The Interactive Advertising Bureau recently estimated that podcast industry revenue grew by 53 percent last year and is projected to reach $1 billion by 2021.
With so much year-over-year growth, it shouldn’t be any surprise that many media companies are aggressively expanding their podcast operations. This is certainly true for Vox Media, which over the past few years has launched over 150 podcasts on topics that include technology, politics, and sports. The audio medium is now an eight-figure business for Vox.
I recently sat down with Marty Moe, the head of Vox Media Studios, to talk about how the company is monetizing these podcasts, what he thinks about Spotify’s entry into podcasting, and why he thinks he can grow Vox’s podcast revenue from eight to nine figures.
To listen to the interview, subscribe to The Business of Content on your favorite podcast player, or you can play the YouTube video below. If you scroll down you’ll also find a transcript of the interview.
This transcript has been edited for clarity.
Simon Owens: Hey Marty, thanks for joining us.
Marty Moe: Thank you Simon, good to be here with you.
You run Vox Media Studios. That’s a recently formed division within Vox Media. What does that encompass?
That’s exactly right. We started building out a few years ago a strategy of original television production, podcasting production, film and documentary work. It was an experiment we wanted to develop in a small way over time. And over the years, it’s become a bigger and bigger part of our business. It’s a really promising part of our business that’s growing fast. We thought it was about time to formalize it by creating a new division within Vox Media called Vox Media Studios, and we thought it needed someone to head it up, and I volunteered to take on the challenge.
So broadly it includes all broadcast mediums within Vox. Podcasts, videos that go on YouTube and Facebook Watch, but then also your television efforts. I know you have a show on Netflix. All that falls under the rubric of studios.
Your tenure at Vox predates its podcast and video efforts. I know you worked with Vox CEO Jim Bankoff at AOL. When did you come into the company?
I came into the company in 2010 as an adviser, and more formally in 2011. I co-founded The Verge. When I left AOL myself in 2010, it was with the intention of starting The Verge, and Jim and I had a fortuitous conversation along the way. He was at SB Nation, and they were simultaneously thinking about going into new verticals themselves. We quickly seized on the idea of coming together to do this to form Vox Media. It was a very quick process in doing that. We’d worked together for years. We were good friends. It seemed like a good opportunity to enable ourselves to get to scale as quickly as possible, as we saw the market for premium content on the web really picking up. The opportunity needed to be seized quickly.
When you were at AOL were you working on the media properties like TechCrunch, Huffington Post, and Weblogs Inc?
Exactly. I ran all the original content at AOL at the time. We were launching new brands. We were continuing to build the network that came out of Weblogs Inc, which was Engadget, Autoblog, Joystick, and the like. And the underlying platform for the blogs, which was called Blogsmith.
We actually had Brian Alvey, the founder of Weblogs Inc and Blogsmith, on the show.
That’s great to hear. I love Brian. He was instrumental in all that growth.
For us at AOL, it was really the first opportunity that we had to build, from scratch, original content brands on the web. And the fundamental lesson there was the power of quality and the power of doing news, doing content that people cared about in categories they care about, and seeing that the fluidity in the web market at the time gave the opportunity to create whole new brands that became household brands overnight.
The Verge launched about a year later. Readers and people who knew about The Verge thought about it as this great thing that’s been here forever, and they couldn’t quite believe it’d been there only a year.
We’re here to talk about podcasting. Tell me about your transition into that. I remember in the early days of Vox, a lot of your podcasts were produced by Panoply, which is a sister company to Slate. What was the thinking there? Were you dipping your toes in? That was before we saw the massive explosion in podcast adoption. Walk me through the history of how you built out your podcast operations.
Originally I was in charge of our content operations and then moved from that to being in charge of our revenue operations and strategy. Really, over time, what my focus has been at the company is to try to take on big new areas of potential growth that we think can help carry the company forward, and seize the opportunities at our grasp.
