Why most podcasters will benefit from the platform wars
Spotify's huge investment in podcasting will trigger a rising tide that lifts all boats.
Welcome! I'm Simon Owens and this is my media newsletter. You can subscribe by clicking on this handy little button:
Review the short history of podcasting and you’ll find a few seminal moments. There’s the format’s invention, of course, quickly followed by its official inclusion in the Apple iTunes directory. Then there’s Apple’s 2012 rollout of a standalone podcast app that was featured on the home screen of over a billion iPhones and iPads. Finally, we have the 2014 debut of Serial, the first podcast to spawn group listening parties and watercooler discussions.
Each of these moments dramatically expanded the audience for podcasts and generated debates about the future of the medium. But thus far there’s been no greater trigger of hot takes about Where Podcasts Are Heading than this year’s announcement that Spotify would pay $100 million to syndicate Joe Rogan’s podcast.
The move came after Spotify had already made several large acquisitions of podcast networks and ad tech platforms, but for some reason this single deal opened the floodgates. Regardless of whether you thought the Rogan signing was good or bad, most agreed that it marked a turning point for the way podcasts are distributed and monetized. Writing for The Washington Post, YouTuber and podcaster Hank Green argued that the deal signified Spotify’s intention to become the audio version of YouTube. “If Spotify can leverage cheap capital to lock a large audience into its ecosystem, podcasts would need to go there,” he wrote. “And if the company gives some kind of preference ... to podcasts that are exclusive to its platform ... then listeners would be locked into their ecosystems as well.”
Others were even more blunt in their assessments. “Most likely, this deal will come to symbolize the moment when the open, RSS-based podcast ecosystem began to collapse,” wrote media analyst Nathan Baschez. Antitrust writer Matt Stoller accused Spotify of “trying to monopolize the podcasting market.” Podcast producer Nick Hilton predicted that Spotify’s lock on both podcast distribution and monetization would lead to “[ad] CPMs declining, even if money is being distributed more equitably.”
I think comparisons to YouTube are apt, but they’re missing one key differentiating factor. YouTube had a 10-year head start as the dominant player in user-generated video. It wasn’t until the mid-2010s that platforms like Facebook Watch, Twitter video, IGTV, and TikTok entered the picture.
Spotify doesn’t have that sort of grip on the podcast industry, and it faces competition from some of the largest tech giants in the world. There’s Apple, of course, which still serves as the dominant podcast player in most countries. For most of podcasting’s existence, Apple has ruled as a benevolent overlord, reluctant to invest in the space, but over the past few years it’s gobbled up several podcast-focused companies and is now commissioning original shows.
Then there are the relatively new entrants. Both Amazon Music and Audible opened up their platforms to podcast distribution, with the latter signing exclusive deals with A-list talent to develop shows. SiriusXM acquired Sticher and Pandora -- both of which had already amassed their own catalog of exclusive podcast IP -- setting up the potential for powerhouse radio hosts like Howard Stern to enter the fray.
Google has gone to great pains to update its podcast functionality, launching a standalone mobile app and placing its podcast player directly in its search results. Even more important, YouTube has proven itself to be a powerful distribution platform for video recordings of podcast episodes and clips.
Finally you have the array of small-but-still-significant players -- your Overcasts, your RadioPublics, your Luminarys. They’ve collectively amassed a sizable chunk of the podcast listening audience.
Heading into 2021, we have a veritable platform war on our hands, one in which well-monied, massive platforms battle it out to build up original IP and acquire users. Collectively, they’re pouring billions of dollars into this endeavor, injecting more money into the podcast industry than it’s generated in its 15-year history.
And while open podcast advocates would universally agree that this trend is bad, I’d argue it’s more of a mixed bag, with podcasting as a profession mostly benefiting from this war. And I’m not talking about just the established players; I think most podcasts, from the indie-produced show all the way up to the A-list fare, will see positive growth in both revenue and audience over the next several years.
Podcast listening audience will explode
Talk to anyone who’s been producing podcasts for at least a decade, and they’ll tell you they directly felt the impact of Serial’s success in 2014. Not only was Serial one of the most popular podcasts in history, but it brought millions of new listeners into the fold, many of whom stuck around and started subscribing to other shows. Serial was a rising tide that lifted all boats.
