Good morning,
Monday is the Martin Luther King Jr. Day holiday in the United States; there will be no Daily Update.
On to the update:
Where Are Hit Podcasts?
From Bloomberg:
Dawn Ostroff wants to find more hits. The chief content officer of Spotify is upset that her company isn’t producing enough new popular podcasts, and has been putting pressure on her in-house studios to deliver. I’ve now heard the same message from every corner of the Spotify universe, though no one wanted to talk about it on the record. It’s hard for new shows to find an audience. Every new show has a smaller audience than its predecessors.
This is not specific to Spotify. Executives at studios large and small echoed the sentiment. While the overall audience for podcasting expands, the audience for individual new shows is shrinking across the board. None of the 10 most popular podcasts in the U.S. last year debuted in the last couple years, according to Edison Research. They are an average of more than 7 years old, and three of the top five are more than a decade old. (“The Joe Rogan Experience,” “This American Life” and “Stuff You Should Know.”) Only a few podcasts in the top 50 (“SmartLess,” “The Michelle Obama Podcast,” “Frenemies”) are less than two years old. And none of them are in the top 25.
This is an interesting story that isn’t at all surprising. Back in 2019 when I wrote Spotify’s Podcast Aggregation Play I compared the then-podcast landscape to the pre-social networking Internet:
The current state of podcast advertising is a situation not so different from the early web: how many people remember this?
These ads were elaborate affiliate marketing schemes; you really could get a free iPod if you signed up for several credit cards, a Netflix account, subscription video courses, you get the idea. What all of these marketers had in common was an anticipation that new customers would have large lifetime values, justifying large payouts to whatever dodgy companies managed to sign them up.
The parallels to podcasting should be obvious: why is Squarespace on seemingly every podcast? Because customers paying monthly for a website have huge lifetime values. Sure, they may only set up the website once, but they are likely to maintain it for a very long time, particularly if they grabbed a “free” domain along the way. This makes the hassle of coordinating ad reads and sponsorship codes across a plethora of podcasts worth the trouble; it’s the same story with other prominent podcast sponsors like ZipRecruiter or SimpliSafe.
I’ll get to the point of that Article in a moment — it is very relevant to this story — but the parallels between text-based websites and podcasts go beyond affiliate marketing. In this case the most important points of similarity are the cost of production and barriers to entry.
Start with the latter: putting writing on the web has never required permission; simply host your own website. Of course that requires a fair bit of technical knowhow, so services like Blogger came along to do the hosting for you. It got even easier with sites like Tumblr, and then social networks like Facebook made it absolutely trivial. The result has been an astronomical increase in content. The cost of production, meanwhile, has always been free — the real burden is the time to produce the content.
Podcasts are broadly similar. You don’t need permission to start a podcast, and you can even host it yourself. Of course that requires a bit of work, which is why services came along to do the hosting for you; Anchor, which Spotify acquired in 2019 and which helped inspire the above Article, made this process so easy it could be done from your phone. What is notable is the cost of production part: podcasts are also free to record, but more importantly, it’s significantly easier to record regularly than it is to write regularly.
The impact of zero barriers to entry and cost of production do mean there is a glut of content; that was the primary reason cited in the story as to why there aren’t any more hits. I think, though, the relative ease of ongoing production is important as well. While there are special one-off podcasts like the Serial podcast that was many people’s first exposure to the medium, a huge amount of podcasts are effectively open-ended, responding to news or sports or a rotating series of guests. The Joe Rogan podcast, for example, posted episode #1762 yesterday; Rogan has already put out five episodes in 2022 totaling 13 hours and 21 minutes. If you listen to every episode of Rogan’s show at 1x speed, 4.6% of your 2022 minutes are already spoken for!
This gets at a second important factor that makes podcasts unique: while one of the allure of podcasts to listeners is that you can listen while doing something else — I listen to most of my podcasts while driving, walking the dog, or cleaning — you can’t listen to more than one podcast at the same time. This means that convincing regular podcast listeners to try a new show entails them abandoning a show they already enjoy and likely listen to habitually, a particularly tough task given that podcasts are difficult to trial and don’t spread virally.
These qualities are why I made the case in 2015 that publishers would do well to be cross medium: text spreads more easily and is consumed more quickly, which makes it better suited to acquiring an audience; podcasts, meanwhile, are harder to grow but have a more loyal and attentive audience, making them better for monetization. That certainly has worked for me: while we never heavily monetized Exponent, the show has a high five-figure listenership, and the subscription-only Dithering is in the five-figures as well.
This also means that podcast growth is more about breadth than depth: popular shows are generally the best place to promote new shows; new podcast listeners are a more reliable source of growth than established listeners; and, from a monetization standpoint, having a model that capitalizes on these low barriers to entry and low costs of production is essential.
Spotify and Podcast Aggregation
One point I should have made in last week’s post about OpenSea and Aggregation in Web3 is that Aggregators do better the more open and frictionless a particular market is. You can certainly see this in terms of websites, where Google is dominant despite the fact that it doesn’t actually own or host the vast majority of its supply. This is also why podcasts were primed for a centralizing force for years: Apple had the opportunity sitting in front of them, but it was Spotify that took it.
Note that point above about breadth over depth: the monetization model for this dynamic is Aggregator-driven advertising. Advertisers can go to a single place to target users directly; the location of their ad isn’t particularly important, which is to say that Spotify can place their ads on any show, not just the most popular ones. Indeed, while the Bloomberg story above opened with an anecdote about Spotify’s Chief Content Officer, I would imagine the rest of the management team is quite pleased with podcasts’ overall growth, even if that growth is distributed across that many more shows (that noted, the reason Spotify would want more hits is for customer acquisition purposes; its ad network can charge far higher rates for personalized streamed ads than ads inserted on download for playback on other players).
One important point to keep in mind about Aggregators is that they are beneficial to most. The customer benefits are straightforward: there is one place to go to discover and consume what you want. The producer perspective, meanwhile, is more complex: if you are a big player than an Aggregator is bad news; for example, if you were an ad-supported site on the web than Google or Facebook becoming far superior advertising opportunities is bad. The same thing applies to the largest advertisers like traditional CPG companies: if you can afford to advertise on TV then digital advertising, even if it works for you, makes competition from smaller players who can use the same medium more acute.
These dominant producers, though, are only a fraction of the overall market: for the vast majority of small websites Google was an absolute marvel, making their content more accessible than would have ever been possible previously. I have similarly praised social media as being an absolute godsend to independent publishers: it both gives your fans a voice to promote you, and provides accessible advertising to reach new customers.
I strongly suspect that this dynamic applies to podcasts; there is a lot of grumbling from established podcasters (like my Dithering co-host John Gruber) about the rise of Spotify’s advertising platform, and I get it: if you have a decently sized podcast that is large enough to be worth the trouble for affiliate marketers then dynamically inserted targeted ads seems like a big step back. If you’re just starting out, though, or only have a few thousand listeners, then getting monetization effectively for free — simply make more content — is pretty cool. And it’s even better if you simply want to podcast as a hobby: Spotify will offer all of the infrastructure you need for free because more volume is good for their business, no matter how far down the long tail it might be (the path for niche stars, meanwhile, will likely be subscriptions — just like text).
One other company worth discussing here is YouTube, which has the same dynamics as websites and podcasts: there is no barrier to entry and increasingly minimal cost of production, and hosting has always been provided for free. This has resulted in a market that is incredibly broad, with YouTube as the clear Aggregator providing both discovery and monetization (via a one-stop shop for advertisers). This was not at a natural outcome: while it is perhaps viable today to bear the costs of hosting your own videos made with your own smartphone, Google brought forward the world of video by a decade by effectively subsidizing these costs. Google has never charged for hosting, and particularly in the early years, turned a blind eye to copyright infringement, getting highly produced videos for free (but for the legal costs). It’s an underrated investment over many years that will pay off for many decades.
Protesting Rogan
From CNet:
More than 250 medical professionals have signed an open letter calling on Spotify to clamp down on COVID misinformation spreading on its platform, specially calling out the podcast of comedian Joe Rogan. The letter took issue with the Dec. 31 episode of The Joe Rogan Experience podcast, which featured Dr. Robert Malone, an immunologist who claims to have created the mRNA technology but is now a vocal skeptic of the vaccines that use it.
I’ve made this point before, but it’s worth reiterating: while there is a debate to be had about whether Facebook or YouTube should put their thumbs on the scale in terms of what information or misinformation their algorithm promotes, demanding the removal of a podcast, which takes deliberate effort and time to listen to, is a demand for censorship. Leave aside the content of the podcast in question, and let’s just all agree to be very clear about what this is (we will leave the debate about the accuracy and consistency of officially sanctioned COVID information for another day).
Spotify has so far stood behind Rogan, who has publicly praised Spotify for just that. What is worth noting is that because Spotify is still fighting to be — but is not yet — the dominant player in the space it is heavily incentivized to be seen as publisher friendly. If Spotify were such a dominant Aggregator that it were the only place to find podcast listeners — like YouTube is the only place for video, for example — it might have a different approach.
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