Attention Podcasters and audio series creators! Your future is now.
Read on (and help your future along by entering TVWriter™’s PEOPLE’S PILOT 2018 writing contest. You know – the one that closes in only 2 days.)
Now for the matter at hand:
by Eric Peckham
The podcast market will discover the answer to a foundational question about its future in the next few years. Will it continue along the path of music streaming, where all podcasts are available everywhere on free, ad-supported tiers? Or, will it follow the path of streaming TV into paid subscription services with exclusive content?
Today, effectively all of the industry’s revenue is from advertising — at least in the United States. However, we’re seeing the first steps being taken toward paid subscriptions and exclusive content. Based on numerous discussions I’ve had with top figures in podcasting over the last month, it’s clear that popular shows are getting large offers for exclusivity on podcasting platforms, major Hollywood players are entering the market and some top VCs are willing to back new streaming platforms taking a Netflix approach to podcasts (like Luminary Media, which raised a $40 million seed round).
Many in the industry are deeply skeptical of that business model, and for good reason: We don’t have concrete evidence that consumers in the U.S. will pay for podcasts and ad revenue is becoming quite lucrative for the top shows as the format gains popularity. But that precedent has hardly been entrenched, as the sector is only just now gaining mainstream consumer interest and getting attention from Hollywood.
And, there’s a macro problem with betting on ads. The dominance of Facebook and Google over all digital ad spending has already driven a shift to subscriptions across music, video and publishing. Even with dramatic market growth, podcasting doesn’t have a comparative advantage in competing against the scale and ad-targeting of the duopoly.
Subscription tiers and exclusive shows (akin to Netflix Originals) can, on the other hand, provide a virtuous cycle of quality content and stable revenue, generating recurring revenue directly from consumers who might ultimately pay for multiple streaming subscriptions to access different shows.
Could podcasting go the direction of streaming TV, with subscription tiers and original series? The breakout success of House of Cards — the first Netflix Original — set the stage for Netflix’s dominance in streaming TV.
Podcasting’s future looks more like Hollywood than like NPR radio. The annual Infinite Dial survey by Edison Research tracked that the percent of Americans over age 12 who listen to a podcast in a given month grew steadily from 9 percent in 2008 to 26 percent (or 72 million people) in 2018. Fifty-four million Americans, or 17 percent of those over 12, are weekly podcast listeners with a mean weekly listening time over 6.5 hours….