Amazon Buys Wondery — The Podcast Race is On
By: Trapica Content Team
Tags: Podcasting, Wondery, Artist, Amazon, Podcast

For many years, social media platforms have been the center of all mergers and acquisitions. Now, it seems that the podcasting niche has finally taken over. Despite celebrating nearly two decades of prominence, podcasting is still in the limelight and this is set to continue in popularity in coming years as huge brands like Amazon get involved in the battle.

For many listeners, Wondery is the chosen location for podcasts. They have built a reputation for shows like Dr. Death, Business Wars, Dirty John, and The Shrink Next Door. In December 2020, Amazon Music purchased Wondery for $300 million dollars, which means they will now take part in the successful podcasting industry.

According to the statement, nothing much will change with the service itself. However, it believes that teaming up with Amazon will allow the service to improve the offering of premium content for all users. While not much will change for Wondery, the deal is a big move for Amazon as it enters the podcast race.

In September, podcasts were added to Amazon Music which signaled the intent of the global company. Amazon grew during the pandemic, but it’s clear that the development strategy contains more than just products. In recent years, more high-quality content has been made available through Prime Video and now the brand will expand even further with Amazon Music and podcasts.

The Rise of Podcasting

Why are some of the world’s largest brands fighting to get their hands on podcasting talent while developing fancy platforms for all users? Podcasting has a long history, but interest in the niche seems to grow more intense with each passing year. Podcasts were already enjoying a boom in the early months of 2020, and the COVID-19 global pandemic has accelerated this even further.

We all lead busy lives, and podcasts accommodate this lifestyle where perhaps other forms of media fail. We can walk to the office, sit on a train, do housework, go for a run, do the grocery shopping, all while listening to a podcast. Consumers and businesses love them (because they can advertise naturally and engage beyond other methods). People often struggle to read a full article whereas listening to a podcast is much easier.

The global pandemic has made travel impossible and caused suffering in every area of life. Podcasts allow a connection to the world for those working on the sofa day after day with little interaction with others. Even though vaccinations are progressing, podcasts will continue even as we return to some form of normality because they have become so integrated in our lives.

Here are some statistics to support the rise of podcasts:

Of all those over 12 years of age, around half listen to podcasts regularly.

Around one-third of all Americans listen to podcasts monthly.

75% of listeners say that learning new things is a key reason for listening to podcast episodes.

Over half are encouraged by commercials to spend money.

Consumers are open to commercials on podcasts because they trust the judgment of the host (and ads are even more powerful when the host reads the advertisement themselves). People listen to podcasts for all sorts of reasons including to learn, to find relief and entertainment, and to keep up to date with news from a particular community.

Amazon vs Spotify…vs Apple

Amazon has staked a claim in the podcasting industry by spending out on the Wondery acquisition. What does this mean for the wider industry? Last year, it was all about Spotify and Apple for podcasts. In the second quarter of 2020, towards the beginning of the pandemic and lockdowns, Spotify had around 42% of the market share for podcasts. In second-place, Apple had 32%. With this in mind, combined they share nearly three-quarters of the market.

After purchasing Wondery, Amazon Music will attempt to barge its way into the battle in order to grow its market share. One important note is that Spotify is by no means standing still. Just recently, it invested in Gimlet, a podcasting network based in New York.

The $230 million dollar deal in 2019 generated excitement within the podcasting niche. This deal allowed Spotify to really progress with podcasts, and it’s obvious now that it was a sensible decision. At the time, Spotify wanted to diversify its offering and now podcasting is one of the leading areas of the entire platform.

Over the years, Spotify has also involved itself in several other mergers and acquisitions — this includes a deal with Megaphone last year. Therefore, the strategy for Spotify is clear — expand and grow as much as possible to take advantage of the podcasting interest. As a publishing and advertising company, Megaphone joined the brand to help all publishers get the exposure they deserve.

Not only is Spotify improving the service for all listeners, but it’s also allowing publishers and content creators to generate income through monetization, and the acquisition of Megaphone was evidence of this strategy in action.

Just like Spotify, Apple is also emerging in the podcasting niche and is using much the same strategy with mergers and acquisitions. In September last year, rumors surrounded an acquisition of Scout FM, a startup that caught the eye of the global technology giant which focuses on custom talk radio stations for a personalized listening experience.

The platform uses artificial intelligence to generate a list of podcasts the user will enjoy. If the user chooses, it will even play these podcasts back-to-back so that the conversation continues for many hours. It’s a companion for daily life and one that has lots of users. Apple users will know that a similar system was introduced back in iOS 14 and Spotify does the same with the ‘Made for You’ section.

Interestingly enough, there were also rumors in 2020 that Apple would acquire Wondery. Of course, we know now that Amazon Music won the battle to buy the service, which could be the catalyst for success that Amazon needs in the niche.

Growth of Podcasting Between 2020 and 2027

Thanks to a report available on Grand View Research, we know that experts are expecting even more growth for the podcasting niche in the years ahead. In 2019, the market had a value of just over $9 billion. Between 2020 and 2027, a 27.5% CAGR (compound annual growth rate) is expected. In other words, the whole industry is set to experience heavy year-on-year growth, which is one of the reasons why Apple, Amazon, and Spotify are all fighting for market share now. 2020 figures aren’t available just yet, but experts predict growth to at least $11 billion (this could now be higher as a result of the pandemic).

By 2027, the report suggests revenue of over $60 billion, which shows that we’re only at the beginning of the journey. Just because Amazon doesn’t have a foothold in the market now, this doesn’t mean it will struggle to find customers. If the market grows as expected, it will have plenty of time to gain market share and compete with Apple and Spotify. In fact, the same goes for companies that haven’t even formed yet.

For the longest time, consumers were waiting for large companies to adopt podcasting while companies were waiting for the listener base to grow in size. Now, both are ready, and this positive dependence between services and consumers will generate growth in the years ahead. Consumers now have advanced platforms with effective AI and machine learning technology, and companies know that consumers are ready to join their platform.

Over the next half-decade (at least!), a few factors will drive growth including improved smartphones and smart speakers, improved monetization options for publishers, and the need for connectedness as we continue to go through the difficult global pandemic. If we’ve realized anything over the past 12 months, it’s that boring and mundane jobs around the house are infinitely more enjoyable with an engaging podcast.

The Podcast Race is On

After forming in 2016, Wondery quickly went into the spotlight and is now in the top four publishers in the US. According to Podtrac, only three names are bigger in the niche:

National Public Radio

iHeartRadio

The New York Times

With monthly listeners of up to 10 million, it’s no surprise that the brand was a target for not only Amazon but Apple too. Will the Wondery acquisition propel Amazon Music alongside Apple and Spotify? Users will vote with their fingers — which download button will you tap in the coming weeks and months?