Open Markets Wants the FTC to Block the Spotify Deal

Open Markets is a team of journalists, researchers, lawyers, and advocates who work together to expose and reverse the stranglehold that corporate monopolies have on our country. They want the Federal Trade Commission to block the Spotify deal.

Open Markets posted a press release on their website:

Spotify yesterday announced plans to buy podcast producer and network Gimlet Media for $230 million as well as podcast recording startup Anchor, two of the most important platforms in the podcast industry. The Open Markets Institute calls for the Federal Trade Commission and European enforcers to block the deals. The market for podcasts is one of the few news media markets that is growing, diverse, and successful, and antitrust enforcers should head off efforts by platform monopolists to take control over the industry.

The podcast market today includes a wide range of truly independent voices able to  finance their operations with advertising revenue. Listeners, meanwhile, are able to download podcasts with little interference or personalized tracking by third-party software or advertising monopolists. And this old-school, open market system works. In 2017, US podcast ad revenues was $314 million dollars, and is forecast to hit $659 million by 2020.

This early stage market is, however, highly vulnerable to enclosure. Spotify CEO Daniel Ek has said he plans to spend some $500 million total to buy podcasts and podcast platforms just this year. Such a position would enable Spotify to begin to capture a significant amount of the advertising revenue that now goes straight to podcasters.

A takeover of Anchor, in particular, could also prove to be especially harmful to the industry. Anchor has provided a platform for start-up podcasters to produce, host, and sell advertising for their podcasts. If Spotify plans to change Anchor’s model, it may stifle new players, or lock them into a Spotify controlled system.

The present diversity in the Podcast industry is directly tied to market structure. There is vertical separation between the layers of the market, with software, production, and advertising done independently of one another. There is limited or no data collection, so there is no user-centric behavioral targeting or privacy breaches. This means podcast producers can still profit in a fair market for advertising sponsorships and compete fairly for an audience.

It is vital that the Federal Trade Commission and European anti-monopoly enforcers not only move to protect the podcast market, they should also study it closely for lessons to apply to other news media markets. The podcast market is a glowing example of what an open market looks like in America and the abundance it brings to both creators and listeners, and the political and civic dialogue it enables among citizens.