Nieman Foundation at Harvard
Editor’s note: Hot Pod is a weekly newsletter on the podcasting industry written by Nick Quah; we happily share it with Nieman Lab readers each Tuesday.
Welcome to Hot Pod, a newsletter about podcasts. This is issue 239, dated December 17, 2019.
Hello everyone. Welcome to the last Hot Pod of 2019. We made it to the end of the year! Frankly, I’m a little surprised. Given everything that’s happened, I thought my brain would’ve melted into a puddle of goo, Bon Benson-style, by now. (Spoilers, I guess.) But my noggin’ is very much not goo, even though it hurts all the time. I’ll take it. Anyway, Caroline and I wrote Year in Review columns to close out the calendar, but there was a good deal of action late last week, so we’re going to start out by hitting some headlines first. Let’s go.
Tracking.
2019 in review: Brave new world. In the past, writing these year-end columns can be a little tough, as it often requires some effort to string together disparate threads into a coherent master narrative that captures the previous twelve months. But the master story of podcasting in 2019 couldn’t be clearer: there was Spotify, and there were the ripple effects of Spotify.
Let’s dispense with the exposition, already much-trodden. The year began with Spotify whipping out around $400 million to acquire three podcast companies: Gimlet Media, Parcast, and Anchor. The move was tantamount to a big ol’ cannonball into a pool where the company had previously only dipped its toes. These massive acquisitions, we’re told, make up the opening gambit of a new ambition: to becoming something much more than a music streaming service.
So that’s how the year began — with an explosion. Meanwhile, the year ends on steady drum beats, with Spotify firmly at the center of the story about podcasting and where it’s supposed to go. Some of this is just good brand management. Having secured an exclusive audio development deal with the Obamas, a cover story in The Hollywood Reporter, and quite a bit more in between, the company has launched a fairly effective campaign to reframe its identity in the eyes of the broader media, entertainment, technology, and finance industries. Where it was once a digital music distribution company whose value was almost completely defined by its complicated relationship to the music labels, Spotify is now an all-consuming audio platform that might just outflank its old frenemies.
But there is also some substance to the brand weaving. Over the course of the year, there’s been some indication that the company has been able to do exactly what it has said it wants to do: to bring the full weight of its resources and capabilities to bear on podcasting. The past month alone has seen a steady rollout of new features meant to improve podcast discovery on the platform. Those releases come on top of Spotify intimating that it has, indeed, seen meaningful growth in podcast listening. From the company’s third quarter earnings report: “We continue to see exponential growth in podcast hours streamed (up approximately 39% Q/Q) and early indications that podcast engagement is driving a virtuous cycle of increased overall engagement and significantly increased conversion of free to paid users.”
Between Spotify’s clear declarations of its goals and various data points suggesting that it’s had a good start toward those goals, we can unambiguously say that the company’s re-entry into the non-music audio scene has been one of the most consequential developments in podcasting since Serial. And despite all that has already happened, between the money spent and the company’s overt articulation of its strategy and tactics, there remains a looming sense that we’ve only seen a glimpse of what’s to come.
Another thing that has only been revealed as a glimpse: the full ripple effects of Spotify’s big year throughout the rest of the podcast ecosystem. I’m sure there are hundreds of ramifications to parse through, but for the purposes of this column, I’m just going to narrow things down to the three big pieces that are the most impactful in my eyes.
The first has to do with the perception of podcasting’s value by everyone outside of it. By spending so much money on podcast acquisitions, Spotify has raised the perceived level of podcasting’s potential value up several notches, cultivating an elevated sense of competition and momentum in an industry that had, up to this point, largely adhered to a slow, steady, and somewhat unsexy growth trajectory. There may be circular dynamics at play here: Spotify’s expensive acquisitions process was essentially a bullhorn pointed in the direction of everyone else — yelling “We believe there’s a crap ton of value in these here hills, enough that we’re going to spend a crap ton of money to get it!” — that will draw more value-seeking entities (advertisers, talent, non-audio media companies, investors, etc.) into the ecosystem; their participation, in turn, could possibly create additional value for the industry as a whole. It is the case, of course, that podcasting was already creating considerable value and attracting new value-seeking entities by itself and on its own terms. Spotify, then, has become a kind of accelerant, meaning to push that process down the road more quickly, but with the intent of assuming some baseline control of the value creation.
The second effect has to do with the relationship between podcasting and Hollywood. That relationship was already been solidified well before this year, with talent agencies steadily increasing their involvement in over the space. That involvement plays out in both directions: you have talent agencies greasing the pipelines for podcasters to jump into other media, and you have them greasing the pipelines for talents from other media to jump into podcasting.
The third ripple effect has to do with Apple. Yep, took me over a thousand words to get to my first mention of Apple in this year-end column, and that’s kind of the point. By doing what it did, Spotify has fundamentally redefined the story we’ve been telling all this time. I think it’s safe to say that podcasting, once a community that owed its health to Apple’s impartial stewardship, is now distinctly a two-horse race. (Or, depending on your disposition, a community stuck between a rock and a hard place.)
