Nieman Foundation at Harvard
Welcome to Hot Pod, a newsletter about podcasts. This is issue 190, published January 8, 2018.
Happy new year, everyone! Let me begin by saying something that’s extremely typical: I spent a good deal of the holiday season either thinking about work or actually working. Which is to say, I totally vibe with what Anne Helen Petersen very succinctly coined as “millennial burnout.”
Anyway, glad to have you here. Let’s get to it.
If you’ve been reading Hot Pod for a while, you probably know that I like to kick the year off with some scene-setting that’s supposed to give us some sense of a baseline. That baseline is generally tethered to the following line of inquiry: Is the industry continuing to grow, and if so, how?
An estimated 73 million Americans (about 26 percent of the population over 12) can be considered monthly podcast listeners, according to Edison Research and Triton Digital’s ever-dependable annual Infinite Dial report, which gives the American podcast industry its clearest number to beat. That was up from 67 million in 2017, and — if you’re looking for a longer time scale — from 32 million in 2013, the year before the iOS 8 rollout and Serial. Also worth noting: Edison Research has found that the podcast listening audience has begun to look more like the American population as a whole in terms of race and that the gender gap in podcast listenership is slowly closing.
It’s about time that we extended this scene-setting treatment to those beyond American shores, given that this newsletter’s focus has sought to be increasingly international over the past year. To that end, here are the relevant numbers to track:
Those are the numbers we’re leaning on. I’m keeping my fingers crossed that we’ll continue to get good information from these markets and that we’ll end up getting good numbers from more countries as well.
For advertising, the podcast industry’s biggest (and most formally tracked) revenue channel, we’re relying on numbers from the Interactive Advertising Bureau, which has been publishing helpful advertising revenue survey studies since 2017. Those studies are primarily built on self-reported revenues from about 19 participating podcast companies, which are then used to attempt estimates of the wider market.
In the IAB’s second annual podcast advertising revenue study, published last June, the self-reported numbers pegged ad revenue to around $257.4 million for 2017, and estimated the wider market to be around $313.9 million. (Whether that’s a conservative estimate is up to you to mull over. I’ve heard execs argue both ways.) Those 2017 numbers beat the IAB’s earlier projection of $220 million for the year, and it’s up from $119 million in self-reported revenues the previous year.
Did U.S. podcast advertising revenues grow last year, and to what extent? I imagine we’ll find out when the IAB releases its third annual survey sometime in the summer.
Will we end the year in a place where advertising isn’t the only major revenue-related question? If a few things shake out the right way, perhaps. Should that be the case, we’d have to start earnestly attempting measures of paid business models (i.e. Stitcher Premium, the upcoming Luminary, and so on) and direct contributions (Patreon, crowdfunding campaigns, and so on). We’d also have to grapple with emerging revenues from podcast advertising marketplaces like Anchor, Megaphone, and the like — should those revenues become meaningful, of course — as well as preexisting advertising solutions from streaming platforms working to inch their way into the podcast ecosystem, like Pandora.
But much as how most communities in America are dealing with the inevitable fallout from climate change, we’ll cross that bridge when we get there, and I look forward to untangling the many ways in which those revenue numbers will be framed and spun. (Perks of the job, baby.) For now, we’ll move forward with the assumption that advertising continues to be the heartbeat of the podcast business. And for now, we’ll continue to persist beneath the shadow of an all-consuming narrative: that the gap between podcast listening engagement (which is super strong) and podcast monetization (which, comparatively, isn’t) is one that needs desperately to be closed as soon as possible, and that oh won’t someone innovative save us right about now.
Now that we’ve set the table, let’s lay out some dishes. (Is that the right next step for the metaphor? Roll with me here.) Lacking psychic abilities, I don’t know what’s going to happen next, but I do know a few stories that’ll get us going. Here are five major beats that we’re going to start the year thinking about:
The politics of granular analytics. Here’s what’s at stake: Many podcast companies would like more granular audience metrics so that they could better attract advertising dollars. It would also be great if they could continue to have some direct control over their data pipelines no matter what happens in terms of podcast distribution over the long run.
Two efforts to watch: (1) NPR’s campaign to foster industry-wide implementation of its Remote Audio Data protocol, and (2) the IAB’s Podcast Measurement Compliance program certifying publishers that have adhered to its analytics standards. (One way to think about this: The latter is trying to set the floor, the former is trying to raise the ceiling.)
