Sometimes I wake up in a cold sweat, thinking about my life choices. Bills, responsibilities, my football team: all of these things play on my mind during those harrowing hours between sleeping and waking. But nothing bothers me more continually than my career choices, or, in other words, my decision to start a podcast company.
When I talk about podcasting to people in the media, they often assume that I’m just a failed print journalist (which is more than a little right). They don’t take podcasting very seriously. The people who take podcasts seriously are those outside the media, who rush to tell me all the podcasts they love (“Serial, of course, and No Such Thing as a Fish. Oh, and have you heard My Dad Wrote a Porno? So funny!”). In a way, I’d rather people rolled their eyes than repeated to me how much they love the same handful of shows that everyone knows and loves. But either response makes me wonder the same question: has podcasting failed?
The latest figures from RAJAR (the body that publishes quarterly listening figures for radio, here in the UK) make interesting reading. The Q3 figures tend to be the most widely reported by radio stations, as things pick up a little over the summer, though the trend generally has been towards mitigated decline (for example, Chris Evans, highly-paid host of the Radio2 breakfast show, lost about 200,000 listeners and this was reported as a small triumph). The BBC, the public radio provider and equivalent podcasting juggernaut to NPR, hit a weekly reach across all its radio stations of 34.3 million, whilst, comparatively, its podcasts had 26.5 million downloads in September. As a point of comparison, Netflix has 9.1 million UK subscribers, whereas 14.3m people watched BBC One’s Bodyguard. Held up against the market share of the public broadcaster, podcasting and video streaming are in similar health. Yet one is worth billions (this year Netflix surpassed a valuation of $152.8 billion) and the other is an industry where people thinking $10 is a reasonable CPM. So what’s going wrong?
A question rarely asked in the world of podcasting is: is radio dead? Radio was the preeminent form of entertainment for decades prior to the mass-marketing of the television, and managed to reconfigure itself in a world of car owners. In the 1970s, when the UK population was some 55m, BBC Radio 1 used to claim 10m concurrent listeners to its top shows. Earlier this year, the same station dipped to 9.2m weekly listeners to its flagship breakfast show. It doesn’t require a particularly subtle view of the radio market to realise that it’s declining — especially given the expensive failure of most of internet radio — but the question is whether it’s terminal.
Another impact of radio’s ill-health is the extent to which podcasts are used to mitigate the losses of radio. Conventionally, shows by providers like the BBC and NPR are broadcast first on radio and then repackaged for distribution as podcasts (the BBC only this year appointed a commissioning editor for podcasts, and the dedicated podcast team is still comparatively tiny). This is where I see a clear divergence between TV and radio: TV has embraced streaming as a competitor that represents the future for the medium; radio has used podcasting as a way of propping up its decline.
Part of this is to do with the relatively small amount of private sector investment in podcasting. In the UK, the BBC are the only significant producer of what we might (somewhat jokingly) call ‘big-budget’ podcasts, i.e. ones with an episode production budget in the thousands (£) rather than hundreds. A lot of money was lost on internet radio and it’s easy to see why there’s scepticism about the commercial viability of podcasting. This suspicion is, of course, reinforced by the fact that the existing host/agents (acast, audioBoom, PodBean…etc) are only able to offer content providers non-bespoke advertising fees that are scarcely breadline. A standard rate of between £10–20 per thousand listeners means that a show has to be reaching 20,000+ listeners a week before it stands a chance of breaking even (at semi-professional costings) or — shock horror — making money. Obviously, bespoke deals are knocking about (and are much better, both for individual podcasters and the health of the industry) but the majority of advertising is coming through at rates that would’ve been unacceptable to the most basement-dwelling bloggers of the early-00s.
