That’s the question raised by Nicholas Qauh in his latest Nieman Labs column. While Quah wasn’t surprised by the news that Spotify was looking to purchase Gimlet, he was certainly taken aback by the price tag.
Quah writes that was he expected was an offer more in the range of around $70–$100 million due to a recent story from Recode which gave Gimlet a $70 million valuation. “Maybe I’m just a naive small business owner who knows nothing about scale or corporate development, but holy shit does $230 million feel like a stretch. Especially when contextualized against iHeartMedia’s $55 million acquisition of Stuff Media, a pure podcast content company, last fall. And your suspicion lies somewhere along the lines of differences in infrastructure, a data point to note: Stuff Media had around 50 employees powering production slate of around 25 shows at the time of acquisition; as mentioned previously, Gimlet has over 100 staffers powering 24 shows.”
Quah says Gimlet Creative, the company’s advertising division, is another key piece to appraise. “Consider that Spotify’s core competency isn’t content, but distribution, engagement, and monetization — and that monetization, in particular, is both a podcast problem a good deal of people are fixated on and the one that established media platforms (like Spotify, but also Pandora) fancy themselves well-positioned to solve with their existing assets.”
In the end, Quah says, make no mistake about it, if this deal goes through, it would be an unambiguously important moment in the young history of podcasting, even if it doesn’t work out. “Gimlet-Spotify would be podcasting’s first true blockbuster acquisition, a potential major turning point for the ecosystem (for better or worse), and the beginning of something…else. But as the poets of Semisonic once observed, every new beginning comes from some other beginning’s end. In this case, this is the end of an era, the one that was kicked off in 2014 with the Serial Boom. I’ll miss it.”