Spotify bought an Australian podcasting company yesterday. Here's the reason
Whooshkaa is the audio streaming giant's first local acquisition. It will become a piece of the tech stack
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.