2017: Year of the podcast

The year 2017 will likely be remembered for many things across the technology spectrum, from major breakthroughs in artificial intelligence (AI) and milestone moments in autonomous vehicles to Amazon conceding that a major offline presence in groceries was needed to compete in retail.

But buried within the big headline-grabbing stories of the year were microtrends that sprang up almost by surprise. And one of those relates to the humble podcast. Continue reading “2017: Year of the podcast”

British GQ and Universal Music test shareable podcast formats

Universal Music and Condé Nast men’s magazine British GQ are testing podcast formats that can be broken down into chunks for sharing and include images and graphics to accompany each chapter, rather than full 30-minute or hourlong shows. The idea is for people to be able to listen to bite-size chapters of audio if they don’t have time to listen to a full podcast, and share them with friends. Continue reading “British GQ and Universal Music test shareable podcast formats”

Podcast ads remain stubbornly old-fashioned

In November, HowStuffWorks dumped the third-party ads in its podcasts. After spending most of 2017 trying to use ad networks to insert spots into its back catalog, which accounts for half of HSW’s monthly listens, the podcast publisher decided to abandon them. Instead, the company went back to monetizing the old-fashioned way: ads read by its shows’ hosts, an age-old format that started in terrestrial radio and remains the dominant form of advertising in podcasts.

“Our listeners didn’t love the experience,” said Jason Hoch, HowStuffWorks chief content officer. “They often felt like they were being shouted at.” Continue reading “Podcast ads remain stubbornly old-fashioned”

You can now use social audio app Anchor to publish podcasts

The social audio app Anchor is on Thursday introducing a new feature that allows users to easily publish podcasts to major podcasting platforms, including Apple Podcasts and Google Play.

Users can initially set up the podcast through the app by choosing a name, art, and more, and then subsequent episodes will be automatically added to the feed.

“They’ll be able to control everything about the podcast that they need to control from Anchor,” cofounder and CEO Michael Mignano told me. “Our hope is that we can remove all of the technical and difficult aspects of the process to the end user. If we had it our way, the user would never even need to know what an RSS feed is. It’s an older piece of technology that we think most creators need to even be aware of.”

Even though users will be able to upload podcasts through the app, they’ll still be subject to the requirements of each of the podcast platforms, and Mignano said podcasts created through Anchor should be available on the various podcast apps within a day or two of the initial upload.

While Anchor wants users to create audio and listen within the app, Mignano said the company was adding the ability to export audio as podcasts because it wants to encourage users to create longer stories that might be better suited to listen to as a podcast rather than in the app, which was designed for shorter audio.

“For us, anything that removes friction or enables creators to make something is a win for both the creator and for us,” he said. “If we can bring people over to the platform by offering them tools they can’t get anywhere else, than we feel we’ve done our jobs.”

Anchor launched in 2016 and was designed to try and make it easier for users to record and share audio while also fostering discussions. The app was incubated at the New York startup accelerator Betaworks, and it has raised more than $4 million in venture funding.

Anchor has yet to begin monetizing the app, but Mignano said the app will likely introduce advertising or subscription offerings. He declined to offer a timeline, but said the company is committed to eventually sharing sharing revenue with users.

In March, Anchor relaunched the app with an array of new features, including integrations with Spotify and Apple Music that lets users import song and tools that simplify the interview process and enable listeners to call into shows.

At the time, Nick Quah wrote in his Hot Pod newsletter that the additions put Anchor in competition with Bumpers, an audio creation app founded by Ian Ownbey and Jacob Thornton, formerly of Twitter:

In my head, I’ve come to place Anchor and Bumpers in one bucket, given both these apps’ focus on serving as the mediating space between users and other users, while establishing another bucket specifically for short-form audio app 60dB and the AI-oriented Otto Radio which seems, to me at least, primarily occupied with developing a firm grasp on the interface between professional publishers and listeners.

Mignano wouldn’t say how many users Anchor has, and it remains to be seen if social audio can take off when apps such as Facebook and Snapchat already dominate many users’ time and homescreens. Still, a number of outlets, including The Verge and The Outline, are publishing on the platform, and as the app continues to evolve, Anchor wants to ultimately make it easier for users to create and share audio clips.

“People can both create and listen freely, much like open platforms for other mediums like photos, text, or videos,” he said. “We want it to be a conversation, we want it to be multidirectional, just not one way like broadcast. I think a way for us to get there is by opening up tools, creating utilities and tools that empower creativity.”