The biggest issue is the circularity here. Advertisers don’t look to podcasts because of a perceived lack of quality in the product, and a market awash with hobbyist content. Simultaneously, hobbyists are struggling to transition into professionalism without the backing of advertisers. That’s one circle. Another circle is the fact that publicly-funded or major corporate producers (BBC, NPR, Slate, New York Times, Guardian…etc) are spending money on podcasts our of proportion with their podcast advertising income. As a result, the market has a thick veneer of high quality content without being advertiser reliant, and a huge crust of mediocre shows under huge financial strain. But, if you’re an advertiser, you only want the production quality of Serial or Dirty John, and therefore the money continues to cycle back to the companies who don’t really need it. A third circle is the fact that for most podcast producers it is impossible or unviable to run an advertising department, and therefore they are reliant upon agencies to source their funding. That these agencies are, most of the time, also the podcasts’ host creates a power imbalance in terms of setting the market rate for podcast advertising. But these host/agents are also struggling with advertisers’ expectations about podcasting, and their margins are razor thin and many are flirting with collapse. So they can’t improve their CPMs without jeopardising their business model, and if they don’t improve their CPMs, podcasters are unable to finance developing their own advertising programme.
Ok, that’s a lot of bad news. The good news amidst the bad news is that unlike TV, radio and VoD, podcasting is still underpriced and undervalued. The market is already huge: here in the UK we have over 5.5m regular podcast listeners, and the US market for sometime listeners is estimated at about 24% of all adults. That’s huge. Last year, advertising rose to an estimated $314m, up 86% from the previous year. That’s a massive increase, though absolutely pathetic in comparison with TV advertising which, in the same year and in the UK alone, was £5.11bn. But the missed correlation there should be a reason for optimism: all that needs to happen is for audience and revenue figures to come more into line, and the podcast market is flush with cash. This is not to mention that podcasts are actually a great place to advertise — much less passive than radio or TV, and able to target specific demographics. It should be a revolutionary platform for advertisers disillusioned with internet advertising — where adblockers and the human ability to just-not-give-a-damn are their natural enemies — and who have been shut out of VoD by the predominance of a subscription model that doesn’t really exist in podcasting. It is an industry just waiting for advertisers to take it seriously.
I have a worry though, and it’s a worry that has dogged me ever since I moved into full-time podcast production. Why hasn’t this happened already? Podcasting is not a new medium, it’s been around for 15 years. It was named for the iPod, which it has outlived, and it has blossomed, from a content perspective, as the smartphone has become ubiquitous. All of Dot Com advertising has seen a slump in prices since its peak, and podcasting is no different. The audiences get bigger, the prices go down. 77% of Americans now own a smartphone — almost everyone who could access podcasts now has access. So why are we still having the same arguments about pricing in the industry? Why are we still engaging in the hobbyists vs professionals debate? What fundamental failure has happened, in the industry, in the last decade, to leave it so far behind where it should be?
There is no neat answer. The podcast industry counts amongst its number lots of very smart people with huge amounts of experience in business, journalism, production (TV/radio/web). If there was a quick fix, it would’ve been sorted. Instead, what we are always left with are more questions: is this a boom industry or a boomed industry? Is the reticence of advertisers on this issue simply ignorance or a sign that something’s not quite right in the state of Pod? Can podcasting go right without going calamitously wrong (or vice versa)?
One thing’s for sure: it’s 2018 and podcasting is not where it should be or needs to be. That’s on producers, hosts and advertisers to sort out. Most media publishers are struggling for cashflow right now, and podcasting won’t get another 15 year grace period. It’s time to step up.
(N.B. James Cridland has written an excellent response to this piece, which you can read here. Rather than engaging in a lengthy back-and-forth, I would just add that whilst radio listenerships are, obviously, still high (and comparatively very high) the role of radio has changed very dramatically in recent decades, and there seems to be nothing radio publishers can do to halt that decline. Even more so than TV, radio seems to need to move towards on-demand content, which makes it qualitatively inseparable from podcasting, or become completely passive content that advertisers will abandon. That’s the fundamental distinction for me between our historic notions of serving advertising against multimedia products: is the listenership passive or active? Podcasting should be thriving here, yet it isn’t.)
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