal’s commercial radio background as MD of 2GB’s parent company. That seemed even more the case when Loewenthal made an early hire of old colleague Nick Randall who had led ad sales at Macquarie, in late 2016.
The breakout success of The Australian investigative journalist Hedley Thomas’s The Teacher’s Pet podcast helped put Whooshkaa on the map. Thomas and Loewenthal are cousins, if I recall correctly.
But Nick Randall only stayed for about 18 months, and Whooshkaa gradually began that pivot.
The sales representation remained – to a point. If you check out the November Australian Podcast Ranker, which came out this week, there are still a few podcasts repped by Whooshkaa, mainly from the stables of the US-based Stitcher Media (the likes of My Favorite Murder and Freakonomics radio) and Wil Anderson’s TOFOP Productions.
According to the ranker, Whooshkaa’s Stitcher connection delivers about 1.5m monthly listeners.
But sales representation is tough going these days, particularly since the rise of programmatic advertising which helped kill off sales houses like HS3 and Inception Digital five or six years back.
So Whooshkaa began to invent itself a new business model, as many successful startups do.
In more recent years, Whooshkaa’s pitch was one of being all things to all podcasters. It was about “podcasting solutions”.
Want to get your podcast out on all the major platforms? Whooshkaa can help with that. (Which is not to be sniffed at, by the way. Getting the Unmade podcast onto all the major apps, which it is now, was a dreary bureaucratic slog.)
Want to take your radio show and smoothly re-slice it as a podcast? Yep, that’s Whooshkaa’s thing too.
And Whooshkaa has been hustling. There’s an enterprise play: “Private podcasts” as a means of employee engagement is another offering.
And similarly, Whooshkaa is targeting the education sector with private podcasts too.
So what did Spotify see in Whooshkaa? By the looks of it, it was the second offering: the technology to make it easier for radio companies to automate the transformation of broadcasts to podcast.
The news of the acquisition broke in yesterday’s AFR, with Spotify’s global head of advertising business and platform Jay Richman telling the paper that the company sees a place for that piece of kit in its tech stack. It looks a lot like Spotify has bought Whooshkaa just for that.
As Richman told the AFR: “We licensed up some of the biggest shows on the planet. We acquired a company called Anchor that specialises in content creation, and we purchased another one, Megaphone, focused on monetisation.
“Over the last year, we’ve been assembling all of these components into the first fully verticalised digital audio stack, bringing audio creation, distribution, consumption, monetisation, all into one place, which allows us to innovate in this space in ways not possible before.”
The Whooshkaa brand itself will likely disappear. Spotify did not make the acquisition for the brand or the culture, or even the people.
For Loewenthal, and Whooshkaa’s other investors, it’s been a nifty exit. He’s now a poster child for radio’s refugees who jumped to podcasting. There will be others.
The audio sector is currently evolving in dog years. For months now, there’s been a big development every week.
For the Whooshkaa team, Christmas will be a break from the frenzy of getting the deal done. There will have been champagne, but less exhilaration than you might think. I bet they plan on sleeping for days.
Newsfeed: Defections, floatations and urinations
Erin Molan defects from Nine to Sky
Sports presenter Erin Molan is leaving Nine for two News Corp roles, as a Sky News contributor, and columnist for The Daily Telegraph in Sydney. Last month Molan said she nearly moved into federal politics as a Liberal candidate. She is currently awaiting a finding in her defamation case against Daily Mail Online, which alleged she made racist jokes during her time with 2GB. Molan also co-presents The Morning Crew on 2Day FM, alongside Dave Hughes and Ed Kavalee.
Christensen defects from Nine to SBS
Nine’s head of corporate affairs Nic Christensen has quit Australia’s biggest media company to lead corporate communications for publicly owned SBS, reports Mumbrella. Christensen, a former deputy editor of Mumbrella, was with Nine for more than five years during which he transformed the organisation’s relationship with the marketing trade press and helped the company set the trade news agenda around the rise of ad-supported video.
James Hennessy defects from Nine’s Business Insider
Business Insider’s editor James Hennessy is leaving the role after just over two years. The title is part of Nine’s Pedestrian Group.
Medialink sold for US$125m
Ascential, the parent company of the Cannes Lions, has sold its US marketing relationship business MediaLink to United Talent Agency for US$125m, the Wall Street Journal reports. Fronted by Michael Kassan, the nearest equivalent MediaLink has in Australia is Darren Woolley’s marketing management consultancy Trinity P3.
Lad Bible floats
Social media publisher Lad Bible’s parent company LBG Media floated on the UK’s AIM stock exchange on Wednesday with a market capitalisation equivalent to AUS$670m. It came a few days after fellow digital publisher Buzzfeed went public in the US.
Streamers spend $180m on local shows
Amazon Prime, Disney, Netflix, and Stan spent $178.9 million in the previous financial year on Australian programs, a report from the Australian Communications & Media Authority says. This included commissioning 22 new Australian programs and acquiring 1,743 existing programs. Expenditure was up by $25m on the previous year, but spending on kids’ programming was down.
Adland’s vilest
The most complained about ad of the year was one for Crazy Domains featuring a drunk man urinating on a shop front, Ad Standards has revealed. The ad, which was banned back in June, generated 285 complaints.
Time for me to let you kick off your pre-Christmas weekend. I hope your shopping chores are not too strenuous.
If you’re struggling for ideas, I did stumble upon this helpful tip on LinkedIn yesterday:
I couldn’t have put it better myself…
Meanwhile, here in the UK, a number of my friends have been testing positive for Covid. On the one hand it’s mild for them because they’re vaxed. On the other, they’re mighty pissed off to be facing Christmas in iso. Perhaps our Christmas scientific miracle is that in the space of year deadly danger has become, for most of us, mere inconvenience.
I’m planning on staying inside and binge watching the final episodes of Succession.
If you want to hear my thoughts on the main events of the year, please do give the Mumbrellacast year in review show a listen. It was my last one before stepping back as editor-at-large. As I mentioned in the show, there’s been no drama, but it’s time to be clear that Unmade is my main focus, particular now I’m dividing my time between Australia and the UK.
And from Monday I’ll be back with more Unmade for one more busy week before Christmas. I’ll be talking to 360Info founder Andrew Jaspan, analysing the performances of the major radio groups in 2021, and the latest audio chapter from Media Unmade is a good one – World Is Fukt, the story of Fairfax Media at rock bottom.
Have a great weekend.
Toodlepip…
Tim Burrowes
Proprietor – Unmade
letters@unmade.media
