Lockdown, Not Knockdown: #10 Podcasting

Digital Industries Booming in The Covid Era

Read my other articles in this series:?#1?(online language-learning),?#2?(online fashion retail),?#3?(productivity software),?#4?(food delivery apps),?#5?(dating apps),?#6?(digital fitness),?#7?(real estate apps) and?#8?(on-demand video streaming) and #9 (online education).

If I asked you to name your favorite five podcasts on a whim, would you be able to? According to US stats, if you're 35 and below, you are very likely to listen to podcasts on a monthly basis. If you're a bit older, there is still a good chance you're a regular listener. And it's not just a trend in the United States. 58% of South Koreans listen to podcasts regularly; so do 40% Spaniards and 36% Swedes. Podcast listeners listen to an average of?7 different shows?per week, so picking a top five, if you are an avid podcast follower, should not be an issue.

My top five, you ask? That's easy. Number five: The Marie Forleo Podcast, witty and inspirational. Number four? Planet Money, explaining economics and finance in small, digestible chunks. (Also their spinoff, The Indicator, is a great one). My number three would be Good Life Project by Jonathan Fields, which I would say is done in a Humans of New York (HONY)-like style. Yes, the podcast guests are not all New Yorkers, and they are also relatively famous as opposed to the mostly anonymous individuals who tell their stories for HONY. That being said, Good Life Project podcast guests all lead very interesting lives and are great at storytelling. Number two is the legendary podcast This American Life, investigative journalism at its best (at any moment, I'd trade lives with the show's creator Ira Glass).

Drumrolls, please... My number one, without a shadow of a doubt, would be the podcast that in some way inspired me to imagine and write this whole article series: How I Built This with Guy Raz (another individual whose life and job I find incredibly interesting). So with that out of the way, let me briefly tell you how the podcasts have become so popular.

The Evolution of The 'Time-Shifted Amateur Radio'

In 2020, the podcasting market was estimated at 11.46 billion USD, and is supposed to grow even more heavily in the following years, reaching almost 95 billion USD by 2028. 2 million podcasts are said to be out there, up from only 525,000 back in 2018. North America is the largest market, followed by Europe and Asia. Interestingly, Latin America is the market with the largest projected growth over the next 5-7 years.

50% of US homes (around 60 million) are podcast fans. The US listeners are mostly white (63%) and male (51%). The ratio of listeners with an annual income of over 75,000 USD is growing steadily (currently at 45%). Unsurprisingly, the podcast genre that dominated in 2020 was news and politics. This was followed by society and culture, comedy, and sports. When it comes to podcast formats, interviews were the dominant category in 2020, followed by panels and solo podcasts, which also happen to be the most rapidly growing category.

The pandemic has only increased everyone's listening times. Spotify, which attributed a bulk of its pandemic growth to podcasts, singled out categories such as health, lifestyle (e.g. gardening or baking), and self-improvement, including meditation and personal wellness, as prominent in the pandemic.

But podcasts were widely anonymous only a decade or so ago. In fact, when in 2005 Apple decided to add podcasts to iTunes, a magazine for Apple fans, Macworld, decided to announce this novelty by referring to podcasts as 'time-shifted amateur radio'. The world podcast had already been coined but unknown. The year before, in 2004, tech journalist Ben Hammersley invented the word as a combination of the popular listening device of the time (remember iPod?) and the word 'broadcast'. It then took several years for the word to become broadly recognized.

Apple vs. Spotify and Co.: The War Is On

As already implied, Apple is the pioneer of podcasting. In 2005, the tech giant added its podcast feature to iTunes, and in 2012 it launched a self-standing app for iPhones. In 2018 the Apple Podcasts app was also added to Apple Watch. However, despite the obvious first-mover advantage and the fact that some 50-70% of all podcasts are listened to on Apple Podcasts, the tech giant doesn't seem to have prioritized its podcast app over the previous decade. Apparently, a single employee was their advertizing focal point for years. The app is often criticized for its apparent lack of sophisticated analytics. It was also described as 'bare-bones and fairly clunky'. Unsurprisingly, the app is not available on Android phones.

