Spotify Technology SA is making its move into live audio by acquiring the sports-talk app Locker Room and its maker Betty Labs.
The deal values the company, initially backed by Lightspeed Venture Partners, and more recently by Google Ventures and Precursor Ventures, at around $50 million, according to a person familiar with the transaction. If certain targets are met the value could climb closer to $80 million, this person said.
Locker Room has quickly become the spot for fan chatter around games and sports news, with the likes of Miami Heat forward Andre Iguodala and Philadelphia 76ers guard Seth Curry to podcaster Ant Wright and ESPN’s Jeff Darlington dropping in for conversations as well. It filled a real-time, interactive void for sports fans left by the inability to gather in arenas, stadiums and bars during the Covid-19 lockdowns.
The purchase follows an explosion in demand for live audio apps amid the pandemic. Voice-based social networks, such as Clubhouse, Twitter Spaces, Water Cooler and Locker Room, allow users to converse spontaneously. They are an alternative to podcasts, but they are also a curated amalgamation of podcasts, live streams, conferences and radio. Comedians, artists and business leaders have flocked to these apps’ virtual rooms to perform, chat, debate and network across topics and industries.
For Spotify, which has expanded into podcasting to position itself as the world’s largest audio company—not just a music-streaming giant—the deal is a bet that live audio will last well beyond the pandemic.
“Our creators have been asking for a long time to be able to be more interactive with fans,” Gustav Söderström, Spotify’s research and development chief, said in an interview. “The most effective way is to actually speak to them live.”
The Locker Room app is less than a year old. It launched in October of last year and has seen about 19,000 installs since then, according to app research firm Sensor Tower Inc. So far in March, it has seen about 8,000 installs, already representing 60% month-over-month growth from all of February.
Spotify plans to rebrand and relaunch the app with a broader focus across sports, music and pop culture. The company plans to keep it a stand-alone product, but users will be able to record live sessions and upload them to Spotify or podcasting platform Anchor and distribute them broadly. The streaming giant plans to tap its music and podcasting stars and users to facilitate programming with artists hosting album-listening parties or DJs spinning live sets before uploading them as playlists. Sportscasters and fans can weigh in around games, and podcasters could host live “ask me anything” sessions, or AMAs.
“How do you talk to many people at once has been a challenge, and this format has turned out to be very scalable,” Mr. Söderström said. “You can have a few people on stage, you can raise your hand in the audience and be unmuted and ask a question, unlike on Twitter where you have everyone screaming all at once.”
For now, the app and its content will remain free for all to access, though Spotify has been working on ways for creators to monetize their content, such as a la carte payments for podcasts.
“Maybe live is a revenue model, maybe it isn’t,” said Mr. Söderström, adding that while China has shown aptitude to pay for this kind of service, Western markets haven’t. “It has potential, and it’s our job to explore.”
This story has been published from a wire agency feed without modifications to the text.