Last Sunday, The New York Times published an article by John Herrman detailing the dance between Apple and podcast companies regarding access to data and promotion. The podcast networks want more audience data from Apple, the ability to more easily charge for podcasts, and a more access to promotion on the front page of the iTunes Store.
Shortly after, Marco Arment, maker of The excellent podcast app Overcast and a podcaster himself, fired back. He criticized Herrman’s reporting but took a larger issue with the podcaster Companies seeking data from Apple. In his podcast, Arment goes into more detail about his issues with data collection, specifically that it would make podcasting more like the web: optimized and monetized within an inch of its life and stripped of its uniqueness. (I’m strongly summarizing here, I recommend listing to the Accidental Tech Podcast yourself.)
I don’t want to discuss which view is correct, but I do want to add some context that certainly colors the debate.
Their Intended Goal
I believe the podcast companies pushing for more data are trying to fit a round page into a square hole.
The problem, as podcast networks see it, is that podcasting doesn’t fit into an existing marketing budget line item. But, if they’re able to describe their audiences with the language of web audiences, perhaps they can fit into the much larger digital brand advertising budget.
This isn’t the first time a move like this has been done. When they weren’t the behemoth they are today, Facebook partnered with Nielsen to create a metric which would measure Facebook audiences in a way which could be compared to TV audiences. They did this (and Twitter tried to align with TV too) because TV budgets still dominate advertising. If they could get an equivalency (the theory went) they could prove FB was more valuable and participate in TV’s larger budget pool.
The problem with this plan was that the people buying FB ads weren’t the ones buying TV ads. And that department divide wasn’t broken down by this equivalency metric. (Thankfully for Facebook, digital budgets grew and they captured, well, most of them.)
Despite Facebook’s misstep, I can imagine why podcast companies think they can take a shot at a this model. It’s not radio ad buyers placing ads on podcasts, it’s the same digital buyers who are also buying banners and video. If podcast networks could express their audiences in the same terms as web audiences, web/mobile ad budgets could more easily be allocated to podcasts.
As it stands, podcasts get small advertisers focused on direct reach (or DR). These are ads that instigate an immediate, (hopefully) trackable action. That’s why nearly all the ads you hear in podcasts have coupon codes.
But DR doesn’t work for soft drinks, consumer packaged goods, movies, or cars. These advertisers don’t usually buy DR ads. They buy brand ads: ads which intend to influence perception for an eventual action. The key concerns for these campaigns are who you’re reaching, how often you’re reaching them, and for how much. Right now, podcasts call only provide costs.
You may have noticed above I said “podcast networks,” not “podcasts.” On the Accidental Tech Podcast, John Siracusa speculated that the people petitioning Apple are trying to create mass market podcasts. I think that is partially true. But Midroll and others are probably hoping to achieve the equivalent by cobbling together the audiences of many shows, using audience data. If networks can find similar people across twenty podcasts they can package that audience up for a large advertiser.
This should sound familiar. As Arment notes, it’s precisely the path websites followed. Ad networks emerged because audiences were fractured, because it became so cheap to start websites that every whim was catered to. Marketers didn’t want to hire hundreds of ad buyers to cope, each of them placing very small buys, so they used data to unite audiences across properties. Publishers then learned how to optimize to that data and found biases in human behavior and the way the data was created. Which brings us to today’s disappointing web. (I do find it a bit ironic that Arment seems to be lecturing John Herrman about this, as Herrman practically wrote the book on this topic. To be fair, Herrman’s NYT article was far from his usual work and edited for a Sunday Times audience.)
So why are podcast networks taking steps toward this future?
One reason I have sympathy for is that all podcasts can’t be tech podcasts.
Like the emergent blogs and websites, podcasts are able to serve niche interests because they’re cheap to produce and don’t have to bid on limited air waves. They’re fantastic for this.
But these niches are different. And some are more valuable than others, not just because of their demographics or disposable income, but because of their willingness to act in a measurable way. Tech niche audiences have little problem ordering a mattress online. But others find this daunting. Further, the hoops needed to jump from ad read, to website, to coupon code are high for most. Tech listeners have no problem doing this. For others, it’s just not easy enough.
So non-tech audiences have lower CPMs. And meanwhile, these networks see the giant brand budgets struggling to find good options in mobile. I can imagine those windmills are tempting to tilt at.
Which leads to the other motivation which has my sympathy: small DR campaigns bought on a show by show basis can fund side projects, but not larger businesses.
I don’t want to debate whether or not podcasts should be big businesses or not, but I do want us to recognize that some are right now. This is a motivation we should acknowledge, especially as podcasts as a business don’t seem to be lighting the world on fire. Midroll probably spent a ton on their app, which is currently middling in the rankings with few reviews. Gimlet took $7.5 million from VCs and almost certainly isn’t showing a hockey stick trajectory (no podcasts are). The pressure to keep people paid and investors happy motivates companies to look for big wins, even if they may be mirages. And Apple is the de facto opportunity because no one else occupies such a central position.
And the final motivation we should acknowledge is Apple’s own: Apple has repeatedly stated they intend to grow their services revenue.
Herrman’s article takes the POV of podcast companies because that’s who will talk to him. But it’s easy to see Apple calling this meeting. One can imagine an Apple executive, tasked with service revenue growth, waking up one morning and wondering, “Wait a minute — we control nearly the entire podcast directory and manage a massive app…Why aren’t we making service money from that?!?”
The Real Reason Podcasts Can’t Grow Up
I, personally, want to keep podcasting weird. But I am sympathetic to these companies’ motivations. In the medium term, podcasts will remain weird — with or without data! — because podcasts are still too hard to find and subscribe to.
Yes, there are Bluetooth speakers everywhere. Yes, car links to smartphones are getting better (though will probably take a step back now that automakers realized they probably shouldn’t cede their dashes to Apple and Google…) But podcasts, as noted by Arment, are still just RSS and MP3s. One has to want a specific podcast enough to download an app, search for it, subscribe, and regularly listen. That’s too many steps for most, and that first one is a doozy. Ben Thompson covers it best. (Seriously, go read Ben’s thoughts. They’re essential here.)
Every car has a radio. Nearly every house has a TV. Turn either on, there’s shows. Nearly everyone uses Facebook and Google. Use either, and you find things easily or (in the case of Facebook, they’re given to you). Both them plug in ads.
As long as they’re tough to discover, podcasts will probably stay weird. Discovery is a massive filter preventing podcasts from becoming huge.
But even this problem will be solved someday. But even then, our nice cottage industry of home office podcasts will continue on, just in the shadow of a larger industry.