Podcasting was in that bucket of things. It really was something where our editors and talent that were already at the company — people like Kara Swisher, Ezra Klein, Nilay Patel — were doing podcasts as passion projects. That had built up loyal followings, but their podcasts weren’t perceived as business opportunities, but instead as a way to connect more deeply with their audiences. As a result, I’d say three years ago, podcasting was something we’d consider a hobby here at Vox Media, and it was a great way for our writers to do something they loved that was very intimately connected with what they already did, to connect with their audience and readers in this hyper engaged way.
As a result, we had all manner of band-aids and rubber bands that were holding our podcast operations together. We had three different companies that were helping us with production. As you said, Panoply was one of them. They helped us in producing podcasts here in DC. Cadence13 was producing Kara and Peter Kafka’s Recode shows for us in New York and San Francisco. And then, for The Verge, we had another production company working with us.
And we also had three different advertising sellers that were selling the ads on our shows. We really had no idea how much money we were making anyway. We had no idea whether this was a profitable business, or one we should be investing in.
About three years ago we started really looking into it and gathering the data, understanding the market better, understanding the industry better, and formulating a plan that made sense for Vox Media. The good news for us is that podcasting is so perfectly adjacent to what we already do. It’s in-depth, conversational, journalistically very close to what we already do. It was a natural fit from a content perspective for us to continue doing it. The question was, from a business perspective, is this something we can justify putting a lot more into.
In the course of our work, we concluded that yes, absolutely, this could be a business. We have to start to organize ourselves and start to operate like this is something strategic to the company. We started bringing things in-house. We went from three different publishing platforms to one. For each of these we had to decide who to ultimately partner with, figure out how to think about it from a sales perspective.
As you know, in podcasting there are two distinct advertising markets. There’s the direct response, traditional podcast advertising market that’s represented by a handful of agencies that are totally different from the ones our sales team has been working with over the years, the brand digital agencies. And then the brand digital agencies, those companies are the other big market, and the biggest growth opportunity over time for podcasting. But you have to organize around those distinct opportunities very differently, with different people and focuses and skillsets.
From platform publishing, from producing in-house, building out our infrastructure like the studio we’re sitting in now, and then on the advertising side, it’s the same thing. We transitioned, we kept working with Cadence13 as our exclusive ad representative in market, but we decided over time that we would start to take more and more of that in-house. By the end of this year, we had taken 100 percent of the ad selling in-house. We’re now handing both the direct response market and the brand market and seeing a ton of growth.
Was there a moment you looked at a graph and were like ‘holy crap, this is looking like more than a rounding error. We need to put more resources into it’? Was there this surprise moment where you realized that there really was an audience here and you’re hitting this growth curve, or was it a slow realization?
I think there was a steady realization. I don’t think there was one ‘aha’ moment, but as we began to put all the different pieces together, and all the numbers together, it was clear that the numbers we were seeing internally in conjunction with the numbers we were seeing out on the market, and the reporting, both in terms of audience usage and the growth and the overall podcast listener base, as well as the growth in the podcast listening market, were all saying the same thing, which was this is a medium that we should be taking really seriously. It can and should be a very strategic part of our business. It can and should be an integral part of the way we think as a company about content.
We’re still in that process, and it’s taking place rapidly. But our editorial teams, our podcast production teams are working tighter and tighter and closer together all the time. And I think you see in the product that we’re getting better and better for this. Part of that is that, as a strategy, we took the same approach we took in television, which is if we’re going to do this, we don’t want to do it lightly. We don’t want to be unduly dependent on third parties for production, for the services required to build up all aspects of the business, because the making of the stuff is important to the end product, and we want to have as much control over that that’s humanly possible.
That, for us, was critically important, but also a bigger lift. If you’re outsourcing to third parties, you don’t have to build the teams, you don’t have to build the infrastructure, the processes that enable all that to happen. If you’re outsourcing to a sales group, you don’t have to build that sales infrastructure. It’s a very different task. But at the end of the day, we felt and feel that if we do the investment, if we control the process, if we really think of this as a core business on its own to the company, that we’re going to reap a lot more benefit, both financially, and we’re going to produce better and better content.
