Podcasting, The Industry
Some considerations about podcasting as an industry, mostly for my own future reference:
As of 2022, there are around 2 million active podcasts, and 48 million published episodes. According to the same source, podcasting will be a $94 billion industry by 20281. The top show in 2021 was The Joe Rogan Experience. According to Forbes, its income for 2021 was $30 million, without counting YouTube revenue.
Not all podcasts get the same attention. Podcast popularity follows a power law. A few percentage of the existing podcasts capture the majority of listeners. The rest are part of the long-tail of podcasters that only get a few downloads each month. That is, podcasting is a great way to share ideas with your audience if you have one. In most cases, it’s not a great way to make a living.
The podcasting business model has two primary sources of income: advertising and subscriptions. My guess–because I don’t have data– is that advertising is the interesting part of the pie.
In many traditional podcasts, the ads are read by the host, endorsing products she or he personally uses. But as the industry grows, advertising spots become just that: a spot available for advertisers, with little relation to the topic of the podcast or endorsement by the host. As happened on the radio, many ads are now recorded by professionals. In the future, I think we’ll see more ads directly inserted live into the stream, targeted at the specific user that is listening to the podcast. Algorithmic targeting of ads is a well-developed field.
Major players are trying to capture the biggest slices of the pie. Take, for example, Spotify. As Ben Thompson pointed out in Spotify, Netflix, and Aggregation, in the music business “Spotify’s margins are completely at the mercy of the record labels”, limiting its profit-making potential. In the podcasting business, Spotify has no such limitation. Also, while music is commoditized–you can find the same songs at around the same subscription price on Apple Music, Spotify, Amazon Music, etc.–, podcasts are not.
Distribution of podcasts to podcast player apps relies on RSS, an open and solid standard. I bet big players are hoping to twist distribution in some way that allows them to build a paywall or at least a walled garden around the podcasts hosted on their platforms. Thankfully, Automattic and other companies that get the importance of open standards and interoperability, are rowing in the right direction.
In 2019, Spotify acquired Gimlet Media for $200 million, a company co-founded in 2014 by Alex Blumberg, the producer for This American Life. Joe Rogan announced in late 2020 that he had closed a deal to move his podcast to Spotify for $100 million. In 2021, Spotify acquired Betty Labs for €57 million, and Podz, a company focused on podcast discovery, for €45 million2.
Companies like Spotify can consolidate around a position of power in front of advertisers because they hold a significant portion of consumers and users–the demand–captive. For podcasters, similar to Google in the search business, Spotify can help your podcast gain exposure and traction… probably it may even offer paid positioning at some time in the future.