The tech giants getting in on the podcast boom
Apple, Google and Spotify are all trying to get a piece of the podcasting pie
If you’re a Freetrader then there’s a good chance you also listen to podcasts. 🎙️
Whether it’s Joe Rogan smoking pot with Elon Musk, a tense murder mystery or Mark Kermode ranting about movies, the podcast industry is booming.
There are now an estimated 700,000 active podcasts around the world according to Esquire.
In the UK, the number of people listening to these podcasts has increased by 24% in the last year to 7.1 million. This means that around one in eight Brits now listens to a podcast.
The regularity with which they listen to podcasts has also increased. A recent Ofcom survey found that the number of podcast listeners tuning in to a show each week has grown by 58 per cent over the past two years.
Brits don’t confine themselves to one or two shows either. Amazingly, the average podcast fan in the UK listens to 7 programs in a week, with 70 per cent saying that they listen to most or all of each episode.
Across the Atlantic, 90 million Americans now tune in to podcasts, with the global figure predicted to hit 1.85 billion by 2023.
Which brings us onto the topic of money.
The Advertisers are Coming
Big advertisers are, unsurprisingly, eager to get involved.
What they find most appealing is the fact that podcast listeners tend to be wealthier, young and educated. 💸
According to venture capital firm Andreessen Horowitz, the majority of American podcast listeners earn over $75,000 dollars a year and a third of them have a graduate degree.
It’s a similar story in the UK. Just over 70 per cent of listeners work in higher-end jobs.
But, unlike the US, British podcast listeners are getting older. Ten years ago, almost 60 per cent were under 35.
Today only 47 per cent of them are, though this may be because older people have started to listen to BBC podcasts instead of radio.
Advertisers are also keen on podcasts as they tend to cater to a particular niche.
Someone that listens to Joe Rogan interviewing an MMA fighter is likely to belong to a particular demographic which advertisers can tailor their services to.
Which companies are involved?
You’ll almost certainly be familiar with some of the big putting money into the podcasting boom.
Whether it’s Apple or Disney, much of the tech and media industry is keen to jump onto the podcast bandwagon.
Spotify
Originally a music streaming app, Spotify has branched out into several different business areas since it was founded in 2006.
The Swedish company, which is listed on the New York Stock Exchange, has been putting vast sums of money into podcasting.
In January of last year, the firm announced that it was investing $340 million in two podcasting firms.
One was producer Gimlet Media, a New York-based production company famous for shows like Start Up and Heavyweight, which was founded in 2014. The other was Anchor FM, a services provider that is a bit like YouTube for podcasts.
Speaking just after the two acquisitions were completed, Spotify’s chief content officer Dawn Ostroff said that the tech firm wants to “be a leader” in the “nascent” podcast industry.
But with stiff competition, the streaming services provider is going to face a battle to establish itself as the ‘go to’ podcast platform.
Alphabet
Next on our list is the parent company of Google.
Podcasting may not be the first thing that comes to mind when you think of the search engine operator but Google has also been getting involved in this burgeoning industry.
In late 2017, the internet giant confirmed that it had acquired podcast app 60db for an undisclosed figure.
The firm was only founded two years prior to it being acquired and acts as a means by which companies can distribute and produce short-form podcasts.
Having been absorbed into the Google machine, there’s a good chance the team will move from strength to strength in the years ahead.
Still, Google is infamous for shutting down underperforming products — so if the podcasts don’t bring in cash, it could scrap them altogether.
Apple
If you do listen to podcasts, you may have had your first taste of the medium through Apple.
The company was the first big corporation to embrace the new media form back in 2005. It was in that year that the firm added a podcasts section to iTunes and the application’s in-built store.
As a result, Apple — unlike its rivals — probably won’t have to make any large scale, expensive acquisitions.
That’s because, by some estimations, up to 70% of podcast listeners do so via an Apple device.
Aside from advertising opportunities, the company is starting to develop production and publishing tools for content creators.
There are also options for Apple to sell podcasts under a subscription or use them as a customer retention tool.
Some have even speculated that the AirPod’s staggering sales figures in 2019, when Apple sold $6 billion-worth of the headphones, were boosted by demand for good, podcast-friendly hardware.
Despite all these bonuses, Apple is starting to feel the heat from its competitors. Spotify is increasingly used by people to listen to podcasts in the US, though if you add together Apple Music and the company’s podcast app, Apple still comes out on top.
Disney
No media battle would be complete without Disney.
They may have started out by making cartoons but the media giant now produces movies, provides streaming services and operates theme parks.
The company announced its leap into the podcasting world in mid-2018.
Highlighting the projected $19 billion that podcasts will generate in advertising revenue by 2022, an executive at the company said that it would be releasing shows aimed at its predominantly Gen Z and millennial audience.
That will include backstage content and interviews with different people involved in the production of Disney’s media projects.
Disney isn’t, however, ploughing as much money into its podcasting efforts as the competition is. That may mean it struggles to keep up or it remains a small part of its business falls by the wayside.
What’s going to happen?
Though podcasting certainly holds a lot of promise, it’s worth remembering that the companies below are already huge, with share prices to match.
That means their new podcasting businesses will have to produce sizable amounts of cash if they are to make any difference to company share prices or revenues.
There is certainly a boom in podcasts at the moment.
Clearly the likes of Spotify and Google think there is something to it, otherwise they wouldn’t have put millions of dollars into the industry.
But these investments are calculated risks, with a long term view. With any industry developing at such a rapid pace and driven by emerging consumer behaviour, it is hard to predict what will happen in the markets.
Fractional Stocks on Freetrade.
If you’ve checked the Freetrade app for one of the above companies then you’re probably thinking; ‘that’s more expensive than I thought it would be.’
Yup, big US stocks don’t come cheap. As we write this, Google’s parent company Alphabet is trading at just over $1,430 on the NASDAQ exchange.
Fortunately, there will soon be a way for Freetrade customers to access pricier stocks at a cheaper price.
We will introduce fractional stocks this quarter. That means you’ll be able to buy £100-worth of Alphabet stock if you want to, rather than an entire share for more than $1,000.
So if you’ve read this and are eager to invest in a company that’s working on podcasts but are a little short on cash, then give us a little time. We’re working on it! 💪
P.S. Would you like to see Freetrade create its own podcast? Let us know in the comments!
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