It’s not going to be easy. Herding cats is difficult — not to mention the platform-sized felines, like Spotify and Pandora, some of which will likely want to enforce their own analytics paradigms. And there’s always the ideological resistance, strong in certain corners in the podcast ecosystem, that calls for the rejection of any further extraction of listener data.
Something paywalled this way comes. Last May, a curious startup named Luminary Media raised $40 million in venture funding to build what may be the first true “Netflix for podcasting” test. The company has remained virtually silent in public messaging since the fund-raise, but it’s been spending that time building out infrastructure, accumulating content assets, and signing deals. Soon we will see it enter the market, where it will almost certainly advance the conversation around whether or not people will actually pay for podcasts.
For what it’s worth, my thesis on the company remains unchanged. Pardon me for quoting myself, from “The Subscription Problem” I published last June:
Such a venture is basically in the business of extending the promise that it can consistently and perpetually beat the entire universe of free alternatives. This doesn’t necessarily mean that the venture needs to provide better programming than all available alternatives in the open ecosystem — that is, to be entrenched in the highly-volatile hits-making business. It can also mean that venture can simply opt for providing a better overall experience when it comes to interacting with on-demand audio in general. Consider one of the fundamental issues for new listeners trying out podcasts: they are made to navigate the full spectrum of options that spans millions and find content that means something to their given tastes.
The game, as they say, is afoot.
The marketplace, being and becoming. For the most part, podcast advertising is a fairly manual process. As a publisher, you either work directly with an advertiser, or you access them through a network like Midroll or an agency like AdResults and Performance Bridge. What generally happens is a very human interaction: You find a good match, you negotiate, you haggle, you make a deal. In a manual marketplace like this, things happen quite slowly. You might even say things happen inefficiently.
The impetus of things like Megaphone and Anchor Sponsorships is to attack those marketplace inefficiencies, in large part by becoming the marketplace themselves. The idea, I reckon, is to build a transactional environment that removes the various frictions of those pre-existing inefficiencies: being found, negotiating, closing. Perhaps they can cultivate environments attractive enough for advertisers such that the latter may end up eschewing the entire manual process in favor of hitting Megaphone or Anchor as the catch-all solution to buy into podcasting. Maybe there will be enough advertisers that end up being intentional enough to round out Megaphone and Anchor buys with direct deals, creating a buying mix. Maybe not.
The possible success of solutions like Megaphone and Anchor has the capacity to alter the balance of power in the podcast ecosystem. The question, of course, is how.
The cycle of power. Two threads here. First, I’m pretty sure podcast-land is going to become way more intertwined with the legacy radio broadcast world than it is right now. And it’s not like the two universes aren’t already mingling: In August 2017, Entercom bought a 45 percent stake in Cadence13 (née DGital Media). Last September, the bankruptcy-fighting iHeartMedia acquired Stuff Media, the parent company of the HowStuffWorks universe. And my conspiracy-theory lizard brain is going apeshit with the New York Post’s recent report that Liberty Media, owner of SiriusXM (which moved to acquire Pandora in September) and Live Nation, is apparently interested in picking up iHeartMedia whenever the company digs itself out of its financial hole. Culture trickles from the top-down as much as it does from the bottom-up (see: civic society), and so the question of the podcast industry’s overall ownership and power distribution over the long term is a crucial one to watch. It may well affect podcasting’s flavor.
I’ll keep the second thread short and sweet: Speaking of ownership, which company is going to get acquired next? Obviously, I’d keep my eye on companies that aren’t particularly built to stay independent — which is to say, the ones that are venture-backed.
The middle class. As platforms, marketplaces, venture-backed entities, and conglomerates go about their business, what’s the fate of publishers for whom the ideal isn’t an exit, but the opportunity to stay in the game? Is it a binary outcome: either build for acquisition or stay niche and small? This line of inquiry, admittedly, is the one that I’ve done the least work on, but it’s one that I’d like this newsletter to scale its efforts up on.
Five tests for U.K. podcasting in 2019 [by Caroline Crampton]. It’s a shiny new year, and I spent some of the festive break trying to think myself out of the somewhat glum state in which I ended 2018. As I’ve been chronicling in this newsletter over the last few months, there have been a lot of developments in the U.K. podcasting scene that hint of bigger things to come, particularly in terms of both content and monetization. Reporting on whether any of this actually comes to pass will be a big focus for me this year, and as such, I wanted to lay out the benchmarks I’ll be measuring the industry here against in the days to come.
