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What the Spotify Acquisition of The Ringer Says About Online Media

Podcasts practically print money. Text? Not so much

Mike Windle/Getty

On Wednesday, after weeks of flirtation, Spotify and The Ringer made it official: The Swedish audio giant is acquiring Bill Simmons’s sports and entertainment website for an unspecified sum, almost certainly in the hundreds of millions of dollars. “What we really did with The Ringer, I think, is we bought the next ESPN,” Spotify’s CEO, David Ek, said triumphantly on an earnings call. Ek was certainly exaggerating (and possibly feeding Simmons’s ego, given his high-profile departure from the sports network in 2015). For a website, The Ringer is a juggernaut, with a podcast operation that raked in $15 million last year. ESPN, even in the age of cord-cutting, brings in billions.

Elk’s point was that he had just bought a company whose importance to sports audio was comparable to what ESPN did for sports video. “We look forward to putting the full power of Spotify behind The Ringer as they drive our global sports strategy,” Spotify’s Chief Content Officer Dawn Ostroff said in a statement. Now that Spotify, originally a streaming service for music, has quickly established itself as a formidable player in podcast media, it is inarguably the most significant company in audio.

But in acquiring The Ringer, Spotify is also getting an old-fashioned editorial operation. Both Spotify and Simmons are insistent that nothing will change on the editorial side of the equation. Simmons tweeted that the site will remain the same “in every respect,” while there are signs that Spotify intends to increase The Ringer’s already sizable staff (the site, as of acquisition, has about 90 employees). Still, the deal highlights a fraught moment in online media, in which websites are increasingly moving further away from text.

Despite its significant editorial presence, The Ringer is, in many ways, an inversion of a traditional media company: It is a podcast company first and an editorial one second. The majority of its revenue comes from its 40 or so podcasts. Its website is visited by around three million visitors a month, but its podcast audience is more than 10 times larger. And while the majority of its staff contributes to the website, the written work is really a sideline—a feeder system for The Ringer’s diverse array of sports and pop culture podcasts.

Having a podcast empire is arguably the best way to fund an editorial company in 2020. Facebook and Google have destroyed the digital advertising market for publishers, forcing them to look for other sources of cash. Subscriptions and paywalls are always an option, of course, but reading ads from MeUndies and Casper mattresses to millions of listeners is much easier and more lucrative, particularly for companies that aren’t The New York Times. There’s a reason why every major publication, legacy or digital-only, is investing heavily in podcasts, from the Times to Slate. (The New Republic launched its first podcast, The Politics of Everything, this week.)

Money isn’t in text anymore. The pivot to video may have been a disastrous scam, costing thousands of media jobs. But the pivot to audio—led, it should be said, by The Ringer—has been a bonanza.

That is because the podcasting advertising market is unusually healthy. There are a number of content creators and advertisers, approximating the online ad market before Facebook and Google took it over. The danger is that a big company like Spotify could mess up that arrangement. As Stratechery’s Ben Thompson wrote after Spotify acquired Gimlet last year, Spotify entering the podcasting ad market could make podcasts “look like everything else touched by the Internet: very large winners on one end, and small niche winners on the other.”

There is also, naturally, the fear that Spotify will lay off The Ringer’s writers, though Spotify has said it won’t. The Writers Guild of America, East, which represents workers at The Ringer, expressed optimism about working with Spotify: “We are already in good faith negotiations at Gimlet, another Spotify owned entity, and look forward to continuing good faith negotiations at The Ringer.”

Whether Spotify’s commitment to expensive writing and reporting work will remain in the event of a downturn remains to be seen. (The company posted strong user numbers on Wednesday but missed its earnings target.) For now, though, the editorial content is seen as a way to identify talent that can then be monetized—by putting a microphone in front of star writers and reporters.

As with Gimlet, the podcast company behind shows like Reply All and StartUp, which Spotify acquired for $230 million last year, The Ringer’s podcasts won’t be Spotify-exclusive, though some might be. (It has already partnered with Spotify on The Hottest Take.) Spotify will get the sports podcasts that it wants and the millions of devoted listeners that come with that category. The Ringer will get a hands-off owner that seems excited about growing its editorial operation. There is every indication that this could end up as a win-win for both parties.

Still, the acquisition of The Ringer highlights just how unimportant websites have become in the overall digital media picture. The “fun internet” is long gone—The Awl, Gawker, Grantland, Deadspin, and The Toast have all disappeared. G/O Media is currently driving its few remaining properties into the ground. BuzzFeed, once a behemoth, is wobbling: With recent layoffs and BuzzFeed News Editor in Chief Ben Smith departing for The New York Times, its future seems increasingly cloudy.

Thanks to the decimation of digital advertising, writing has become less important to the media industry. The written word is increasingly used to drive readers to more lucrative audio and video offerings. Spotify purchased The Ringer because its podcasts print money. The website was thrown in for free.