You’ve been launching more narrative podcasts lately. You have Today Explained, The Impact. You just launched one about pop culture. I imagine that’s a lot more expensive than a conversational podcast. What is the business case for that? Do they really have a lot more audience, or drive more in ad sales to justify that expense? If you look at some of the most popular podcasts in existence, like the Joe Rogan Experience, Fresh Air with Terry Gross, those are low production interview podcasts. If you can get those kinds of numbers with a conversational podcast, what’s the business case for having these expensive narrative podcasts?
The way we see the business is there are a number of different kinds of shows, and each of those kinds have different formats, different production requirements, different listener dynamics, different cost structures, and different kinds of monetizing in the end. For us, we really see it as a portfolio approach, where we know we’re going to have a certain number great star-driven talk formats — for us, Kara Swisher, Ezra Klein, Peter Kafka. Those folks are squarely in that camp.
And even there, we have learned as we’ve done more and more of that, in order to really support those shows and those hosts, it’s not just plug and play. There are guests to book, a lot of organizational requirements that have to happen, making sure we’re doing the work to get the hosts out and on other shows, or on TV, and just really supporting what they do so they’re not left to do everything. That used to be what happened as we were just getting into it.
I remember Sarah Kliff at one point was editing a Vox newsletter, she was hosting both The Impact and The Weeds, and then she was also your star healthcare reporter. She was doing everything.
She was a super woman. But that’s not how you want to be ultimately deploying your talent. They need to be able to focus, they need the support in the work they’re doing. So, for The Impact, or for Ezra’s show — Ezra shouldn’t be doing all the research. He needs help with that so he can be thinking about the bigger picture questions. It differs from person to person, from host to host as to what kind of support they need, but we’ve become very aware and diligent about those shows needing their own infrastructure to help them work, and to make them better and better, and as big as they can be.
Then we’ve gotten into our daily news show, Today Explained. We’re going to be launching a new show in the Fall, which is going to be really cool as well in a different category. Those have a whole other set of requirements. Those are big, dedicated teams. Think of them as a website on their own, except it’s in podcasting. They’ve got producers, they’ve got writers, they’ve got hosts, they’ve got researchers. To be able to put out a high quality product every day requires that sort of investment.
I’ve heard that the business case for a daily podcast is that the audience just expands so much more quickly. Podcasting is such a linear medium. Nothing goes viral, it’s usually steady growth. So if you’re publishing more often, you’re going to be growing that much more quickly. Is that the case with Today Explained?
I’d say that it started out well, and then it’s just been on a steady march upward ever since. We don’t see any end to that up and to the right trajectory. It really is the daily task of being there for your audience, then incrementally extending that audience as people talk about the show, share it with their own friends, and then it gets more prominence, in the platforms, at Apple, at Spotify. It really is building in this incremental way this audience that comes back every day, and then on the business side this is very appealing, consistent audience size for advertisers.
As you quite correctly said — you asked about the narrative shows that might be expensive to make, but it’s limited run with only a few episodes, how do you make that work? Those are all questions that every podcast publisher deals with. You want to do those big narrative shows because they’re a great way of doing journalism. The content is amazing; audiences love it. But you also need to have both the financing and the business model to make it work.
The way we think of narrative these days is we want to build big franchises that have a lifespan that’s longer than just one season. If we’re doing a narrative podcast, what we’re really looking for are narrative approaches that can extend themselves to multiple seasons and have a topical thread holding them together so each one of them doesn’t have to stand on its own, so that we can have a likeminded audience that we can appeal to with a different program represented by different seasons well into the future.
We’re trying to stay away from big limited run programming because it’s both expensive and tough to monetize, because the audiences are unpredictable and the show doesn’t really have a track record. But when we do that, we might look to a partner that does want to do something like that, we might co-develop with a partner, and that might be anyone from Midroll or Spotify or people like Luminary. There are other business models out there for platforms that might justify a different kind of show that we would be interested in making, and to get out into the world. We might figure out a way of financing it that way.