Apple’s new analytics for podcasts mean a lot of change (some good, some inconvenient) is on the way

“It may look obscure,”tweeted Gimlet’s Matt Lieber, “but this is the biggest thing to happen to the podcast business since Serial first went nuclear.” Lieber was talking about a major announcement that came out of the podcast session at WWDC, the Apple developer conference, which took place on Friday. It was a piece of business delivered with relatively little fanfare — par for the course, I think, with the nature of Apple’s historically chill relationship with podcasts —  and Lieber’s right. This is a very big deal, and a lot of change is on the way.

Here’s the headline: Apple is finally opening up in-episode analytics for podcasts. The data will be anonymized, consistent with Apple’s general stance on privacy, and the new analytics layer is scheduled to arrive with the iOS 11 update this fall. This means that podcast publishers will, at long last, receive data that tells them just how much of their episodes are actually being listening to — within the Apple Podcast app, at least, which is still largely understood to serve the majority of listening. (Estimates, however sampled, tend to range between 60 and 80 percent). Previously, podcast consumption was chiefly conceptualized based on downloads, a black box metric that’s criticized as lacking the level of granularity that are table stakes for advertisers buying on digital platforms in 2017. With this announcement, that measurement issue — long articulated as the defining problem of the medium — can finally be meaningfully interrogated, with many believing that the hurdle impeding advertisers from committing more dollars to the space can be thrown out the window.

But some are also arguing this change will bring a mixed bag of consequences, and in some ways, the new data puts the space at risk of snuffing out various dynamics that make it special. Which is to say, while there’s a hope that this will finally lead to podcasting realizing its full economic potential, the shadow of Web 2.0 looms large.

The WWDC session also contained a few other useful announcements, including a design overhaul for Podcasts app and new extensions to feed specifications that would give publishers more control over how they can present episodes within RSS feeds. Among other things, publishers will now have the ability to bundle episodes by season and signal which episodes are actual content versus extras like trailers. Noted Apple writer Jason Snell has a good rundown on this over at his blog, and you can check out the spec document here. And as I mentioned last week, this is probably what the redesign looks like, courtesy of this Reddit thread. (Once again, your mileage may vary with sourcing Reddit.)

But let’s get back to the analytics stuff. Since Friday’s announcement — which you can watch in full at this link, but only on the Safari browser, because Apple — there’s been a ton of writing appraising the matter, and in case you’d like a quick primer, I recommend this write-up by Recode’s Peter Kafka, which also contains screenshots of the upcoming analytics dashboard. (I’m going spelunking in some rabbit holes here, so a primer this is not.)

Here, we’ll attend to wonkier questions: What does this new analytics universe portend? How will the podcast business change? If so, who wins and who loses?

I wasn’t born a prophet, so I don’t know how exactly this will play out, but I do have some notes and assessments on a bunch of the key issues. This write-up is by no means comprehensive, and I’ll be exploring more questions in future issues as we deal with the consequences of announcements. For now, let’s jump in, and we’ll move through a bunch of topics.

Just double-checking: Is this really a big deal?

Yep, I’m pretty certain it’s massive, but it’s worth weighing the counter-argument. Even if Apple serves a majority of all listeners, the argument goes, it doesn’t account for the whole listening universe, and as such there might be muted effects to how this ends up moving the way business is being done. I’m not sure I’d buy much stock in that view: first, not only does most listening quantitatively happen on Apple, the company is qualitatively synonymous with the space. Second, there still doesn’t appear to be a strong alternative to Apple with a big enough consolidated market share that could meaningfully challenge (or avoid) the way Apple defines audience measurement. Which means that, in June 2017, it’s still feasible to think that whenever Apple says jump, most folks are still pretty much going to make like Durant.

How will the new analytics layer change the way we currently understand podcast audiences in the aggregate?

A couple of parts to this:

(1) Many believe that an ecosystem-wide audience resizing is in the cards. Because the vast majority of podcast audience appraisal is conducted based on downloads — and because we don’t actually know what happens to an episode after it’s downloaded — the way podcast audiences are represented, understood, and sold is almost certainly going to change. Just about everyone I spoke to frames this in terms of some form of downsizing, which makes intuitive sense, because there will always be some percentage of episodes being downloaded that are left unlistened (and ads left unserved). But the positive spin I’m given is that this change nevertheless comes with a higher level of accountability, and the gains in trust from advertisers will likely lead to much greater gains over the long term.

As Matt Turck, Panoply’s chief revenue officer, puts it, “I’m assuming we will see listener numbers fall short of download numbers; however, the benefit to making analytics far less mysterious should vastly outweigh the concern.”

