Somehow, 2004 doesn’t seem all that long ago. It was the year that MTV veejay (video jockey), Adam Curry, teamed up with software developer Dave Winer. Together, they developed the “iPodder” which was an application designed to automatically download internet broadcasts to Curry’s iPad. It was the precursor to what we know as podcasting today and has been extensively improved and expanded upon since its rather unceremonious debut fifteen years ago.
Neither Curry nor Winer could have possibly known that podcasting would grow into the media force that it has become. Today, podcasting is on track to generate $1 billion in ad revenues by 2021.
The podcasting content game is a high stakes table for media outlets like Apple, Spotify, iHeart Radio and others. Spotify has already allocated $500 million for content acquisitions within the genre. Their big bet is that 20% of their future subscribers will be listening to content other than music. With more than 207 million active listeners, 96 million of which are paying subscribers (as of Feb 2019), Spotify has twice the opportunity that Apple does to generate revenues via subscriptions and advertisements.
What rock have you been under?
That’s a fair question if you haven’t embraced this new media either as a listener or as a podcaster. If podcasting is new to you, here are the statistics that you need to know. Apparently half of the USA has listened to at least part of one podcast compared to five years ago when fewer than 20% of people even know what a podcast was. Today, one-third of Americans listen to a podcast at least once per month.
As of June 2019, there are more than 750,000 podcasts featuring over 30 million episodes. One year earlier, there were 550,000 podcasts which demonstrate the stratospheric growth of the genre.
Podcast listeners are affluent and loyal. Half of the listeners choose to tune in from home whereas 22% listen from their cars. A staggering 80% of listeners tune in for the entire duration of the podcast and listens to an average of seven podcasts each week. Men slightly edge out women 56% vs. 44% of listeners based on a binary metric of gender and just over one-third of all listeners are people of color. And half of all podcast listeners feel that they better retain content by listening to it versus reading it.
South Korea is way out in front as a nation of podcast listeners (58%) with Spain (40%), Sweden (36%), and Australia (33%) tied with the US (33%) and pulling just slightly ahead of Canada (28%). Translated into real numbers, the US currently has around 86 million podcast listeners which is forecast to grow to 132 million by 2022. Most listeners are aged 18-54. The average podcast is 43 minutes in length.
Corporate America has taken notice
What began as a low-tech cottage industry has rapidly evolved into a billion-dollar media option with adjacent industries just starting to launch. Corporate entities were slow to get on the podcasting bandwagon but have since widely embraced it. National Public Radio (NPR) is the leader with 140 million unique streams as of May 2019. NPR produces the world’s #1 and Peabody award-winning podcast, Fresh Air, which is hosted by Terry Gross. Those in the tri-state area may be familiar with the wildly popular Humans 2.0 podcast, hosted by the incredible Mark Metry. Metry’s podcast brings in the heavy hitters from the big corporations and is ranked in the Top 100 on iTunes. If that’s not impressive enough, he has been an innovative force online for a decade – ever since the ripe old age of 12!
Sony Music Entertainment has entered the space. Verizon is one of 30 Fortune 500s using podcasting effectively. Companies with branded podcasts like Slack, GE, Sephora, and ZipRecruiter are on fire with respect to their audience size and engagement levels. It’s no surprise that they’re doing it as podcasting is currently boasting the highest rate of ad recall.
The ripple effect
Startups are catching the wave. More than $100 million – each – was recently raised in venture capital by Luminary and Himalaya. Creator funds like PodFund, who raised $2.3 million are now popping up. Podcast marketing tech, dare we call it “PodTech” was just birthed as a fledgling adjacent industry with a raise of $1.5 million by Chartable.
Adjacent industries are now emerging at scale as part of the boon. Given that the podcasting norm requires a snazzy Technotronic intro, those produced by Touch Circle and other independent musicians are now finding new avenues for their talent. And new sources of income.
Legal issues, and the need to manage them have also emerged as part of the revenue ripple created by podcasting. Trademarks, publicity, and copyright are the new keys to the kingdom. Ownership of the podcast, paying appropriate music royalties and clear permissions must be defined. Your podcast cover artwork must be original, licensed or used with permission. Podcast content that you generate is your own and you need to take steps to ensure your work is copyrighted. Guests should give you explicit permission to use their image, likeness, and content. Trademarks are recommended to formalize the ownership of your podcast name, with or without association to a specific graphical mark.
Trends in podcasting
It’s all about the ad revenues, isn’t it? Indeed, it is. Podcasting advertising revenues have already exceeded half a billion dollars this year alone. With engagement rates triple that of radio advertising, it’s no wonder that the amount spent on advertising in podcasting is growing at break-neck speed.
Dynamic ads, which are those that are frequently swapped out, now account for about half of all advertising in podcasting. Up until the past year or so, podcasts were typically branded with a dedicated “sponsored-by” ad strategy which is quickly eroding as podcasters are beginning to affirm their earned right to go with the highest bidder. Today, podcast hosts are typically reading content on behalf of their advertisers given that the podcaster holds the relationship with his/her/their audience but this is changing.