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Yeah, I’ve heard that before, that the limited run series might be better for paid platforms like Spotify or Luminary because you don’t have enough of a buildup to attract advertising.
Speaking of Spotify, I’d love to hear your thoughts on it. Obviously it’s made some big expansions into podcasts lately. It acquired a bunch of podcast companies, just started testing out a bunch of podcast playlists. Do you view it as just another podcast player? How do you view Spotify from a business case? Do you really think they could bring in new listeners to the field because they have this huge base of music listeners that they’re trying to convert? What kind of opportunity does Spotify present?
First of all, for Spotify itself, I think it’s a massive opportunity, and we’re really excited about what they’re doing in podcasting and see it as something that’s going to raise the level of the game for the whole industry, and anything that brings new listeners to the kind of work we’re doing is good, as far as we’re concerned We’re eager to partner with Spotify in ways that can help them and help us bring more great programming to market.
We see it as, over time, they’re not just going to turn the dial and then all of a sudden all their users are listening to podcasts. I think they’re smarter than that. They’re a very deliberate company that is all about the end users and has, I’m sure, a very important product roadmap that they’re not going to just turn away from. But as you see the changes that they’re starting to make with making podcasting a more prominent part of the user experience and very integrated in what their listeners are able to access and see and discover, there’s no question that it’s going to be a more meaningful platform for us. We see that as a great thing that more people will be able to listen and discover what we’re doing.
Could you see a future where they’re inserting ads into your podcast or giving you a piece of the pie for any paid listens, like they’re doing with music labels right now?
I don’t have any inside dope on that, but I don’t see why that couldn’t be part of the future. I think one thing that the big platforms have to do is give reasons for publishers to invest more into the work they’re putting into those platforms. I’m hoping that the work that Spotify is going to do to both create better listener experiences, better discovery experiences, as well as potentially new sources of revenue for publishers, that that’s going to put heat on other platforms we love like Apple Podcasts and Google and everyone else that’s in the business that’s distributing podcasts.
Does Spotify hinder your ability to insert dynamic ads or accurately measure anything for your advertisers?
No. At this point, no problems with that at all. I think it’s going to get more smooth as they integrate the pieces they’re putting together and work through their roadmap and their strategy.
Podcasting, for most of its history, has been this open ecosystem. You just need an RSS feed to be distributed across apps. But we’re starting to see these closed systems. You have Spotify. You have Luminary. I know a lot of podcasts pulled their podcasts off Luminary. It’s going to have this paid tier. Do you feel like we’re starting to have these walled gardens within the podcast ecosystem, and do you think that might be a bad thing? A lot of people make comparisons to Facebook and how it started to consolidate power and started to choke off distribution.
I don’t worry about it right now. I think there’s going to be a lot of experimentation. That’s what you see in Luminary. There’s obviously a lot of investor interest in this space. Any industry that’s growing at about 40 percent year over year is going to generate that. So we’re going to see a lot more innovation, a lot more efforts to attempt new business models, to disrupt. I think it’s great. The more of that, the better, from the publisher perspective. Ultimately it’s just more demand for what we do. I think if there are different business models that emerge for us, then that’s great as well. We see it on the TV side where closed ecosystems are great because they allow us to create high quality original television content for them because their business model supports doing that. So we want to create great programming, great podcasts. New business models, new investments are going to allow us to do that, and we see our ability to continue to scale the kinds of podcasts we do, the subject matters we’re covering, the formats we’re doing, all of that is going to be fueled by this growth.
I had read somewhere that you guys have over 100 podcasts now on the Vox Media network. Is that right?
It’s true. It’s probably closer to 150 at this point.
I assume most of those are for SB Nation, with podcasts for individual teams.
Yeah. To put that in context: about 30 podcasts that we do are big, owned and operated podcasts we produce in-house and are ongoing shows. The rest, about 120 now, are podcasts for every single one of our sports teams that SB Nation covers. That’s an effort that just started less than a year ago and has been ramping up really quickly, but we see that in and of itself as a huge opportunity in podcasting in general. But no one’s done something that ambitious. No one’s done something that comprehensive.
