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November 2016

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The Role Apple Should Play, and other stuff too

Written by , Posted in Hot Pod Weekly

Slowly climbing back onto the saddle after the American Turkey weekend. Oof.

But first: does anybody know any examples of local podcasts — from public radio and otherwise, about news and otherwise — that been successful revenue-wise? And by that, I mean podcasts that are not only able to justify its cost, but routinely draws in profit. I’m working on something related to this, and I’d love to hear from you if you’ve got examples.

Ken Doctor on the role Apple should play. The media analyst made an appearance on the latest episode of The Wolf Den, Midroll’s pretty handy content marketing podcast-slash-guide to the industry, to discuss his spectacular series on the podcasting boom that recently ran on Nieman Lab.

Of particular note is his take on Apple, which came up at around the 16:45 mark:

What I would like to see is [Apple] not get into the middle of things where they actually overwhelm all the smaller companies that are in it… The money looks like it’s going to be mainly advertising and less listener payment, and that’s not a field they’re very good at.They’ve proven that they’re not a very good advertising company. And that’s a good reason for them not to get into it: [there’s] not a lot of money in it right now, and they’d need big hits…

… If their role could be the providing of information and data in a Switzerland-kind of way for the industry, given that 60% or so of all the listening comes through Apple devices, and maybe get paid a little to do that — but to do that in a way that is non-competitive — that might be their best role for the industry. It will support their core businesses, which is selling hardware and software, but not put them in direct competition and snuff out the creativity and imagination that’s in the industry.

Doctor’s position here — for Apple to become more involved as an information and data provider, and not as some sort of involved content distribution funnel — is more or less the position favored by most in the industry at this point in time. It’s a highly specific vision of Apple’s role in the podcast space that requires a delicate balance, one that was largely reflected in the agitation aggregately portrayed in that semi-controversial New York Times article from back in May. (A controversy, by the way, that now seems driven by fears that drawing attention to the problem would trigger an unpredictable action from Apple, and not based on any vision of the future articulated by anybody interviewed.)

Perhaps unsurprisingly, I completely second Doctor’s position here, both for the positives — yes, it would be very nice for all of us to get better access to actionable data that could yield greater audience insight (preferably in such a way that isn’t particularly invasive) and foster greater intangible confidence in the medium from the advertising community — as well as for the severity of its negatives.

The Darkest Timeline. Now, I’m not an Apple Kremlinologist — I’ll leave that to the vast blog ecosystem dedicated to Apple coverage — and so I can’t, of course, personally predict with any confidence how the company is thinking about its podcast strategy (or even whether it’s thinking about it with any seriousness at all). My gut reaction, and I know I’m not the only person who suspects this, is that podcast money is still very much chump change, and that any attempt to step in as a layer that takes off a percentage of the entire space would still amount to what is essentially a rounding error for the company. (Recall that the current valuation of the podcast industry’s ad spend is only so much — for 2016,ZenithOptimedia projected $35.1 million back in March, while others have so far estimated it to be as high as $167 million — while digital music revenue is pegged to be about $2.66 billion this year, radio ad spend was $17.5 billion in 2015, and Apple’s app store revenue was estimated to be about $6.4 billion in 2015.)

However, if I were to endeavor to imagine a possible world in which they’d try to do something at this specific point in time, I’d figure that the guiding incentive would not be to capitalize on peeling a layer off revenues in the space as it is, but to instead become an underlying condition of how future business is conducted in the space. Which is to say that, in such a scenario, Apple would want to position itself in a way that’s similar to how, say, Art19 or Panoply would want their respective platforms to be the de facto podcast hosting solution, or how Stripe is becoming increasingly synonymous with internet payments.

What does that mean, precisely? Whatever it is, it’ll probably feature the company offering podcasters — and in particular, big podcast publishers, who are incentivized to persist in the long term — solutions, expertise, and/or access to something those podcasters themselves do not have and experience high barriers of entry to obtain. As Doctor noted, that probably isn’t going to be ad sales, since the company has historically proven themselves to not be great at that. What does that leave us with? Audience development, maybe payments? And where does that leave Apple: a strategy of exclusives, like their pursuits with Apple Music, or maybe direct payment-patronage tools, coopting the role that Patreon would play?

Anyway, that’s what I’m batting around in my head. In any case, at this point I’ll say that if Apple were ever to make a move, I suspect the very first people outside of Palo Alto to find out are probably the bigger podcast publishers, so keep an eye on them. In the meantime, consider investing in building out a promotion strategy and infrastructure where iTunes — and maybe even a network — isn’t at the center, but one channel of many. Hey, it can be done. I mean, look at Chapo Trap House. (I guess?)

Two more things from the Ken Doctor interview. Do check out that Wolf Den episodewith Ken Doctor — the full conversation is really, really good — but there are two additional topics that you should keep in mind:

(1) On the potential of FCC regulation over podcasts (something that the medium has, up until this point, not experienced), which Doctor discusses at about the 33:00 mark:

I think there will probably be efforts, and now, given different kinds of politicization, there may be more efforts. What I’ve seen over 20 years is that essentially the law and regulatory practice has been absolutely flummoxed by digital media… The FCC and the FTC have not figured out how to deal with this. Even antitrust law has not figured out how to deal with it. I don’t think that’s going to change.

I would hope that your industry… will take that lead and make your own rules that are ethical and that are transparent to the public. And to get ahead of it, and try to avoid government regulation which is as likely to be misguided as it is to be well-guided.

(2) The role podcasts can play for local media and local news was also discussed, and you can hear that chunk of the discussion at around the 38:30 mark.