Transparency about pay. The audio industry in the U.K. (as in many other places) runs on people working freelance or on casual shifts. This is true across the board, from the BBC right down to the smallest production companies. Anecdotally, and from my own experience, I know that the level of remuneration for this kind of work can vary wildly, from substantial rates in places that have a podcast revenue strategy locked down, to barely-worth-it pay at outlets that still subscribe to the “it’s on the internet therefore I should pay you less” school of thought.
I won’t consider British podcasting to be a stable and sustainable industry until those working within it are paid adequately for their efforts, and transparency around rates will be key to making that happen. It’s all very well for executives to trumpet the success of their new apps, but while I’m still hearing stories from people who make podcasts about how they’re doing half their work on a commercially released show for free because they were told “there isn’t any more budget,” I will continue to be skeptical about who that success is benefiting. I look to the BBC particularly for progress on this, since their license fee revenue comes with a duty towards financial transparency. If they’re paying their producers fairly — and they publicize those rates — that could go a long way to setting the culture for other U.K. providers to emulate.
On the box. The podcast-to-television pipeline is still very much in its infancy in the U.K., and so far very few teams are seeing any of that sweet cash the U.S. is so excited about. There’s some movement towards the “IP factory” model from individual production companies like Julian Simpson’s Storypunk (which I wrote about in an Insider in December), but the big broadcasters like the BBC, Channel 4, and Sky have yet to really get into this area.
In the next year, I hope to see that change so that a new monetization avenue opens up for podcasters. While it would nice to see a Homecoming-style prestige fiction show on our screens — and I don’t see why something like the BBC’s conspiracy thriller podcast Tracks couldn’t make the leap, for instance — I’m trying to be realistic here. Nonfiction seems like an easier avenue to get started on this, perhaps with comedy or political specials. Basically, what I’m saying is that the next My Dad Wrote a Porno shouldn’t have to go to HBO to get on telly.
One-hit wonder. Speaking of the Belinda Blinked chronicles, another thing I’d like to see in the next year is a shift away from fetishizing the kind of success that My Dad Wrote a Porno has achieved. I’m as guilty as anyone of glibly describing shows as “the next X” (see previous item), but doing this does create the impression that there’s a linear, one-by-one queue of hit shows that have to emulate one another in order to do well. It would be great to see wider recognition of the fact that there are lots of different ways to succeed and that what constitutes a hit can vary massively for different genres and creators. I served as a judge on several awards programs and podcast competitions last year, so I heard a lot of entries trying to copy existing shows rather than find their own form. Until we stop believing in the existence of a set recipe for a hit podcast, new entrants to the industry are going to keep feeling that they have to fit their ideas into pre-existing templates.
Career pathways. Sometimes I’m asked to give talks at various schools to students interested in podcasting, and one of the most popular questions I get asked afterward is: “How do I get a job doing this?” Usually, I have to admit that there isn’t really a straight answer — I suggest they start making and experimenting on their own while doing their best to network with the kind of people who might be impressed by what they create and want to start paying them for it.
While there are a very small number of apprenticeships and training-scheme grants for audio, I’m not yet aware of anything resembling a properly organized pathway to becoming a podcast producer that a young school graduate in 2019 might be able to discover and follow. While the industry still operates on a “who you know” networking model, any gains in terms of improving diversity will be limited.
In the next year, I’m hoping to see those with the cash launch new approachable and inclusive entry points to the industry, whether that’s in the form of bursaries for study, entry-level production jobs, or properly open pitch calls for talented producers who don’t yet have many credits. I really do believe that the first organization to do this in a wholehearted, non-tokenistic way is going to win at the content game over the long term because they’ll have new stuff that sounds like nothing else that’s out there.
A third way. Finally, my favorite hobby horse: How do you monetize in the U.K. outside of Acast and Audioboom? For the industry here to move into its next phase of maturity, we need a bigger market in ad marketplaces and providers. Whether that means U.S. outfits like Megaphone or Art19 opening up here or homegrown companies stepping into the gap, I’m convinced that this is a crucial part of British podcasting’s next stage. It won’t change overnight, but I’d like to see one or two key launches in the next year that indicate that the options are widening.
Tracking:
