Spotify (SPOT  ) is in talks to buy famous podcast producer Gimlet Media for an alleged $200 million, as it attempts to expand its narrative-audio endeavors.

Gimlet Media is a Brooklyn-based podcast company that has forayed into TV production with popular shows such as "Homecoming."

Spotify has already entered the world of video content, adding a section on its app that includes a combination of video and podcast content, even entailing some input from Gimlet Media. However, it doesn't have an established presence in the podcast market, which is growing at a rapid pace and has a monthly audience of about 73 million listeners -apace with the market for streaming music or video content.

Spotify chose to acquire Gimlet not only because it wants to expand into the podcast industry, but also because it's often difficult to scale this type of media to generate revenue. Acquiring a profitable giant like Gimlet would ensure that Spotify's foray into this relatively novel industry is successful.

Podcasting's ad revenue model produced $315 million in 2017, which is but a fraction of the $11.9 billion that digital video ads earned that year.

Another issue is that Spotify can't cross-subsidize its music services with other products like Apple (AAPL  ) or any other tech behemoth can. Spotify thus needs to ensure that its streaming services cover the breadth of the media market, so as to lock down listeners into using the app as a one-stop media outlet.

It is however, important to note that Gimlet is only valued at $70 million. By purchasing it at an overvalued price, Spotify is attempting to limit the likelihood that competitors don't follow suit, as the market is very fragmented. Still, such a high price point implies that Spotify won't be able to acquire multiple media outlets, at least in the short-term.

Spotify has 200 million users. If it can enlarge its user base through the addition of podcast fanatics and also find a way to retain existing users by offering new and creative media types, this number is expected to increase.