The strategic brilliance of Slate's pivot to podcasts

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There were plenty of ways to look at Spotify’s November acquisition of the podcast platform Megaphone, but the detail I homed in on almost immediately was the price: $230 million.

Why did I find that figure so significant? Because the number was only $20 million less than what Jeff Bezos paid for The Washington Post back in 2013. Both The Washington Post and Megaphone were owned and sold by Graham Holdings, a conglomerate whose genesis stretches back to the late 1800s when the Post was founded.

Think about that for a moment. The Washington Post, by the time it was sold, was over 130 years old and one of the most venerable newspapers in the world, and yet it was considered a distressed asset when its parent company unloaded it on Bezos. And then, only seven years later, that same holding company sold a podcast platform that it had launched in 2015, and all for almost the exact same price.

And what’s even more interesting to consider is that Megaphone probably wouldn’t have existed at all if a former public radio producer hadn’t come up with the idea 15 years ago to read online articles into a microphone and publish the recordings as a podcast. 

Stumbling into a fledgling medium

That producer was Andy Bowers, and back in 2005 he worked at the online magazine Slate. Prior to his job there, he’d been a longtime reporter for NPR, serving in roles ranging from London Bureau Chief to White House correspondent. In 2003, he was brought on to produce a joint collaboration between Slate and NPR -- a show called Day to Day. “I actually kept the same desk at NPR but changed employers,” Bowers told me back in 2015. “And as part of that, my job was to get the Slate people caught up about how to do radio, to build studios at our various bureaus at Slate so they could appear on NPR.”

But then Slate wound down its involvement with Day to Day, leaving Bowers with not much to do. As it happened, this was around the time of podcasting’s invention, and Bowers developed an early fascination with the format. And so he began to experiment with it, firing up a microphone and reading Slate articles out loud. At the time, his coworkers were barely aware of what he was doing. “He kept lurking in closets, skulking around like a weirdo, reading our stories out loud into a microphone, telling us about this great podcast he was building,” Julia Turner, who would later go on to become Slate’s top editor, recalled in an interview. “Most of us at the time didn’t even know how to listen to them yet.”

Bowers didn’t know it at that time, but those initial experiments would serve as the catalyst for a brilliant strategic pivot, one that positioned Slate as an early podcast pioneer and led to a spin-off company that, over a period of five years, would evolve into Megaphone. 

The birth of a podcast network

Back in 2005, Slate wasn’t exactly a thriving publication, at least from a revenue perspective. It launched in 1995 under Microsoft, and in 1998 it introduced a paywall that it later abandoned. Microsoft sold Slate to The Washington Post Company in 2004, and The New York Times, in writing up the sale, reported that Slate had “never achieved steady profitability.” The magazine continued to struggle for years, culminating in the layoff of one of its founding editors, Jack Shafer, in 2011.

And it’s not like Bowers’s early podcast experiments led to any immediate revenue. “We stuck with it for probably like seven years before we began to see the first inklings of a real revenue stream,” recalled Julia Turner. Keith Hernandez, Slate’s former president, explained to Nieman Lab that the magazine stuck with it because “podcasting felt like such a natural extension to what was happening on Slate.com. The way the team was working and thinking and developing — it just felt right to continue developing, whether there was revenue or not.”

Though Bowers’s article readings were a moderate success -- at their peak they were generating about 10,000 downloads a week -- Slate didn’t launch its first blockbuster podcast until December 2005. Bowers got the idea for it while listening in on the magazine’s weekly editorial meetings. “[Slate politics correspondent John Dickerson] and his colleagues in Washington had hilarious conversations that sounded like how I was used to hearing reporters talk at the bar or after they appeared on the Sunday talk shows,” he told me. “And I thought, ‘If I just put microphones in the conference room, this would be really entertaining. People would hear the honest conversation that reporters have.’”

That observation spawned Political Gabfest, a show cohosted by Dickerson, Emily Bazelon, and then-Slate-editor David Plotz. It was Slate’s first show to generate a genuine fandom, and it went on to amass an audience in the hundreds of thousands. Over the next several years, Slate launched dozens of shows across pop culture (Culture Gabfest), sports (Hang Up and Listen), and self-help (Dear Prudence). 

As Slate’s podcast stable grew, so did its audience. When I interviewed Bowers in 2015, it was generating 6 million downloads per month, or 70 million per year. By 2018, Slate podcasts drew 180 million downloads. In 2019, it jumped up to 250 million. And though the magazine struggled to monetize these downloads initially, it did eventually build out several business models that allowed it to capitalize on its podcast success.

Building revenue sources

The podcast advertising market was paltry for at least the first decade of the format’s existence (in 2015 it only generated $105 million), but Slate started introducing host ad reads into its podcasts fairly early on. Unlike most early podcast networks, Slate had an already-existing ad sales team for its website, and it was able to make in-roads with potential sponsors who were interested in dabbling in podcasts. For instance, Audible became an early sponsor for Political Gabfest, long before the brand’s ads became ubiquitous across the entire medium.

Slate was also among the first podcast networks to learn that its fervent listening fanbase would actually purchase tickets and show up to in-person live events. It started with Political Gabfest. “I believe the first one was right around the inauguration of Obama in 2009,” Bowers told me. “We decided to do a live show thinking there would be a lot of people in town for the inauguration. So we booked a venue and we literally had no idea if 10 people or 100 people would show up. It ended up having a line around the block.”

Slate went on to build out an entire events team. By 2018, it was hosting 25 live podcast tapings a year. Faith Smith, executive producer of Slate Live, told me that year that her team combs through geotagged download data to determine which cities to visit. “We wanted to go to Seattle, and then we looked at the numbers and were like, actually, we have a lot more listeners in Portland,” she explained. “Which, you know, just based on the population numbers, we were a little surprised by that. So we said let’s go to Portland instead.”

Depending on the show and the city, Slate sells anywhere between 500 and 1,500 tickets per event. Though it keeps the prices relatively low, around $30, it also sells much more expensive tickets to intimate “cocktail hours” where attendees can actually mingle with the podcast hosts. It also sells event-specific sponsorships that are separate from the ads that appear on the podcasts.

Of course, live events are difficult to scale. Faith’s team has to rely heavily on the availability of the podcast hosts, and it’s only able to leverage the audiences that live in the cities where the events are being held. But in 2014, Slate introduced a new way for avid podcast fans to gain more access to its hosts. That’s the year the company launched Slate Plus, a membership program that charges users $5 a month for extra “bonus” content.

Though some of that content appeared on Slate’s website, the company also changed up its podcast workflows so that the hosts would record Slate Plus exclusive segments to be tacked on to the end of each episode. After surveying its membership, Slate discovered that over 50% of them signed up for the program as a direct result of these bonus podcast segments. In 2017, the company launched Slow Burn, a narrative podcast that became its biggest hit to date, drawing in a listener audience in the millions. Not only did it monetize the show through live tours, but it published entire bonus episodes each week that were only available to Slate Plus subscribers. By 2019, Slate was attributing 65% of its Slate Plus revenue stream to podcasts. Bowers told an interviewer that podcasts formed the “backbone of Slate’s paid membership program.” In early 2020, Slate hit 60,000 paying members for Slate Plus. 

And of course, Slate’s advertising game continued to improve. Podcast ads are projected to hit $1 billion in U.S. revenue this year, and Slate is likely capturing a sizable portion of that spend. With the looming death of third party cookies, the magazine debuted Slate Select, which Digiday described as “an ad targeting product that allows advertisers to reach Slate’s audience across both its sites and its podcast network using Slate’s first- party data.” It was also an early pioneer in dynamic ad insertion, which made it much easier to monetize its extensive archive of older podcast episodes. Late last year, Slate announced that podcasts generated more than half of its revenue.

The launch of Panoply

Of course, Slate’s podcast innovation didn’t start and end with just its own in-house podcasts. In 2015, it signaled that its ambitions were much higher with the launch of Panoply, “an innovative, full-service podcast network for media brands, authors, personalities, and premier organizations.” Essentially, Panoply partnered with outside organizations on virtually every aspect of podcast production, including marketing, ad sales, and audience development. Headed by Bowers, Panoply’s initial client list included The New York Times, HBO, HuffPost, and Popular Science. Many of these companies wanted to experiment in podcasts without hiring an entire team from scratch, and Panoply provided the staffing and talent to make such an experiment affordable, taking a cut of the revenue for its troubles.

Later that same year, Panoply acquired Audiometric, a podcast hosting platform that specialized in ad insertion technology. With all of Panoply and Slate’s podcasts hosted on Audiometric, it became much easier to scale ads across the entire network, including in old episodes that, in aggregate, were still receiving millions of downloads each month.

Over the next few years, Panoply continued to launch ever larger projects, including Malcolm Gladwell’s Revisionist History and Slow Burn, both of which pulled in huge audience numbers. But in 2018, the company made a shocking decision: it was getting out of the content business. All existing Slate podcasts would be moving back under the control of the magazine, while Panoply would devote all of its attention to its podcast hosting and ad tech business, which it had rebranded as Megaphone. A year later, it dropped the name Panoply all together. By that point, it was handling hosting and ad sales for a number of large podcast networks including iHeartMedia and Vox Media.

And then a year later it sold to Spotify. In five short years Slate had launched a sister podcast company, pivoted its business model, and then sold it for a gigantic sum to one of the largest podcast companies in the world.

***

It didn’t have to end up that way. Look at many of Slate’s contemporaries -- from Salon to Huffington Post to any number of other digital-only media outlets launched over the last 20 years -- and you’ll find plenty of examples of publishers failing to adapt to the harsh economics of digital publishing. Many went all-in on Facebook-driven display advertising or pivoted to video. Plenty faced extensive layoffs and a retrenchment in journalistic coverage.

And sure, Slate’s avoidance of many of those pitfalls is partly due to luck, but you also don’t embark on a seven-year podcast experiment -- back when it was not a sure thing that it would generate any revenue -- on just a whim. As then-editor Julia Turner told Nieman Lab, “that ability to take the long view when a particular opportunity really aligns with what you care about, to bet on that — that’s been key for us.” Or, as then-Slate-president Keith Hernandez put it, “It’s about making sure you separate fad from the future of what matters to your business, and allowing those things to breathe and not pulling them off the table when it’s too soon.”

If you were to travel back in time to 2005 and tell Slate’s senior leadership that a medium most of them had never even heard of would one day generate the majority of the magazine’s revenue, they probably wouldn't believe you. That Slate accomplished this feat is a testament to its versatility and its willingness to stay the course when most other publishers didn’t have the patience or foresight to do so.

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on TwitterFacebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.