Back in February, Matt Lieber and Alex Blumberg sold off controlling interest of their podcast company Gimlet Media to Spotify for a reported USD 230 million. The deal with the streaming behemoth is to scale up the podcast business and make it a billion-dollar business. Lieber sat down with OMR founder and CEO Philipp Westermeyer in the OMR Podcast to discuss why the time was right to sell to Spotify, what challenges are in need of solving in the industry and how he expects to scale his business in the next five years.
“I started Gimlet five years ago with my co-founder Alex (Blumberg) and it arose out of an obsession with the medium of audio,” says Matt Lieber in the OMR Podcast, which was recorded during the OMR Festival back in May. In addition to the podcast, Lieber held a keynote on the Conference Stage that dealt with the state of the podcasting business (watch the full Keynote here). In the OMR Podcast, he drilled down on a lot of what he touched on in his keynote. “What we found five years in is that business was going well. We were reaching millions of people globally. And we had built a nice advertising business. But we found that there were some fundamental infrastructure issues that were limiting how big podcasting could be,” says Lieber.
Spotify as a gateway to discovery
Matt Lieber sees three such fundamental issues with podcasts: On the one hand, he says that because of the nature of how these podcasts are distributed, which is via RSS feeds, you do not get data back on who are listeners are. Number two in his view is that to be able to get into bigger deals with global advertisers, you need to have the data back. And the third is discovery. “In the US, it’s about 1 in 3 people have listened to a podcast in the past month. And if you ask the ones who haven’t listened to a podcast, the reason they don’t is that they don’t know where to start,” says Lieber. Because Gimlet was unable to solve the problem of discovery alone, the pair sold Gimlet to Spotify last February.
“And so when we started talking to Spotify, we realized they have the data, they have the global scale and they’ve solved discovery,” says the Gimlet founder. He says that his company will remain intact as an independent storytelling company and now has over 125 members of staff. He sees parallels between the video sector and the podcast industry and the Spotify strategy: “Netflix is a global platform with big, expensive productions with stars. And then there is Youtube which is a longtail of user-generated content that makes it easier for everyone to find their own voice. Spotify will be a platform where there are big premium franchises, but also where there are hundreds of thousands of shows where every creator can find their voice.”
The several billion-dollar question
Podcasts are a half a billion-dollar industry stateside—but Lieber still sees a massive amount of growth potential in the industry. “I think we are 1 to 2 years away from podcasts being a billion-dollar a year industry. Radio is an 18-billion dollar business in the US. My view is that 80% of that audience is going to move to on-demand and an on-demand impression is more valuable than a radio impression.” He says that Gimlet CPMs start at $60 and go up from there depending on the audience. Given that podcast listeners have actively sought out the podcast and are listening to it with earbuds in their ears, it is a higher quality impression that makes such lofty CPM prices possible.
Gimlet already inserts its ads dynamically in the shows’ ad breaks, all dependent on location and playback device. “There is going to be at some point a need for programmatic audio solutions and I think it has to play a bigger role to grow the audience at scale.” While the current advertising breakdown is 95% native ads to 5% non-native, Lieber thinks that “the market will probably bifurcate. You’ll have a high-end premium native tier of advertising, where the host has opted-in and then there will be a tier that is more programmatic, which will be about scale, reach and efficiency and not host-read.
To find out how licensing works for Gimlet, why Julia Roberts has a significant role in it and which formats Lieber sees as prime candidates for growth, listen to Matt Lieber in the OMR Podcast with Philipp Westermeyer.
The OMR Podcast with Matt Lieber at a glance:
- Why did Matt Lieber (and Co-Founder Alex Blumberg) sell Gimlet Media to Spotify?
- How do they feel about the deal? Will the Gimlet name be retained?
- Is it fair to compare Spotify’s podcast strategy to Netflix’ movie/ TV strategy?
- In Germany, there is a trend for celebs to actively seek out podcast makers. Is that the case in the US as well that the Gimlet team is approached by US celebs?
- What is the largest podcast in the USA based on listeners?
- Will ads continue to be central to podcasts?
- What is the running CPM for some of the most popular podcasts in USA?
- Many companies have recently discovered podcasts as an advertising medium and produce several formats. To what extent does that work?
- How big is Gimlet Media now?
- Walk us through the ad strategy at Gimlet. Do hosts recommend products themselves or are spots produced by other speakers?
- Which podcast formats generate the highest revenues per listener?
- How big does Matt Lieber think podcasts can be in the next few years?
- How does licensing work at Gimlet, where they create new shows that are turned into TV?
- How long does Matt Lieber think he will remain at Gimlet?
- What role will podcasts play in Spotify’s further development?
- Which podcast formats are almost always guaranteed to net a large number of listeners?
- Did Apple drop the ball on podcasts?
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