Spotify has set the trend of music streaming platforms acquiring podcast companies in the past two years, spending a total of over $800m to snap up the likes of Gimlet, Parcast, The Ringer, Anchor FM and Megaphone.
Now another music streaming heavyweight has moved into this territory, with a headline-grabbing buyout.
Amazon Music has today (December 30) announced that it has signed an agreement to acquire Los Angeles-based Wondery, which makes and produces well-known podcasts including Dirty John, Dr. Death, Business Wars, and The Shrink Next Door.
The announcement confirms a rumor published in the Wall Street Journal earlier this month, which suggested Amazon was set to acquire Wondery at a valuation for the podcast firm of over $300m.
The WSJ called Wondery “the last large, independent podcaster on the market”, citing a source who suggested the podcast company was on course for annual revenues of over $40m in 2020.
Around 75% of that revenue would come from advertising, said the WSJ, with the rest coming from other sources including the licensing of Wondery’s properties to TV. (Dirty John, for example, launched as a popular scripted drama series on Bravo in the US in 2018, and Netflix worldwide in 2019.)
Other sources of income at Wondery include licensing its content to subscription audio services, including Amazon’s own Audible, plus money from Wondery’s own premium subscription service which launched this summer.
Wondery was launched in 2016 by its CEO (and former Fox executive) Hernan Lopez, and raised $15m in investment capital across two fundraising rounds in 2018 and 2019.
“This is a pivotal moment to expand the Amazon Music offering beyond music as listener habits evolve.”
Amazon Music announcement
An important side-note for the music business: In April last year, Wondery and Universal Music Group inked a deal that enabled Wondery to use UMG’s music catalog and develop podcasts based on the story of UMG artists.
Amazon’s acquisition isn’t yet closed – it will have to pass the usual regulatory hurdles – but, with Wondery in its ranks, Amazon Music says it will “be able to provide even more high-quality, innovative content and continue [our] mission of bringing a world of entertainment and knowledge to their audiences, wherever they listen”.
Amazon Music, which launched podcasts on its platform in September, called its Wondery acquisition “a pivotal moment to expand the Amazon Music offering beyond music as listener habits evolve”.
It added: “Our commitment to podcasts, our focus on high quality audio with the Amazon Music HD tier, and our recent partnership with Twitch to bring live streaming into the app, make Amazon Music a premiere [sic] destination for creators.
“Together with Wondery, we will continue to bring more customers to streaming as we expand selection and ensure we are a destination for our customers to find, discover, and listen to the creators and artists they enjoy.”
Amazon further clarified: “When the deal closes, nothing will change for listeners, and they’ll continue to be able to access Wondery podcasts through a variety of providers.”
MBW has confirmed that Liontree was an advisor to Wondery on the sale to Amazon Music.
Meanwhile, a Spotify user survey held in November suggested that Daniel Ek’s company is mulling the idea of launching a podcast-only subscription tier.
The survey asked SPOT users to respond to the prospect of four potential premium podcast tiers, each carrying a monthly price ranging from $2.99 to $7.99Music Business Worldwide