Cracking the podcast puzzle
It’s official. Podcasts have made a comeback. But how can the music industry capitalise on the potential?
Podcast listeners are no longer a niche subset of society. According to the 2019 Infinite Dial Report from Edison Research and Triton Digital, half of the US population have listened to a podcast. In the UK, 11% of the population listens to a podcast weekly according to research from Ofcom. With recent news of Spotify’s acquisitions of Parcast, Gimlet Media and Anchor earlier this year and podcast advertising spend to hit more than $1B (according to IAB), it seems there is no stopping the growth of podcasts. However a real pain point and source of frustration for many podcasters is they are still unable to use their favourite music to soundtrack their podcast — well not unless they have a substantial bank balance and a lot of time on their hands to negotiate deals.
Podcast music licences are obtained directly from the copyright owners meaning they require music users to track down who owns the rights to a song. A typical Top 40 song has an average of 9 writers, so this is no easy feat. There is also some confusion about what a podcast music licence is. Podcasts are no longer exclusively downloaded and listened to later; it’s becoming more common for them to be streamed or played over smart speakers. So which licences do you need for a podcast? A mechanical licence? Synch? Performance? And who is responsible for acquiring these licences, the podcaster or the streaming platform?
Earlier this year, the American Independent Music Publishers (AIMP) Summit hosted a panel on podcast licensing. Panelists agreed the world of podcast licensing is complicated especially as podcasts have grown so quickly in the last few years. However some clarity of a what a podcast licence is was given by Sean McGraw (SongTrust) as he discussed treating podcast licenses similar to a synchronisation license. When pricing the licence, publishers may consider how many listeners the podcast has, what revenue (if any) the podcast receives and how the music will be used — just in the background, as the intro/outro, how much of the song is played etc. Similar to sync licenses the fee to use a song could range from $200 to tens of thousands of dollars.
Whilst these fees can be too expensive for some podcasters, others are willing to pay. The problem for them remains the licensing process. A quick search on the Internet will bring up many royalty-free/stock music options for podcasters. However there is still not an easy way to license commercial music. The process of individually contacting each publisher and label for the right to use music is off-putting for smaller podcast producers that don’t have the resource of a network behind them. Many may choose to take the risk and use the music anyway or claim ‘fair-use’ which makes them vulnerable to lawsuits.
Show me the money
The upshot of all this is that there is money on the table for writers, publishers and labels if we can just crack the podcast licensing puzzle. Using the predicted growth of podcast advertising spend, the number of new podcasts being released this year, and an analysis of the way that music is used in podcasts, Blokur has estimated the value of the podcast music licensing market. By 2023 our model estimates the market could be worth $335M. Whilst this is small in comparison to streaming and film/TV sync licensing, it is still an opportunity that copyright owners are not taking full advantage of.
An easy licensing solution for commercial music for podcasts could open doors to other licensing markets. The question is, who will be the first to solve it?
