Amazon Is Doing What Apple Didn’t
Broadly speaking, we use our smartphones to listen to music and non-music content. For music, we know what the available options are. Whether it’s Spotify, Pandora, Apple Music, Amazon, Tidal, Youtube or pirated music (yes, people still do that), we are mostly set on the service of our choice. The best consequence of strong competition is high quality of experience for people and notice how the major players ( Spotify & Pandora) are not owned by the mobile operating systems.
This is mainly because these two services were started long before Apple Music came into the picture. That being said, Apple Music is doing much better than people think. This is mainly because of power of defaults and “good enough” experience combined with reasonable price.
Now, let’s look at non-music content. Non-music content is usually what most people refer to as podcasts. Both consumption and revenue in the podcast industry have grown at a pace much slower than than in other forms of media (music, textual & videos).
The biggest distribution & consumption (60–70%) platform is Apple. They don’t own the content but own the listening experience. If they wanted to, they could have easily made the experience much better for their users, charged users for the experience, increased podcasts consumption and added a new revenue stream to their services business. Podcasts could have been Apple’s version of Spotify for non-music audio content. Podcasts never got their “iTunes moment”.
So many smaller players are trying to own the listening experience and distribution. Otto Radio, Overcast, SoundCloud, Stitcher, and Pocket Casts to name a few. We are also seeing a whole host of audio social networks like UnMute, Anchor and Bumpers popping up.
“Podcasts”, in the minds of most people, are something that we listen to while working out or commuting. It is fundamentally a passive experience which demands a little more attention that music does. While I believe one of the audio social networks will break out and go mainstream, I don’t think one of the smaller distribution players will go mainstream and lift the entire podcast industry.
Power of defaults is very real. And, this is obvious from the fact that 60–70% of podcast consumption is on Apple. The experience is “good enough” to keep iOS users from trying out other apps even though some third party players have some features that Apple doesn’t. Things like audio trailers could make the experience significantly better but Apple seems to not care much about podcasts as a service business.
Power of defaults doesn’t work only if the alternative is 10x better. Think Snapchat and iPhone’s camera. Think Google Maps and Apple Maps. But, if the default option is good enough, people would prefer that. Think about how fast Apple Music seems to be growing.
So, if the mobile operating systems are not becoming the defaults for podcasts, what kind of platform will the most potential to go mainstream?
An ideal consumer-facing, podcast app would have the following —
- It will have access to all or most podcasts in one place. This should be doable since most podcasts have no contracts, fees, or licensing.
- It will be a standalone app for podcasts. No mixture with music or audiobooks.
- It will be free for mass adoption. Could have a paid version with no ads and original content. Paid version will mostly be a subscription model since we seem to have skipped the iTunes moment.
- Social sharing for viral loops (Being able to share sound bites from an episode).
- Easy discovery within the app based on key terms, topics, podcasters etc.
- Possibly has an in-built network with social graph and conversations around episodes. An Insta for audio.
- Comprehensive metrics — streaming numbers, when people stop listening, demographics etc. This could come at a fee. There could be revenue sharing agreements.
- The owner will be able to leverage copious amounts of data for targeting advertising.
- There will be scope for affiliate marketing and in-app purchases. This will require built-in user identities and payment mechanism. This is important because reports show podcast listeners are very likely to make purchases after listening about brands and products.
A lot of companies have tried hitting different variations of these features. But, I believe the winner will be the one with huge distribution, large data sets, creator-friendly mindset and established brand name right off the bat. This is why most startups have failed in this space. Getting those features and capabilities after attaining critical mass won’t help since Apple is the big, fat opponent in this world. In order to beat Apple, owning data, distribution and a familiar name would be very crucial for reaching critical mass.
I think Amazon’s new short-term audio offering called Channel is promising and its my thesis.
Channels will use customer data, directing programs to audience members based on their previous listening choices on Audible. Nuzum did not rule out the possibility that Channels could eventually access a listener’s Amazon purchases to customize marketing, though he said no such plans were in place. An Audible spokeswoman said the company has “millions of members globally,” but would not state a precise figure.
While it is still very difficult to dethrone Apple despite it’s lack of efforts and intention, Amazon could become a compelling competitor or could start a new approach and thinking for building listening experiences.
Interestingly, Amazon does not want to use the term “Podcasts” as Hunter Walk suggested a while ago.