The platform wars will take the Serial Effect and place it on steroids. For one, the platforms are pouring hundreds of millions of dollars into original programming, which lures in A-list talent and increases production values. Every time a Kim Kardashian or a Michelle Obama enters the fold, they bring with them an entire fandom that’s new to podcasts.
Even more important, most of the tech platforms have massive user bases to which they can market their podcasts. Spotify has 200 million+ music listeners that are now one click away from streaming podcasts. Any podcast product Apple produces immediately gets pushed out to a billion iPhone and iPad homescreens. Both Amazon Music and Audible have tens of millions of users between them. Google’s reach across search and YouTube is unmatched.
Will these platforms direct a lot of users to their own exclusive podcasts? Sure, but there will be trickle-down effects that widen the potential scale and audience for every podcast, big or small.
More advertisers and better ad delivery
Most of the major tech platforms aren’t satisfied with just capturing podcast market share. They’ve also invested heavily in podcast hosting and ad tech, acquiring companies like Anchor, Megaphone, SimpleCast, and AdsWizz.
This gives the companies more control over hosting and distribution of podcasts, which will allow for better targeting and dynamic insertion for ads. Under this new paradigm, advertisers can achieve the same level of targeting and scale available on the Facebooks and YouTubes of the world.
What does this mean for podcasters? More advertisers flooding the zone as thousands of Fortune 500 companies and small businesses get off the sidelines and start devoting portions of their marketing budgets toward podcast advertising. While the platforms currently direct most of this inventory toward their own original shows, it’s only a matter of time that they roll out revenue share opportunities similar to YouTube’s partnership program.
Dynamic insertion will also make it easier for ads to be inserted in smaller podcasts. Defenders of the status quo often argue that podcasts currently attract higher ad CPMs than what you’ll find on other digital mediums, and the widespread adoption of dynamic insertion will drive down those CPMs. What those people don’t always acknowledge is that most major ad networks won’t represent your podcast unless it’s generating at least 50,000 downloads per episode.
Think back to about a decade ago when YouTube introduced its partnership program, which allowed YouTubers with as few as a thousand subscribers to monetize their channels. Sure, they weren’t generating huge incomes right away, but the dynamic insertion made it easier to at least subsidize their work as they grew their following. Because of this program, tens of thousands of indie creators now make a full time living from YouTube alone.
The Netflix effect
In 2013, Netflix debuted House of Cards -- technically not its first original TV show, but certainly its first big-budget prestige series. The launch established what is now the dominant strategy for acquiring streaming customers: rapid IP expansion. Within a few years, media conglomerates and tech platforms spanning from Amazon to WarnerMedia were engaging in massive bidding wars and spending tens of billions of dollars to acquire new shows and movies.
I think we’re already seeing a similar dynamic play out in the podcast space. In some cases, the platforms are outright acquiring podcast networks, as Spotify did with Gimlet Media and The Ringer. In most scenarios, however, the platforms sign syndication and production deals, providing upfront cash in exchange for exclusive content.
Currently, podcast creators who want to make ambitious narrative shows with large production costs struggle to secure the capital they need to get the shows off the ground. With hundreds of millions of dollars being thrown at the industry from deep-pocketed platforms and VCs, it’s going to get a hell of a lot easier for producers to secure funding and talent for their series.
Don’t get me wrong. I am fearful of a Facebook-like algorithm that chokes my podcast off from those who subscribed to it. Just as I sometimes get nostalgic about the old school blogosphere from a decade ago, I’ll no doubt look back at the open podcast ecosystem and miss parts of it. And I’m not super excited about a future where I have to toggle between multiple apps just to listen to all my favorite podcasts.
But I also think that the maturation of podcasting, on the whole, is a good thing. The decentralized nature and lack of scale over the last 15 years limited the format’s growth, and increased monetization will trigger a cambrian explosion of new talent. As a podcast creator myself, I can’t wait to see what new ecosystem emerges.
Do you like this newsletter?
Then you should subscribe here: