Podcast wars heat up

Spotify's $235 million acquisition of podcast monetization company Megaphone on Tuesday is the latest in an acquisition frenzy that's stirring up the podcast industry.

Why it matters: The past year has seen several key companies invest hundreds of millions of dollars in podcast acquisitions, including Spotify, iHeartMedia, Apple, SiriusXM and others.

Driving the news: Spotify's Megaphone deal comes on the heels of an investment spree by its rivals.

• iHeartMedia on Friday said it would acquire the rest of Voxnest, a podcast monetization company. (It owned a minority stake in Voxnest prior to the deal.) On Monday, it announced a partnership with audio production company Pushkin to be its exclusive sales partner for many of its most popular podcasts. (Full disclosure: Axios partners with Pushkin to produce its Axios Today podcast, and also works with Megaphone.)
• SiriusXM's $325 million acquisition of Stitcher closed last month. The deal gave it access to Midroll, a podcast ad company that Stitcher bought in 2015. This summer, the radio giant acquired Simplecast, a podcast management platform that helps podcasters publish, manage and measure their content. It already owns podcast ad company AdsWizz, which it acquired through its purchase of Pandora in 2018.
• Apple earlier this year reportedly acquired Scout FM, a startup that creates radio-like stations for podcasts. While Apple has long been the king of hosting podcasts, it hasn't invested as much in podcast monetization through ads.

Be smart: Companies like Amazon, Google and others have also made moves into podcasting, but so far, they have not seemed as eager to acquire new firms to build their audio empires. That could change in the future.

The big picture: For now, podcasting is a small but growing advertising medium. The industry as a whole still only brings in less than $1 billion in ad revenue, even though more than 90 million people listen to podcasts monthly, per Edison Research.

• But just as Google and Facebook bolstered the digital ad market by aggregating lots of ad tech companies, the same thing is beginning to happen in audio.
• Companies like Spotify, SiriusXM, iHeartMedia and others aim to grow the podcast advertising market by aggregating podcast services together through deals like the ones struck this week and later securing a chunk of the services' revenue for themselves.

What's next: There are still a few independent podcast companies that are likely to get acquired as the podcast industry continues to consolidate.

• Apple and Sony are among two firms that are eyeing an acquisition of the independent podcasting studio Wondery, Bloomberg reports. Sources tell Bloomberg that Wondery is seeking $300 million to $400 million in a possible sale.