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Spotify is becoming the YouTube for podcasting
Spotify announced this week an ad product that will better integrate advertising into its podcasting streams. This means, according to The Verge, that “it’ll begin inserting ads into its shows in real-time, based on what it knows about its users, like where they’re located, what type of device they use, and their age, similarly to how the broader web operates.”
The move is Spotify’s latest salvo in its quest to become the YouTube for podcasting. Most other podcast listening apps serve as mere conduits; you download a podcast file from a web server and then the podcast app will play it for you on demand. If any ad is included in the episode, it was inserted prior to the download.
Spotify’s Streaming Ad Insertion effectively marries content distribution with monetization. Like YouTube, Facebook, and virtually every other major social platform, it’s able to leverage the massive reams of data it has on its users when serving up the ad, and this, theoretically, gives it a distinct advantage over traditional podcast ad networks.
Right now, this ad tech is only being applied to Spotify’s exclusive programming, but its executives have already dropped hints that this could be rolled out to all users who opt into it, meaning that any podcaster could potentially benefit from the program as long as they agree to let Spotify take its cut. This wouldn’t be dissimilar to YouTube’s partner program, which generates up to $26 million a year for the platform’s biggest stars.
Of course those opportunities will bring with them plenty of tradeoffs. Famous YouTubers have experienced all sorts of upheavals to their revenue streams as YouTube constantly tweaks its ad delivery algorithm. Don’t be surprised if, five years from now, we start reading stories about how Spotify podcasters saw their revenue cut in half after Spotify shifted its advertising focus.
I’m particularly interested in how a podcast revenue share with Spotify would work. The platform makes much more money from paying subscribers than it does from advertising, so is there a potential scenario in which a participating podcaster could get a cut of that much larger pile of money? The Verge article I linked to above had this tantalizing detail: “[Paying] users also hear podcast ads, unlike when they listen to music.”
More food for thought: if a podcaster opts in to Spotify’s advertising platform, would that mean they have to strip any ads they sold themselves from the mp3 file before uploading it to Spotify? On YouTube, creators have managed to sell host sponsorships while also allowing preroll/midroll advertising, so the two aren’t necessarily mutually exclusive.
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Will listeners ever pay for podcasts? Some already are
Last year, the Interactive Advertising Bureau released a report estimating that the podcast industry generated $479 million in 2018 and is projected to make $1 billion in 2021. Not only is this a tiny pittance compared to the money generated by other mediums like TV and search, but podcasting has also been limited by its over-reliance on advertising.
Unlike, say, Netflix or The New York Times, most podcast companies have struggled to gate their content behind paywalls, and most major podcast apps don’t provide a way for podcasters to directly collect money from their listeners.
But several companies, like Spotify and Luminary, are attempting to bundle exclusive podcasts and sell access to them behind a subscription paywall. Other platforms assist individual podcasters in converting their listeners into paying subscribers.
The company Glow fits into the latter category. Founded a little over a year ago, Glow developed technology that allows a podcast’s paying subscribers to listen to paywalled episodes on their podcast player of choice. I recently interviewed its co-founder Amira Valliani about how she’s solving the paywall problem and why she thinks paid podcast subscriptions will eventually scale.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player. I also rounded up some of the biggest insights from the interview over here: [link]
The magazine-to-Hollywood pipeline
The Baffler published a fascinating article claiming that the rise of streaming platforms and their thirst for new IP has led to magazine writers pitching more narrative-driven feature articles in the hopes that those articles get optioned for TV or film. In this telling, Hollywood is effectively subsidizing magazine journalism to the extent that magazines serve as a mere middleman between writer and producer. The Baffler piece opens up with an anecdote about an LA producer staying up til midnight so he can be among the first to read a brand new David Grann article, which then goes on to be optioned for $5 million.
Frankly, I’m skeptical of the author’s claims about the far-reaching effects this has had on the entire journalism industry. Have streaming platforms ushered forth tens of billions of dollars for new TV shows and movies? Definitely. Does this mean that magazine pieces are getting optioned more often? I wouldn’t doubt it. But the chances of your average magazine piece getting picked up by Hollywood for a significant amount of money are still infinitesimally low, and I can’t imagine that your average journalist is calculating this potential outcome into every magazine pitch.
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The significance of 100 million Apple News users
With a new year upon us, Apple published an article to its website touting its growth for a range of services that included Apple Music, Apple TV, and the App Store. The Apple News section is short and only contains one number: 100 million. That’s the number of “monthly active users in the US, UK, Australia and Canada.” That’s up from the 85 million MAUs that Apple touted in late January 2019.
What’s particularly telling is that Apple didn’t include a number for Apple News+, the $9.99-a-month version that gives readers access to hundreds of magazines and a few daily newspapers, including The Wall Street Journal. That’s because subscriptions have reportedly only numbered in the low six figures, with many publishers (anonymously) saying they’re not generating much revenue from the partnership.
The same can be said for Apple’s free version of Apple News. It delivers plenty of eyeballs, but ad revenue is still scarce. So does that make the 100 million number completely meaningless? Of course not. That’s a huge audience of users who are coming to the app to do nothing but consume news content from traditional media outlets. Some outlets have become savvy about using up their ad inventory to either promote their own paid subscriptions or to drive other actions, like getting users to sign up for their email newsletters.
ESPN’s huge get
Variety broke the news that ESPN hired a guy named Omar Raja, who was previously working for WarnerMedia’s Bleacher Report.
It's hard to underscore how big of a poach this is for ESPN. Raja founded House of Highlights, one of the most impressive Instagram successes in the platform's history. He took a format first pioneered by ESPN’s SportsCenter -- the game highlight -- and adapted it for the social web in such an effective way that a multi-billion dollar media conglomerate felt the need to snap him up. Under Bleacher Report’s banner, Raja expanded House of Highlights onto other social platforms and even a live event series.
And now he’s at ESPN. According to the Variety piece:
Raja will serve as the main voice of ESPN’s “SportsCenter” Instagram account,which has 15.2 million followers, and will play a role in devising content for ESPN’s mobile app. “He will join us in a multi-faceted role focused across the board, not just a single platform,” says Ryan Spoon, senior vice president of digital and social content at ESPN, in an interview. “It includes our own platforms, but he will also think about new content, new voices, and ways to deliver content to our evolving properties.”
I’d be really curious to learn the terms of his contract. More specifically, I’d love to find out how much money it took for ESPN to lure him away.
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