(2) That said, there remains the possibility that the new in-episode analytics layer might reveal inconvenient truths about audience behavior. I’ve been told there are a few non-Apple tools and platforms (like Spotify and some third-party listening apps) with in-episode analytics already in the market, and while they only supporting a minority share of listening, the consumption data they’ve been collecting suggests there’s nothing especially revolutionary hiding in those new numbers.

Aaron Lammer, of Longform and Stoner, is one among the skeptical. “I would push back against the idea that there is some great insight lurking in these analytics,” he said when we chatted over Twitter. “As people who’ve set up elaborate app-based analytics hooks where you can track everything will tell you-there isn’t that much interesting… I’d rather look [at] it as standardization rather than revolutionary shift.”

That point on standardization, I think, is really important to file away in your head.

(3) Bryan Moffett, the COO of National Public Media, made a good observation on how the proliferation of dynamic ad insertion technology might mean the transition to an in-episode analytics world would still contain tricky imprecision.

To quote him in full:

A dynamic ad server will serve up many different versions of a single episode. They could vary in length by a few minutes or even more. For example, if one user gets an episode of TED Radio Hour with four dynamic :30 sponsorships and a :30 promotion block in its hour of content, but another user for some reason gets the same episode with just two :30 sponsors, the length difference is over a minute and the content is not aligned minute by minute for each episode.

Apple’s analytics rolls up all listening to a given episode and averages, so there is bound to be some imprecision. It’s not a lot, and it’s certainly a better world than the one we live in now.

It’s never easy shifting gears.

How will the podcast business be affected?

Time will tell, obviously. But here’s the range of the thinking out there:

(1) As I mentioned, there is a sense from some bigger publishers that this new analytics layer will finally allow them to kick open conversations that may meaningfully unlock long coveted brand advertising dollars. Contrary to direct response advertisers, whose intended outcomes (and measurement methodologies) additionally revolve around conversions off promo codes, brand advertisers are generally thought to require a higher level of trust in the impressions being reported back to them. Podcasting’s black-box download-oriented measurement universe has long been described as the primary hurdle preventing brand advertisers from allocating more dollars to the medium, and it is believed that Apple’s in-episode analytics are a significant first step forward in opening up conversations between brand advertisers and podcast publishers across the system (conversations that have to do with perception as much as actualities).

(2) But how does this development affect the direct response side of the podcast advertising business? There’s a general belief among the folks I’ve talked to that direct response advertisers, or performance-based advertisers, will likely be stable, though there appears to be suspicion that the new analytics layer presents yet another horizon of opportunities for those advertisers and their respective agencies to haggle more over prices. I’m also being told that there are expectations of some oncoming turbulence/fluctuations in price points, as those advertisers go through the process of figuring out how to integrate this new data layer into their current practices.

(3) There are two versions of the apocalyptic view on the business end. The first takes the shape of some worries about ad-skipping, and what the new analytics layer is going to reveal about the extent of this behavior. (For more background on this, read this Wall Street Journal from last summer). The end-times scenario is said to be one where it’s discovered that podcast ads are skipped over at such a volume and intensity as to kill their value. On this front, the responses seem to generally track along the built-in split between brand advertising and performance-based advertising; there is a sense that, even if there is a problem, it would mostly affect the former, while the latter would remain somewhat stable, because conversions are still taken to be more important than impressions. Again, the positive spin I’m served ties back to a sense of greater accountability that the new analytics layer brings into publisher-advertiser interactions: we’ll know who is actually providing value to advertisers, and we’ll know who isn’t doing so as much. As Midroll chief revenue officer Lex Friedman said, “Podcasters who are confident that people are listening to their ads should be very happy about this.”

The second apocalyptic argument presents a scenario where podcast CPMs plummet, ultimately leading to the collapse of the market. This view generally draws on a parallel between podcasts and what happened to blogs once the format started experiencing waves of ad tech development. Personally, I can’t quite see the specifics of how this move by Apple could bring those dynamics to podcasting just yet. My understanding of the plummeting blog CPMs pegs the phenomenon to the continuous structural devaluing of blog advertising real estate brought on emerging ad technologies that gave advertisers (and ad tech companies) unchecked leverage. And while I think the broader risk of podcasts possibly going down the road of blogs is absolutely real, I don’t have a sense that this new analytics layer alone automatically leads to a devaluing of podcast advertising real estate. If anything, Acast’s recent rollout of a programmatic podcast advertising product is more likely to incur those types of effects, should the tool ever get traction — this development from Apple strikes me as a step forward that’s small enough to stop short from these effects.

