Why Apple may spend $30M to buy "Pandora of talk radio" app Swell
Sources tell Re/Code that Apple is close to finalizing deal to buy Swell, a news and podcast curation app for $30 million. Billed by some as the "Pandora of talk radio," Swell creates playlists drawing in content from iTunes, NPR, ESPN, and others that are personally tailored to users' tastes.
Like YouTube, Amazon, Spotify, and every other company looking to take control of the heavily fragmented streaming music market, Apple wants to build a broad ecosystem of audio products. This deal underlies the importance of podcasts to that vision -- indeed, podcast usage continues to expand with over a quarter of Internet users downloading or streaming podcasts, according to Pew. Swell is also notable for having a slick user interface optimized for car drivers. That matters because some believe, as was the case with products like SiriusXM, that the automobile is an important gateway for increasing widespread adoption of subscription services like Spotify.
The deal looks to be an acqui-hire, with the Swell app slated to be shut down this week as most of the team joins Apple. Like the company's $3.2 billion Beats acquisition, this shows Apple once again farming out talent on the software side of things. That's smart considering, as Re/Code notes, Apple's current podcast app has a dismal 1.5 out of 5 star rating on the App Store.
That Swell's value stems largely from its curation element is also significant. When Apple bought Beats, Tim Cook emphasized the personalized nature of the experience: "Programmed by a trusted team of well-respected music experts with over 300 years of experience across all genres, Beats Music delivers the right music for any situation, any time, and any preference, personalized to your tastes." What Beats does for music, Swell does for podcasts. And despite the massive decline of digital downloads threatens to make iTunes obsolete, podcast-listening is still on the rise.
Apple is in a precarious spot in the battle to win over the world's ears. It has many assets, including the celebrity cachet and musical expertise behind the Beats team, along with long-standing connections to the music industry that were forged during the era of digital downloads, which it dominated. But with far fewer streaming subscribers than Spotify and others (Beats Music had just 111,000 subscribers as of last May), and with the model quickly shifting away from the digital download model that Apple pioneered, expect it to continue making content acquisitions like the Swell deal. Otherwise, the new streaming music services may make Apple's audio offerings obsolete, just like Apple did to CDs a decade ago.