Despite everything, it’s remarkable (yet, weirdly, still unsurprising) that we haven’t seen any overt or direct response from Apple with regard to the increased Swedish competition over podcast listening. There is, of course, the Bloomberg report from the summer stating that Apple has begun meeting with various podcast publishers to discuss exclusive content deals, which I have consistently been told is something that is indeed happening, but I’m still struck by a lack of…oh, I don’t know, hunger.
I’m going to hold my position on this until we get to see the full shape of whatever Apple Podcasts’ official next move is supposed to be. If the Bloomberg report is right (again, I haven’t been told otherwise), what kinds of publishers is Apple approaching? What is the driving strategy and how will it differentiate Apple’s new podcast order from the podcast world Spotify wants to build? More to the point, what will Apple stand for? To state the blindingly banal Silicon Valley truism: execution matters, and there are more than a few ways that a potential Apple Originals/Exclusives strategy could succeed or fail.
Not that the prospect of Apple matching Spotify pound for pound with an exclusives/originals strategy is something that should be universally embraced, of course. There are more than a few podcast folk who feel weary about a Balkanized future, given podcasting’s historical relationship with openness. I, for one, am one such weary-wort. For what it’s worth, I subscribe to the perspective that Apple doesn’t have to match Spotify pound for pound in order to preserve its influence over the space. (To the extent that it wants to, which still seems like an open question.) Apple can, and should, match Spotify on other stuff — like being accessible on smart speakers or, you know, improving on its horrendous app — but I do sincerely believe there is a future where Apple can maintain its commitment to the open ecosystem and hold the line against Spotify.
However things shake out, it seems that the road ahead will be a rocky one for independents. The year ahead is rich with unknowns, but the one thing we do know is that there will be more money and corporate-owned entities flowing into the ecosystem, which will translate to more competition and almost certainly a more difficult operating environment for podcasters who’d rather not align with anybody right out of the gate.
On the flip side, my sense is that Spotify truly believes that it will have positive impacts on both big publishers and independent podcasters, the idea being that the company’s various exclusive programs are meant to get its users through the podcasting door after which they can discover the wider universe of shows, from big and small providers, via the numerous recommendation features that will be thrown their way. And sure, there remains the possibility that Apple will, indeed, muster up the interest to double down on open podcasting and consciously facilitate a space where big publishers and independents can exist on equal footing.
But if I were a podcaster intent on preserving independent self-ownership, I don’t think I’d be confident enough to bet on either of those outcomes. There’s just too much power in caprice. I’d probably be better off betting on myself, which would mean betting on various tools, partners, and philosophies that could help me bet on myself, whether it’s an alternative/non-advertising business model (Patreon, Supporting Cast, etc. etc.) or an operating ideology that focuses on being small and niche.
I don’t want this column to sound entirely skeptical about the way things are going, because that isn’t completely accurate. I’m not so much of an ideologue that I dismiss the upsides of the changes we’ve seen over the past year or so, whether it’s the fact there’s more money now that can potentially be spent on producers and native talent, or whether it’s the fact that the growing participation of older media companies in the space means more stable jobs for those who’d rather not live with the instabilities of running their own shop. But I still burn the candle for indie podcasts and media, because independence is one of podcasting’s original promises.
For what it’s worth, I’m still the type of idealistic dolt who believes the trend toward a certain kind of big-ness — accelerated by Spotify, deepened by corporate interest, potentially tempered by a matching Apple response — opens up a gap that can be filled by nonprofit entities, in particular the public media system. As it stands, there’s a slice of public radio that’s responded to the podcast boom by building analogous businesses able to tap into the financial value that’s being created here. (Quick reminder that NPR’s podcast sponsorship revenue is projected to beat broadcast sponsorship next year.) But there’s an opportunity for the public radio system as a whole to fashion itself as the home, and advocate, for independent and open podcasting. This would be a public media system that sees itself only partly as a content publisher, and more holistically as the facilitator of a wider system of publishing.
That’s all pie in the sky stuff for now. I bring up that possibility, though, to raise a broader point: Spotify may be at the center of the podcasting narrative right now, but it isn’t the whole story. That’s still being written.
2019 in Review: Choice and the Year of Freaking Out [by Caroline Crampton]. When I think back over the past twelve months, it’s the freakouts that stand out to me. A lot has happened this year, between the acquisitions and the consolidations and the sheer volume of new episodes cascading into feeds. But it’s not the actual happenings themselves that I remember most clearly — it’s the messages piling up in my inbox afterward. That feeling that there’s a wave of nerves headed in my direction that I can’t stave off.
Whether you work with audio at a broadcaster, an independent production company, a sales house, a network, or completely by yourself, the inevitable next question is: “What does this mean for me and my work?” And there weren’t many definitive answers in the months that followed. In an uncertain environment, it’s natural and reasonable to feel unsettled. “Let’s wait and see” isn’t a very comfortable position to be in.