Who wins, who loses?

(1) Obviously, publishers who have made a practice of inflating download numbers will get checked — though the counterargument that all metrics, without active third-party verification, can be gamed over time is certainly a prudent one.

(2) An argument can be made that this system-wide shift to a new analytics standard would usher in a weeding-out period. Podcasts delivering strong ad value will get additional data to strengthen their appeal for more advertising dollars, and podcasts not doing so will be flushed out of the ad market. It would mean that high-performing podcasts would be in a better position to extract more value, while not-so-high-performing podcasts would have a harder time accessing advertising dollars.

(3) It should be considered that whatever audience readjustments happen will probably disproportionately and negatively impact smaller podcasters’ ability to derive advertising revenue. Which is to say, just as how every publisher experiences the turbulence of discovering that its meaningful listening audience size is probably going to be smaller than its downloads, smaller podcasts will be whipped around harder, and in some (if not most) cases, that could lead to those shows falling beneath a certain threshold for advertising consideration. That’s bad for podcasts with already relatively small but meaningfully engaged audiences. In these cases, there are presumably two available moves: first, lean deeper into a niche that maintains a specific appeal for relevant advertisers, and second, pursue other non-advertising revenue streams.

I suppose, generally speaking, it’s worth keeping in mind that advertisers need to be served value too, and also, advertising isn’t necessarily the only business model available to publishers.

Content considerations. Metrics and measurements have long informed the way programs are created, and we should probably expect to see the dynamic express itself further with the new analytics layer. A couple of threads to consider:

(1) Knowing just how much of episodes are being listened to presents a much better feedback loop to improve not just editorial products, but also advertising products. And there is also the likely effect that we’ll see the blossoming of new formats, genres, and show structures that come from playing toward what the new metrics tells us.

(2) On the flip side, there should also be room for the more general worry that we’re sliding into a world where metrics outweigh creative decisions. I think there’s always room for that concern, regardless of whatever metrics are available — there will, to some extent, always be operators looking to play to the numbers rather than actually use the numbers to make better work.

(3) I’m pretty drawn to the question, raised here on Twitter by The Atlantic’s Alexis Madrigal, of whether increased data granularity within a medium would lead to the detriment of experimentation within that medium. Instinctively, I feel as if there is some truth to this, but I also suspect experimentation has less to do with the available metric universe and more to do with the ways in which compensation is structured off those metrics. (A quick tangent: I also find myself wondering how “experimental” material is defined; personally, I tend to grade experimental-ness relative to however the medium currently behaves, and think experimental programming will exist in any format regardless of where it is in its life cycle. I think the more interesting question here is about the conditions under which “experimentation” can exist within high-budget and high-scale productions.)

I’m not even close to being done, but I’ll leave it here for now. Obviously, this enormous and complex development contains many, many layers, and I’ll continue to dig around and write about them in future issues. (I mean, that’s why Hot Pod exists, right?)

Here are some of the questions I’ll be thinking about:

  • To what extent will podcasting go down the road of blogs, and what does that even mean? And should podcasting end up experiencing those same dynamics, what are the differences based on audio as a media format?
  • How will the podcast industry change? Will the professionalizing publishers benefit as they hoped for? What will happen to smaller and indie podcasters?
  • How will podcasting change for audiences?
  • Will we see the industry create more jobs for producers, developers, and assorted media folk?
  • How will the development impact what I’ve described as the bifurcation of the space, with podcasts as extension-of-blogging on one side and podcasts as extension-of-radio on the other?

As for my own normative view on all of this, I’m still figuring it out. I do think that the podcast industry is indeed still comparatively tiny, as Recode’s Peter Kafka points out, with podcast ad spending projected to only be about $250 million this year. While it’s growing at a solid and steady rate, it’s still peanuts compared to where radio (about $14.1 billion) is today, and there’s more to be gained and lost from changing how business is being done today. And like Kafka, I do think change was going to happen no matter what.

Also, as I mentioned on Twitter, I find myself skeptical about the nostalgia and privileging of the status quo. But that’s a story for another day.