“Efficiency trumps all things, in general,” said Erik Diehn, CEO of Midroll, when we spoke over the phone recently. “There are many more advertisers in the space relative to a few years ago, and they’re increasingly looking for scale. If you’re an advertiser, you can cobble a few shows together, or you can choose instead to buy one big show… That’s just where we’re at. It’s the same thing on YouTube, ditto a few years ago with blogs. We’re at a point of bifurcation: you’re going to see many more larger shows absorbing a lot more dollars, including brand dollars, that weren’t there before.”

Diehn notes that there is a very specific form of exception to this, pointing to the podcast Spilled Milk as a case study. “They aren’t huge, but they sell out because they’ve been around for a while, they have a good audience, and they do food,” he explains. “Some people will buy even at that smaller scale. If you’re going to be a commercially successful podcast at this point, you got to have a differentiated or notable product.”

I spoke with Diehn, by the way, to balance out the interviews I did for last week’s item on independent podcasts. More in the members newsletter.

Digiday has a pretty interesting snapshot on the UK digital audio landscape, drawing from a report by UK-based Radio Joint Audience Research that groups together streaming platforms, digital radio, and podcasts. Expected findings apply: a preference by younger demographics, a steady growth rate (a reported double-digit growth every six months), and persisting fragmentation when it comes to centralized measurement.

As with my own reporting, the article notes that there exists a general sense that digital audio in the UK still “lags” behind the US, though I should note that, among podcast companies specifically, there are a few entities putting in a fair bit of effort developing a connected presence on both fronts. (See: Audioboom and Acast’s long-running incursion into the US, Panoply’s recently-established outpost in the UK.)

Anyway, check out the Digiday article in full. There’s some additional findings on specific company strategies that are also pretty cool.

An unexpected pleasure. I was catching up on Life After, GE Podcast Theater’s follow-up to The Message, over the weekend, and I was struck by just how positively I reacted to the show’s complete lack of advertising breaks. No pre-roll, no mid-roll, no clunky sponsorship messaging; there were simply no disruptions in the show’s contiguous experience that added onto the suspension of disbelief already being demanded by the story. The show felt more immersive as a result, washing over my earballs so much more smoothly. Heck, I swear it made me like the show more than I naturally would have, and frankly, I can’t tell if the season is any good or whether I’m just happy there are no ads. (For what it’s worth, I quite like the season.)

And yes, the irony of Life After being one gigantic piece of advertising isn’t lost on me.

Also not lost on me: the fact that my overwhelmingly positive response says a whole lot more about the state of normal podcasts than it does about branded podcasts as a, uhm, thing (genre?). Advertising is a tax, the price we pay for a piece of media that we didn’t pay for out of our pockets. The role of publishers, by and large, is to mitigate the burden of that tax as it is suffered by audiences; in an ideal world, publishers could even turn that tax into an additional value.

The experience of Life After brings into acute focus just how much that tax has accumulated over the past year, and just how much they’ve congealed into fatigue. (For me, at least.) Granted, I’m an edge case — I spend inhumane chunks of my days consuming podcasts, and perhaps it was only a matter of time that I’d grow blind (deaf?) to advertising in my exorbitantly high levels of podcast consumption. But I’m struck, at this moment, by the extent to which I’ve been bearing with podcast ads, and I’m saying this as a person who actually believes in advertising. The flip-side to this is just how little podcast advertising I actually notice, how rarely I encounter host-reads that fill me with any memorable feelings at all.

There is, of course, a limit to which my personal experience says anything about everything else, but all of this does make me wonder how, in the midst of an expanding in-flow of advertising money into the space, the podcast industry en masse is readying itself to figure out how to preserve the medium’s intimacy — to capitalize on the fresh start it offers for digital media — while scaling up its advertising infrastructure to accommodate that money.

Anyway, I’d love to know what you think. Especially if you disagree.

Related: A reader recently pointed out to me that Life After is being directed by John Dryden, who helmed the very good Tumanbay which the BBC published last year. (Sadly, it’s no longer available for consumption at this writing. Come on, BBC! Ugh.)

For those keeping close watch on Audible Channels: The number of Amazon Prime members is now estimated to be 49.5 million across the US, up 23% from last year, according to a report by financial services firm Cowen & Co as cited by Barron’s.

Recall that Audible’s parent company Amazon started bundling Channels content with its Prime membership program back in September. Previously, Channels was only available to paying Audible subscribers and as a standalone paid subscription feature, priced at $4.96 per month or $60 per year. Also recall the larger strategy for Amazon with Channels: its existence theoretically increases the value of the Prime and Audible memberships, thus increasing the friction for cancellation for current members and increasing the pull for new subscribers. That allows for a programming strategy that favors hyper-targeting, which means that Audible doesn’t have to always program for the broadest possible audience. This should be nothing new for longtime Hot Pod readers, but I’d going to keep hammering on it because I believe it’s key to reading that company.

Been thinking a lot about the podcast review formats, and I quite like the way The Guardian formats theirs — grouped, brisk, efficient, conclusive. Also: have I mentioned that I love the way Caroline Crampton is building out the beat over at the New Statesman? (Is it a coincidence that both publications are British? Probably not.) The more the merrier, and I’m looking forward to more entrants in this department.

Bites:

  • Hot Pod reader Charles Wiltgen has made pretty handy tool: the Podcast Validator, which helps assess whether your RSS feed is good to go. A little bit goes a long way for that additional piece of mind. (Podbase)

  • If you’re keeping an eye on what comes next for the CBC’s role in Canada, do yourself a favor and check out the latest episode of Canadaland. (Canadaland)

  • “A Podcast of Their Own for Women in Music.” (The Atlantic)

  • “On the Need for Queer Podcasts.” (LA Review of Books)

  • Not directly podcast-related, but I’m reading: “How Silicon Valley Passed on Conservative Media” (The Information, paywall)

Moves: