Spotify tumbles on reports Apple will fund its own original podcasts (AAPL, SPOT)

Reuters

Apple is planning to fund its own original podcast content, Bloomberg reported.
Spotify slid on the news that Apple is increasing its investment to keep competition at bay.
Competition in podcasting has ramped up as advertising revenue has increased from the medium.
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Shares of Spotify slid more than 3% on news Apple plans to fund its own podcasts that would be exclusive to its audio service, Bloomberg reported, citing people familiar with the matter.

Competition in podcasting has been heating up as more and more shows are being produced, launched, and listened to. Advertising revenue for podcasts increased 54% in 2018 to $479 million, according to a recent report by Guggenheim. The report also noted that if Spotify could capture 25% of that market, it would make $250 million more in annual revenue.

Apple is certainly looking to capture part of that market as well. While Apple first launched its podcast application in 2005, it hasn’t made many updates until now. Users can currently listen and subscribe to over 700,000 podcasts on the app.

Funding its own content is a way for Apple to edge out competition in the space from Spotify, which recently began pumping its own money into podcasts. The company launched Spotify for Podcasters in 2018, and announced plans to grow its own podcasting business in early 2019. The goal is to become the world’s leading audio platform, said CEO Daniel Ek in a statement.

The plan included agreements to acquire Gimlet Media, an independent podcast content producer, and Anchor, another podcast company, in 2019. Spotify spent about $230 million on Gimlet, and has not disclosed how much it paid for Anchor. Spotify said in an earnings release that it plans to acquire more and has a total spend of $400 to $500 million for the year.

Apple does not have a clear strategy, but has reached out to media companies and representatives to talk about buying exclusive rights to podcasts, Bloomberg reported.

Spotify is up more than 34% year to date.

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