Roman Mars, Esquire. New Hampshire Public Radio’s Civics 101 has some new competition in the form of a somewhat surprising side project from the 99% Invisible chief: “What Trump Can Teach Us About Con Law” is an explainer podcast that features Mars being taught the basics of constitutional law by UC Davis professor Elizabeth Joh based on ongoing developments in the current iteration of the White House. I’m told that the podcast is officially produced under the Radiotopia banner, which brings the number of Radiotopians with two podcasts up to two (the other is Hrishikesh Hirway, who makes both Song Exploder and the West Wing Weekly for the indie podcast collective). Mars’ new podcast comes mere days before the launch of another new Radiotopia podcast, Ear Hustle. That’s scheduled to roll out later this week.

Career spotlight. Spend enough time in the New York podcast scene — or any major city with a podcast scene, really — and you’re bound to bump into someone who came up through WNYC, which was once the city’s only major institution dealing with narrative radio. In this week’s Career Spotlight, we’re bumping into Leital Molad, who currently leads podcast development for the Pierre Omidyar-backed First Look Media.

Hot Pod: What do you do?
Leital Molad: I’m the executive producer of podcasts at First Look Media. In a nutshell, I develop and produce podcasts for The Intercept (First Look’s investigative news site) and Topic (our entertainment studio). Right now we have two podcasts in production, Politically ReActive and Intercepted. I oversee those shows week to week, working with the producers, giving editorial notes, and liaising with our business team on the marketing side. The other big part of my job is taking pitches for new shows, creating pilots, and bringing projects to launch. Since I got to First Look last October, we launched three shows: Maeve in America, Intercepted and Missing Richard Simmons.
HP: Where did you start, and how did you end up in this position?
Molad: I started as an intern at WNYC in 2000. The next year I got a full time job as a production assistant for Studio 360 with Kurt Andersen, and spent the next 15 years working on that show, ultimately running it as senior producer. My last year at WNYC I launched and EP’ed a health podcast, Only Human. I started thinking about my next career move and figured that this podcast renaissance was a great time to break out of my cozy public radio cocoon and try something new. So I took the leap and went to First Look — a media startup that was just getting into podcasting.
HP: How did you learn to do the job?
Molad: WNYC was an amazing place to learn everything I know about radio and audio. I got to wear many hats, ranging from basic show production — booking guests, writing scripts, cutting tape — to reporting my own stories, producing documentaries, and running live events. And I learned a ton about launching new shows after working on Only Human, which has been very helpful in my new job. Also, having been in the trenches with audio production (which I love), I can be a better manager of producers and engineers. Getting new shows off the ground at a startup often means being able to jump in on production when needed, and that’s been invaluable.
HP: When you started out, what did you think wanted to do?
Molad: After college, I didn’t land on what I wanted to do until I was brainstorming with a family friend who offered to help with some career advice. He asked me, “If you could have anyone’s job, who would it be?” Right away I said, “Terry Gross.” He said, “Well, that’s what you need to do!” I had been a DJ at my college station and an avid listener of public radio, and those two things just clicked. I wasn’t sure how to become the next Terry Gross; eventually I figured I should go to journalism school. So I came to New York for grad school at NYU, and then, very luckily, landed the internship at Studio 360. My dream of hosting evolved into an appreciation and desire for producing, which I fell in love with.  Maybe I’ll still host a show some day, we’ll see!  (You know, they say anyone can start a podcast with a laptop and a microphone…)

Molad adds that she’s on the lookout for more female voices, and that interested parties should get in touch. You can find Leital on Twitter at @leitalm.

Bites

  • ESPN has rolled out the podcast feed for its upcoming 30 for 30 audio adaptation. The first episode is set to drop on June 27. (website)
  • Malcolm Gladwell’s Revisionist History is coming back on Thursday. (NY Times)
  • WBUR is launching a storytelling podcast aimed at kids. (WBUR)
  • Looks like the Chapo Trap House team has bagged themselves a book deal with the Simon & Schuster imprint Touchstone Books. On a related note, I’m hearing that the podcast channel is increasingly fruitful prospecting ground for book publishers. (Twitter)

Podcasts, Analytics, and Centralization

Tucked into the last day of WWDC was a session on podcasting, and it contained some big news for the burgeoning industry. Before getting into the specific announcements, though, the session itself is worth a bit of analysis, particularly the opening from Apple Podcasts Business Manager James Boggs:

First we want to talk for a moment about how we think about modern podcasts. Long-form and audio. We get excited about episodic content that entertains, informs, and inspires. We get excited and many of our users have gotten excited too.