Tech makes it possible
Technology is enabling podcasting to go with us, wherever we go. From wireless ear gear to smartphones to automobile satellite broadcasting, podcasts are accessible any time and from just about anywhere. The quality of the audio production has also contributed to the increased appetite for the medium. Today, aspiring podcasters can buy reasonable equipment and kits including the required microphone, filter, and headset for around $100 on Amazon and utilize freeware such as Zoom and Audacity to generate and edit the recordings. Libsyn is a premium service that distributes your podcast to outgoing channels like Spotify.
Apple has been steadily losing its once-dominant hold on the podcasting market. Google made a move in June 2019 and, since then, Apple’s market share has dropped from 80% to 63%. Experts have hypothesized that Apple is losing its podcasting dominance because of its stringent data privacy policies which prohibit the release of its consumers’ behaviors and interests which is exactly what advertisers are paying to get. And, Apple appears to be losing interest in the genre as evidenced by its lack of action to counter the acquisitions and efforts by its competitors like Spotify and iHeart Radio.
So what’s next for podcasting?
If you’re a known podcaster with a loyal following, your future looks bright. If you’re a media platform in the business of collecting podcasting ad revenues, your future also looks great: in fact, you’ve probably noticed a 10x uptick in your revenues over the last four years. Podcasting ad revenues, which are approaching $0.7 billion, represent ~ 2% of ad revenues for radio. Just think of the possibilities. Will podcasting kill the radio star?
And, if you’re the brand that’s doing the advertising, cha-ching! Nearly half of listeners report being able to remember the ads they heard in the podcast. Studies have shown that podcasting is correlated with higher brand affinity, awareness, ad recall, recommendation, and purchase intent. Now that’s loyalty that you can bank on! Monetization is something that could benefit from disruptive innovation. Today, podcasters can generate income only through ads and back-link donations.
Data privacy and AI
Of course, inextricably tied to advertising is the issue of data privacy. Advertisers want to know who’s listening and to what. Watchdog advocacy agents are pushing hard for increased privacy protection will affect monetization and potentially event podcasting platform viability for some companies.
Applying AI to analyze transcripts and make suggestions based on keywords and content preferences represents the next wave of podcasting. Companies like Castbox have already entered the market in this space. Things are going to get a little freaky and funky when startups like Entale go mainstream with their application of AI which selects and presents images based on words used in the podcast. Essentially, they are blazing a new path for intelligent, visual podcasting.
Will podcasting kill the radio star?
How we engage with podcasts is also likely to change. As technology evolves to more tightly integrate social platforms with media channels, just as Facebook is currently attempting to streamline interoperability between Instagram, What’s App and its other media, podcasting will become interactive. Ximalaya FM, one of the leaders of the social audio movement, is already ahead of this trend and making waves in China. Who knows? One day we may even be listening to podcasters but watching on Twitch to see how live audiences on various social platforms are pinging, polling, liking and do all sorts of other behaviors.
With TV viewership down and content streaming up, podcasting may the thing that kills this 90-year old institution. Podcast listeners are now spending an average of 6 h per week listening and two-thirds of those listeners only heard their first podcast in the last three years. Vertical integration may become the new norm for aggregating content so that listeners can go beyond creating playlists and actually create chapters, books and whole libraries around specific themes.
A new channel for content creation
Differentiated content may then be sold differently where lower quality content could be distributed as a freemium model whereas higher quality content could drive premium pricing. One thing about the future is certain, podcasts are unlikely to continue being free to listen to. Media channels may also seek differentiation and specialization: they may choose to only offer content that is aligned with the preferences of their existing subscribers and eschew all other content. And we’re on the verge of a new genre of podcasting: scripted narratives with complex plots and a cast of characters. Netflix is just about to launch its post-apocalyptic “The Last Podcast” and this content could unleash the tremendous potential for authors and script-writers.
Perhaps short-form podcasts will soon find their way to home assistant devices. This could also prompt dynamic content insertion opportunities such as weather updates from a local news sponsor or other relevant advertising midstream. One final trend to note and welcome would be greater diversity in podcasting. The world is already listening. So the world should be speaking, too.
Anything goes in the wild, wild west. Podcasting is not public radio so it’s not yet regulated. For now, anything goes. Explicit language, vulgar content, whatever you want, you can find it. Expect that to change soon. After all, laws are made to protect us, right?
If you’re looking for listening suggestions …
This is a great time to shamelessly recommend that you tune into our Grit Daily podcast. It’s available on Spotify, iTunes and iHeart Radio. Noah Staum brings you daily content like Mondays Matter and Tech Tuesdays with daily news wrap-ups plus all sorts of great content in entertainment and entrepreneurship. And, if you like coaching tips, we have a Monday Motivation podcast and a women-in-tech podcast by Loralyn Mears called, “Like a BOSS” plus so many stories from the execs who share their insights and their time with Grit Daily. Check it out!