Knowing all these shortcomings of Apple Podcasts, Spotify has emerged as Apple's main competitor in this space. Just before the pandemic, in 2019, Spotify made headlines by investing 400 million USD in podcasting. The Swedish company bought three podcast tools and sent a clear signal to Apple that it was being serious.

Spotify's ambition is now to be a one-stop-shop for both music and podcasts. Those of us who are loyal to Spotify will find that very convenient. Another benefit is that Spotify is available on both iPhone and Android. The company uses Netflix-like strategies of doubling down on original content creation, featuring Michelle Obama, Duke and Duchess of Sussex, and many more celebrities. It credits podcasts for its 24% growth in paying subscribers in 2020. Importantly, Spotify prides itself in offering podcasting analytics tools to creators.

Other than Apple or Spotify, there is still a lot to choose from. Obviously, there is YouTube, free and available to everyone. For indie lovers, the app of choice is probably Pocket Casts, which is owned by several public radio organizations such as NPR, This American Life, and WBEZ. The app is very user-friendly and accessible to wide arrays of audiences. It is available on both iOS and Android. Other podcasting apps available are BBC Sounds, featuring a number of BBC podcasts and special programs; Castro, with a great user interface and the ability to control which podcasts you’re listening to in a queue format; and Overcast, with advanced voice enhancement techniques. Giants like Google (Google Podcasts) and Amazon (Audible Podcasts) have also made forays into podcasting.

Monetizing Podcasts In The YouTube Era

Like many industries that I have talked about throughout this series, podcasting has experienced significant growth over a previous couple of years. Nevertheless, that tremendous growth hasn’t yet translated into profits. There are several reasons why this may be the case.

First, there’s the podcasting business model itself. Most podcast creators make money from advertizing. But it’s not the sophisticated, digital marketing type of advertizing; rather, it’s the good old radio slogans. Even so, 41% of Americans have stated that they are more likely to buy products or services if they hear about them on podcasts. If you are a loyal podcast listener, it is probable that you will trust the host and their recommendations more than you would a random radio ad (or a random Instagram post).

Against this backdrop, in 2019 the overall podcasting spending amounted to 701 million USD and has neared a billion dollars since. Spotify, offering freemium content, partly makes money off subscriptions, but it is an exception; of course, its model only works because it’s primarily a music streaming service. Another way for podcast creators to make money is by selling their own merchandise. In an attempt to scale up their brands, many creators networked during the first (and only) two editions on PodCon, a podcasting conference modeled after VidCon and taking place in Seattle in 2017 and 2019.

The second problem with podcasting is the 'app gap'. None of the currently available apps is particularly useful for podcast creators. In particular, the analytics on the podcasting apps are nowhere near those of YouTube, Instagram, or Facebook. This being so, it is difficult for podcast creators to estimate and monetize their real following. The hope that the industry would follow the video streaming trends (see my article on on-demand streaming) has so far not materialized. Offering podcasts at a cost is borderline impossible, simply because the market has not matured to the point where paying for podcasts would be normalized. Considering that podcast listeners under 35 mostly use YouTube, it is difficult to imagine that they would be ready to pay a monthly subscription.

Finally, the third challenge, for lack of a better word, is the nature of podcasting itself. Unlike going to the movies with friends, or Netflix and chill soirees with your partner, podcasting is usually a private, sacred activity. 49% of all podcast listening is done from home, followed by 22% when driving. Scaling up under such circumstances is infinitely more difficult.

So let me conclude with some good and bad news. The good news is that, as long as there are people like me who look forward to Mondays because an episode of their favorite podcast will air, there is enormous untapped potential in podcasting. However, the bad news for podcasters is that, beyond limited attempts, nobody has really developed a sustainable strategy to unlock this tremendous potential. Maybe that's one of the post-pandemic challenges. Maybe Guy Raz can make a podcast on that. I'd tune in.