I went on to transcribe the next 500 or so words of Boggs’s presentation, which included various statistics on downloads, catalog size, and reach; a listing of Apple “partners” organized by media and broadcast organizations, public media, and independents; and even started in on Boggs’s review/promotion of individual podcasts like “Up and Vanished” and “Masters of Scale” before I realized Boggs was never going to actually say “how [Apple] think[s] about modern podcasts.” I won’t make you read the transcript — take my word when I say that there was nothing there.

Still, that itself was telling; Boggs’s presentation perfectly reflects the state of podcasting today: Apple is an essential piece, even as they really don’t have anything to do with what is going on (but naturally, are happy to take credit).

A Brief History of Podcasts

Probably the first modern podcast was created by Dave Winer in 2003, although it wasn’t called a “podcast”: that was coined by Ben Hammersley in 2004, and the inspiration was Apple’s iPod. Still, while the media had a name, the “industry”, such that it was, was very much the wild west: a scattering of podcast creators, podcatchers (software for downloading the podcasts), and podcast listeners, finding each other by word-of-mouth.

stratechery Year One - 267

A year later Apple made the move that cemented their current position as the accidental guerrilla of the industry: iTunes 4.9 included support for podcasts and, crucially, the iTunes Music Store created a directory (Apple did not — and still does not — host the podcast files themselves). The landscape of podcasting was completely transformed:

stratechery Year One - 268

Centralization occurs in industry after industry for a reason: everyone benefits, at least in the short term. Start with the users: before iTunes 4.9 subscribing and listening to a podcast was a multi-step process, and most of those steps were so obscure as to be effective barriers for all but the most committed of listeners.

  • Find a podcast
  • Get a podcatcher
  • Copy the URL of the podcast feed into the podcatcher
  • Copy over the audio file from the podcatcher into iTunes
  • Sync the audio file to an iPod
  • Listen to the podcast
  • Delete the podcast from the iPod the next time you sync’d

iTunes 4.9 made this far simpler:

  • Find a podcast in the iTunes Store and click ‘Subscribe’
  • Sync your iPod
  • Listen

Recounting this simplification may seem pedantic, but there is a point: this was the most important improvement for podcast creators as well. Yes, the iTunes Music Store offered an important new discovery mechanism, but it was the dramatic improvement to the user experience that, for the vast majority of would-be listeners, made podcasts even worth discovering in the first place. Centralized platforms win because they make things easier for the user; producers willingly follow.

Interestingly, though, beyond that initial release, which was clearly geared towards selling more iPods, Apple largely left the market alone, with one important exception: in 2012 the company released a standalone Podcasts app for iOS in the App Store, and in 2014 the app was built-in to iOS 8. At that point the power of defaults did its job: according to the IAB Podcast Ad Metrics Guidelines released last fall, the Apple Podcast App accounts for around 50% of all podcast players across all operating systems (iTunes is a further ~10%).1

The Business of Podcasting

It’s not clear when the first podcast advertisement was recorded; a decent guess is Episode 67 of This Week in Tech, recorded on September 3, 2006 (Topic: “Does the Google CEO’s place on Apple’s board presage a Sun merger?”). The sponsor was surprisingly familiar — Visa (“Safer, better money. Life takes Visa.”), and Dell joined a week later.

Over the ensuing years, though, the typical podcast sponsor was a bit less of a name brand — unless, of course, you were a regular podcast listener, in which case you quickly knew the brands by heart: Squarespace, Audible, Casper Mattress, Blue Apron, and recent favorite MeUndies (because who doesn’t want to hear a host-read endorsement for underwear!). Companies like Visa or Dell were few and far between: a study by FiveThirtyEight suggested brand advertisers were less than five percent of ad reads.

The reason is quite straightforward: for podcasts there is neither data nor scale. The data part is obvious: while podcasters can (self-)report download numbers, no one knows whether or not a podcast is played, or if the ads are skipped. The scale bit is more subtle: podcasts are both too small and too big. They are too small in that it is difficult to buy ads at scale (and there is virtually no quality control, even with centralized ad sellers like Midroll); they are too large in that the audience, which may be located anywhere in the world listening at any time, is impossible to survey in order to measure ad effectiveness.

That is why the vast majority of podcast advertisers are actually quite similar: nearly all are transaction-initiated subscription-based services. The “transaction-initiated” bit means that there is a discrete point at which the customer can indicate where they heard about the product, usually through a special URL, while the “subscription-based” part means these products are evaluating their marketing spend relative to expected lifetime value. In other words, the only products that find podcast advertising worthwhile are those that expect to convert a listener in a measurable way and make a significant amount of money off of them, justifying the hassle.2

The result is an industry that, from a monetization perspective, looks a lot like podcasting before iTunes 4.9; there are small business to be built, but the industry as a whole is stunted.