Is that a different business? You don’t think of podcasts as being very localized, but that’s a localized business. Is there a difference in terms of audience building and advertising sales?
I think there will be some opportunities in local markets to do advertising at that level. But ultimately this is a big national audience. It may be locally oriented in its listening interests, but in terms of being a big national audience, it’s the same. If you want to reach a great sports demographic of very interested sports fans, this will be something we can sell, just like we’re selling other podcasts.
What will be important is dynamic ad insertion and being able to sell what we refer to as rotational inventory so one advertiser can buy across a whole sports network or league. It can buy across all of sports, instead of necessarily having to buy across 100 different shows with 100 different host reads. So we’re trying to make that as efficient as possible, and I think that’s the way that’ll end up working from a sales perspective.
Do you find that, because you have this huge network, that you’re able to promote new shows on your already existing shows and that this drives a lot of listeners to the new show?
It’s hugely important. To have a base of existing listeners to whom you can promote new shows that they might be interested in is crucial. It just means you don’t start from scratch on every one. For us, the important thing is how to promote new shows and existing shows to our overall network of listeners and do it in a way where ideally you’re promoting shows that you think will have an affinity to what they’re interested in. If we’re launching a big new tech news show, we think promoting that show to the Today Explained audience would make a ton of sense, because these are people interested in the news, technology is just a bigger part of our news environment these days, and so it’s going to be a perfect overlap. Maybe not everybody decides to subscribe, but we think a big chunk will. Having those existing audiences serve as big promotional assets can help launch a new show and get it to critical mass quickly.
We saw that with our recent launch of Nice Try, which we launched last week. It’s in the top 20 podcasts on iTunes, and it’s just off to the races.
Do you do what Gimlet does where you’ll run an episode from a new podcast in an already-existing show’s feed?
Sometimes we do that. We try to take a very deliberate approach about how you do that. We don’t want to inundate our fans with random episodes.
Yeah, I’ve heard some Gimlet fans complain about Gimlet doing that too much.
We don’t do that. And Gimlet was probably experimenting and learning some lessons there as well, and we’re always experimenting with the right ways of promoting and trying to take feedback from what makes sense, what feels right, and what feels intrusive.
You talked about the two realms of advertising: direct response advertising vs brand advertising. For most of podcasting’s history it’s been direct response advertising. A lot of people say that when podcasts make the next great leap forward in terms of being a business, it’s when the brand advertisers start advertising. What are you seeing in terms of growth? Are you seeing more brand advertising?
I think it’s early days, and it’s a process of education and answering questions. Brands are very interested in this medium. They see the growth numbers. They see something that’s an intimate and engaged listening experience. There’s no question that they’re going to increasingly come into this market. I think some of the questions they have are, ‘So, how’s it work?’ and ‘What are we buying?’ and ‘Who’s listening?’ and ‘Can we get a better sense of demographic data?’ And as we all know, in podcasting, there’s not as much granular demographic data that there is on the web.
They always talk about how data is not granular enough with podcasts, but TV and radio are based on Nielsen ratings, and I’d take podcast download numbers over Nielsen numbers any day.
100 percent. I think this is part of the education process. The proof is going to be in the pudding. The more we can bring brands into this environment, test it out, show them that we can demonstrate exactly what they’re getting and that listeners typically listen all the way through, at least 70 percent through, so they’re definitely hearing the advertising. We know from surveys that listeners overwhelmingly appreciate the advertising, particularly when it’s done well and creatively. So you have a very receptive and engaged audience. You can prove that that audience is hearing this advertising. And you can also show that things like brand lift are really going to make an impact on these brands’ KPIs. I think it’s early days, and we’re having conversations with brands every day about podcasts and the right way to get in. We’re seeing more and more come in.