The nature of the podcasting space to date has also contributed to this atmosphere of unease. There are so many overlapping and competing interests involved, from public radio to venture-backed studios to ambitious networks, and each has a different set of priorities. Entities slide into a greater involvement with audio, entering sideways or stopping and restarting their efforts. Sometimes it feels wrong even to talk about “a podcast industry,” since we’re not all facing in the same direction most of the time, but I’m not really sure how else we can do this.
Overwhelmingly, it was the smaller providers and individuals who reached out to express their anxiety this year. Creators who aren’t inking big advertising deals but who are making a living (or some of one) from their audio, now concerned about how the models they have painstakingly constructed will be buffeted by the new norms…whatever those turn out to be.
It began to feel cyclical to me. Every few weeks, Spotify or another big corporation would make a big announcement concerning podcasting, and the “what does this all mean?” posts and messages would start to appear. While I do think that many of the developments we’ve seen this year will change podcasting in the long term, I also think that our chances of accurately unpacking what that will look like in the first 24 or 48 hours are very low. Which isn’t very helpful when you’re freaking out, I know.
The trend toward greater corporatization in podcasting is undoubtedly here to stay. But is there hope, or are we stuck in this cycle of anxiety forever? I’m not going to pretend that we’re all headed for the sunlit uplands in 2020 and beyond. But there is one trend from 2019 that I want to mention in relation to this, and that is the expanding choice on offer to podcasters working on all scales.
An individual or a team with a great idea for a show now has more alternatives than ever for where they can take it. There are more networks and platforms to pitch, with more money to spend. Direct monetization options are opening up all over the place too — I’ve written about some of them this year already.
If you don’t want to explore advertising, it’s no longer the case that you just have to stick a PayPal “donate” button in the sidebar of your website and hope for the best. Products like Supporting Cast, Glow, and others open up premium feeds and payment processing mechanisms beyond just large publishers. There’s still a long way to go in this area (there’s too much friction for podcasts wanting to offer paying listeners paywalled or bonus material) but substantial progress has been made already.
However, just because there is more choice of how to monetize a podcast, it doesn’t necessarily follow that more people can be properly compensated for their work. There are more contracts floating around, but also more potential for creators without the means to pay for legal advice on risk. For every amply Patreon-supported show out there, there are a dozen pages where goals aren’t met and the pledges aren’t into three figures. There are podcatchers that now allow you to accept donations directly, but that doesn’t mean the money will come flooding in.
All of which is to say, I think more choice for podcasters is an excellent thing, but I’ll never stop being skeptical about how much money it might make them. The freakouts won’t stop; things are changing and it won’t all be for the better, because nothing ever is. But if I could leave anything behind in 2019, it would be that background hum of anxiety about the state of podcasting I’ve felt for most of the year. An attitude of inquisitive curiosity is what I’m going for instead. Asking the right questions will matter more than ever, as this thing shifts and changes again in the months to come.
Et Cetera
Before we wrap things up for the year — with respect to the Tuesday newsletter, anyway — I’d like to highlight three more 2019 stories I thought were interesting, plus a couple more.
On paper, Luminary had a lot going for it…well, maybe it just had the one thing: money, and lots of it. That resource afforded the company the opportunity to get into a position where it could set up a pipeline of deals that could potentially reshape the on-demand audio business as we knew it. As it turns out, though, money can only get you so much.
Luminary’s April rollout was ultimately derailed by miscommunication, miscomprehension, and misalignment. Also: the app simply isn’t good, which, you know, table stakes. The whole episode displayed a fundamental lack of understanding of how the ecosystem works, how to build goodwill in a community (let’s not even talk about the Sign Bunny fracas), and how to create a market with tangible value. In November, the company reshuffled its executive ranks, bringing in a new CEO — a former president of HBO — while benching its founder.
What should we make of Luminary’s grand misadventure? Is it some proof that people don’t actually want to pay for podcasts? Nope. The biggest lesson from this debacle is simple: if you’re going to do something, do it right.
(2) The rise of the West. In the summer of 2017, the New York City Mayor’s Office for Media and Entertainment published a report declaring the city to be “podcasting capital of the world,” pointing to the growth of podcasting businesses within city limits. And for a while, the claim may have been somewhat true, given the prominence of long-standing New York-based audio giants (WNYC, This American Life, etc.) and the seeding of several companies that would become the face of this podcast phase (Gimlet Media, Panoply, etc.).
But by the end of 2019, there has been enough movement to suggest that the focal point of the podcast ~industry~ has swung westward, toward Los Angeles. I’m almost completely basing this on the fact that podcasting’s larger-scale business activities are now increasingly intertwined with the broader entertainment industry clustered around LA.
(3) Dialectic consolidation. Three subplots from the year that collectively amount to a trend: Entercom’s acquisition of Cadence13 and Pineapple Street, iHeartMedia’s ongoing efforts to bill itself as a notable podcasting concern, and Sony Music’s investments in Three Uncanny Four, Broccoli Content, and most recently, Neon Hum Media. If you can’t build ‘em, buy ‘em.
(4) Some other stories we’re still thinking about:
All right. That’s all folks. Just one last quick note of gratitude — thank you so much for reading Hot Pod. See you next year.