Apple Podcast Analytics

This is the context for what Apple actually announced. Jason Snell had a good summary at Six Colors:

New extensions to Apple’s podcast feed specification will allow podcasts to define individual seasons and explain whether an episode is a teaser, a full episode, or bonus content. These extensions will be read by the Podcast app and used to present a podcast in a richer way than the current, more linear, approach…

The other big news out of today’s session is for podcasters (and presumably for podcast advertisers): Apple is opening up in-episode analytics of podcasts. For the most part, podcasters only really know when an episode’s MP3 file is downloaded. Beyond that, we can’t really tell if anyone listens to an episode, or how long they listen—only the apps know for sure. Apple said today that it will be using (anonymized) data from the app to show podcasters how many people are listening and where in the app people are stopping or skipping. This has the potential to dramatically change our perception of how many people really listen to a show, and how many people skip ads, as well as how long a podcast can run before people just give up.

The new extensions are a nice addition, and a way in which Apple can enhance the user experience to the benefit of everyone. As you might expect, though, I’m particularly interested in the news about analytics. Problem solved, right? Or is it problem caused? What happens when advertisers realize that everyone is skipping their ads?

Advertisers: Not Idiots

In fact, I expect these analytics to have minimal impact, at least in the short run. For one, every indication is that analytics will only be available to the podcast publishers, although certainly advertisers will push to have them shared.3 More pertinently, though, all of the current podcast publishers know exactly what they are getting: X amount of podcast ads results in Y number of conversions that result in Z amount of lifetime value.

Indeed, contrary to what many folks seem to believe, advertisers, whether they leverage podcasts, Facebook, Google, or old school formats like radio or TV, are not idiots blindly throwing money over a wall in the vague hopes that it will drive revenue, ever susceptible to being shocked, shocked! that their ads are being ignored. Particularly in the case of digital formats advertisers are quite sophisticated, basing advertising decisions off of well-known ROI calculations. That is certainly the case with podcasts: knowing to a higher degree of precision how many ads are skipped doesn’t change the calculation for the current crop of podcast advertisers in the slightest.

What more data does do is open the door to more varied types of advertisers beyond the subscription services that dominate the space. Brand advertisers, in particular, are more worried about reaching a guaranteed number of potential customers than they are tracking directly to conversion, and Apple’s analytics will help podcasters tell a more convincing story in that regard.

In truth, though, Apple’s proposed analytics aren’t nearly enough: advertisers still won’t know who they are reaching or where they are located, and while brand advertisers may not have the expectation of tracking-to-purchase no one wants to throw money to the wind either. The problem of surveying effectively to measure things like brand lift is as acute as ever, and it simply isn’t worth the trouble to do a bunch of relatively small media buys with zero quality control.

Apple’s Opportunity

This, though, is why Apple’s centralized role is so intriguing. Remember, the web was thought to be a wasteland for advertising until Google provided a centralized point that aggregated users and could be sold to advertisers. Similarly, mobile was thought to monetize even worse than the (desktop) web until Facebook provided a centralized point that aggregated users and could be sold to advertisers. I expect a similar dynamic in podcasts: the industry will remain the province of web hosting and underwear absent centralization and aggregation, and the only entity that can accomplish that is Apple.

One can envision the broad outlines of what the business for a centralized aggregator for podcasts might look like:

  • The centralized aggregator would likely offer hosting to podcast creators, not only to secure the user experience and get better analytics (including on downloads through other apps) but also to dynamically insert advertisements. Those advertisements would also be available to smaller podcasts that are currently not worth the effort to advertisers.
  • Advertisers would get their own dashboard for those analytics and, more importantly, the opportunity to buy ads at far greater scale across a large enough audience to make it worth their while. Ideally, at least from their perspective, they would actually be able to target their advertising buys as well.
  • Users would, at least in theory, benefit from a far broader array of content made possible by the growth in revenue for the industry broadly.

There are already companies trying to do just this: I wrote about E.W. Scripps’ Midroll and their acquisition of podcast player Stitcher last year. The problem is that Stitcher only has around 5% of listeners, and it is the ownership of users/listeners, not producers/podcast from which true market power derives. Apple has that ownership, and thus that power; the question is will they use it?