For Vox Media and our podcast network we see it as one of our core strengths in the market, and that is we have an integrated approach to direct response advertising and brand advertising where we have a whole team that’s in market and able to educate a broad swath of brands about the medium. And then we have a dedicated team that can focus on the different needs of direct response advertisers. We can bring the best opportunities and the best results to both of those markets, which is something very few other players have. Native podcast businesses, their world is the direct response advertising world, and they’re trying to figure out how to crack into the brand market. We start out in the brand market, and we think we have a big advantage there, because we already have those relationships and we have the ability at scale to make podcasting a very integral part of the solutions and packages we’re selling. We’re newer to the direct response market, but that’s a market we feel very comfortable in already. With our products and with our shows, we see that as a very natural evolution for us.
So both are important. I think longterm the bigger growth is going to be on the brand side, because that’s where the bigger dollars are. But we’re very committed to both markets.
I read a quote from you that podcasting is an eight-figure business for Vox.
That is correct. Our goal is to add a digit to that and make it nine-figure. It’s big, it’s substantial for us. It’s growing fast.
There have been cases where media companies have reached a point where podcasts are generating over 50 percent of their revenue. The Ringer is an example of this. Slate said they’re going to hit 50 percent soon. Do you think, especially now that the display advertising market isn’t growing to what publishers hoped it would be, do you think that podcasting is punching above its weight? Do you think that, once it matures, that it could play an outsized role in generating your revenue?
First of all, those companies that you cited that are 50 percent podcasts now, the big difference between them and us is that the size of our digital ad business is different. We have a really big digital ad business and we’re very committed to it. We’re continuing to see very strong growth in that. That’s just something that’s going to be continually be important to us.
That being said, we very much want to see a portfolio of revenue that begins to become more diverse over time. On that pie chart you’re going to see a big digital advertising number, that’s continuing to grow; you’ll see a podcasting number, that’s a faster growing market; on the television side, also a fast growing market. You’ll see bigger slice of the pie on that. And then of course we have our SaaS business, our platform business we’re licensing to other publishers, and that’s got a nice growth curve to it. A year ago we were essentially a one-engine airplane in terms of our revenue mix. Digital advertising was the vast majority of our revenue. Entering into this year, we’re a four engine aircraft, and we’ve done the hard work of figuring out the strategies behind podcasting, television, and platform licensing, and now it’s a question of building out the infrastructure, scaling those businesses, and growing them as fast as we can.
You head up the studios. What kind of integration is happening between the podcasts and the entertainment divisions? Gimlet has been really successful in selling TV IP rights, film IP rights to its podcasts. How much are you in LA pitching Hollywood studios on your podcasts?
More and more. It has to be the right kind of show and the right fit. As you may have noticed, a couple months ago we acquired a company called Epic Magazine, and they are now a part of Vox Media Studios as well. Their whole business is about telling great stories that are character driven, really deep, and just kind of blow your mind stories, with the express purpose of turning that into film and television intellectual property. We now have as a core competency at the company doing that in our journalism. Podcasting is just another potential avenue of doing that. Where we can find great stories that would make great television shows or great films, we’ll be doing that. Having all these capabilities and talent under one roof is going to help enable us to do more and more of that.
We’re already an integrated IP development production team for podcasts and television. I think it’s going to go the other way too. We’re going to maybe do a television show where we decide to build a podcast off the same concept, because we can do different things in audio than we do on television.
Well you do have a television show called Explained and a podcast called Today Explained.
Exactly. And you can see a lot of more possibilities for that, where our explanatory journalism has just begun in podcasting. And there’s a whole world out there that needs to be explained, past, present, and future that we’re very excited about pursuing. The ecosystem of podcasting, film, and television, as well as our other journalism, we see as more connected. And the more we operationally stay close and connected, the better we’ll be able to make all those opportunities happen, because our skillsets and our capacity and the way we work is going to be multi-pronged from the very beginning. Here’s the palate we paint on, is a palette that includes text journalism, that includes original television, and film, and podcasting, and web video. That’s our world we live in, and each one of those is just as important as the other. And then depending on the trends in the business and how fast any one of them is growing, we can shift focus to one or the other. Ultimately, as a company, we need to be in our DNA expert at all of those things, and we’re really getting there fast.
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