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On Tuesday, Sweden-based Spotify agreed to buy podcast advertising and publishing platform Megaphone to improve its podcast platform.

It is a $235 million (roughly Rs. 1,700 crores) deal. Targeted advertisements will be created with the help of Megaphone's technology.

Further, it would make its proprietary advertisement monitoring tools available to third-party podcast publishers.

After being hit by the pandemic this year, spotify noticed its advertising business improve in the third quarter.

Spotify earns income from paid subscriptions and through advertisements to non-paying users. According to executives, they expect a growth in advertisements this quarter

At this time of the year, when people are at home, their heavy investments in podcasts is their effort in being the Netflix of audio content. This has helped the drive subscriber growth.

It has around 144 million premium subscriber. Compared to last year, Spotify has spent hundreds of millions of dollars to purchase companies like Gimlet Media, a podcast producer, and Ringer, the sports and entertainment podcast network founded by sports writer Bill Simmons.

According to the company, this new technology would help podcast publishers earn better too.

Spotify's Chief Content & Advertising Business Officer Dawn Ostroff said. "We are still in the early chapters of the streaming audio industry story, but it is absolutely clear that the potential is significant,"

Currently, Spotify has 1.9 million podcasts that was 1.5 million in the second quarter. Big launches such as the Michelle Obama Podcast and Mama Knows Best by influencer Addison Rae has boosted the number.

By Neha Makhija