Surely the safe bet is “no”. iAd, Apple’s previous effort at building an advertising business, failed spectacularly, and Apple’s anti-advertising rhetoric has only deepened since then. That’s a problem not only in terms of image but culture: Apple seems highly unlikely to be willing to put in the effort necessary to build a real advertising business, and given how small such a business might be even in the best-case scenario relative to the rest of the company, that’s understandable.4

To be sure, should Apple decline to seize this opportunity it will be celebrated by many, particularly those doing well in the current ecosystem. Podcasting is definitely more open than not, with no real gatekeepers in terms of either distribution or monetization. That, though, is why the money is so small: gatekeepers are moneymakers, and while podcasts may continue to grow, it is by no means inevitable that, absent a more active Apple, the money will follow.

Disclosure: Exponent, the podcast I host with James Allworth, does have a (single) sponsor; the revenue from this sponsorship makes up a very small percentage of Stratechery’s overall revenue and does not impact the views in this article

  1. For what it’s worth, Exponent has a much different profile: Apple Podcasts has about 13% share, while Overcast leads the way with 26% share, followed by (surprisingly!) Mobile Safari with 23%
  2. This shows why Casper mattresses are the exception that proves the rule: mattresses are not a subscription service, but they are much more expensive than most products bought online, which achieves the same effect as far as lifetime value is concerned
  3. I’m less worried about the fact other podcast players may not offer similar analytics: the Apple Podcast app will be used as a proxy, although this may hurt podcasts that have a smaller share of downloads via the Apple Podcast app (as total listeners may be undercounted absent similar analytics from other apps)
  4. It’s Google’s challenge in building a real hardware business in reverse

What you need to know about Apple’s new podcast analytics

The world’s biggest platform for podcasts is going to shed new light on the state of advertising in the space. On Friday, Apple announced it would soon begin offering podcast creators some rudimentary audience analytics.

Here is what you need to know about Apple’s announcement.

The state of podcasting:
• Podcasting started as an Apple-dominated medium, and it remains one. Nearly 80 percent of all podcast consumption happened on Apple devices in 2015, according to research by Clammr, though Google Play and Amazon’s Echo devices, among others, are eating away at that market share.

• Apple remains a dominant hosting platform for podcasts, hosting about 70 percent of all available podcasts, according to Adopter Media. Because of this, the analytics features teased last week won’t affect everybody in the industry, but it will affect the lion’s share of them.

• Measurement has been a persistent problem for podcasting as a medium. Podtrac, which compiles monthly statistics on show streams and downloads for creators including “This American Life” and HowStuffWorks, is limited to data creators offer voluntarily. This means some prominent podcast publishers, including The Ringer, aren’t counted.

• Podcasting has steadily marched into the mainstream. By the end of this year, more than a third of all Americans will listen to podcasts on a monthly basis, up from 20 percent in 2016, according to forecasts from Bridge Ratings Media Research.

• Because podcasts are a niche product and because of measurement limitations, podcasting remains a small market, about $200 million in the U.S. It is projected to grow to nearly $500 million by 2020, according to Bridge Ratings.

• The lack of audience data has also profoundly influenced the kind of advertising that supports podcasting. Ninety percent of all podcast ads have a direct-response component, according to Adopter Media.

• These analytics are likely being made available because more people are listening to podcasts immediately (77 percent), rather than downloading the files for later listening (27 percent), per Edison Research.

What it means:
While many podcast creators, including Recode cofounder Peter Kafka and Gimlet president Matt Lieber, see Apple’s announcement as a big deal, it still doesn’t put podcasting on the same plane as most other digital media for advertisers.

“There still won’t be good targeting data available,” said Karl Rosander, the founder and CEO of podcast platform Acast. “To really help publishers, Apple needs to share (i.e., get the data through an application programming interface for all verified shows) data with the hosting provider, not only through the publisher’s platform.”

The data that Apple will provide creators will be anonymized, which means that Apple-hosted shows still won’t be able to target people with the kind of audience data that ad buyers expect when using Facebook, Twitter or Google.

But as creators and advertisers accumulate more data about listens, it could wind up having profound implications for how shows are shaped. “Think of all the new jobs for audience dev folks in audio,” Hot Pod creator Nicholas Quah tweeted on Saturday.

As for whether it unlocks the brand advertising dollars that podcast producers have coveted for years, that remains to be seen.  “We are probably a year out from knowing what sort of meaningful audience data this will yield,” said Glenn Rubenstein, founder of Adopter Media. “It remains to be seen if this listener data will sway any of the larger advertiser holdouts who have supposedly been ‘demanding’ it.”

The post What you need to know about Apple’s new podcast analytics appeared first on Digiday.

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