Podstruck’s May 2021 Month in Review

Welcome to Podstruck’s May 2021 month in review where Podstruck curates and analyzes podcast industry events and trends. ✓

This May review includes:

• News from Big Media
• News and Notes on the major podcast industry players
• Additional Podcast and Podcast Adjacent News
• Final Ramblings

News from Broader Media

Several May 2021 big media stories had relevance to podcasting:

• AT&T shed WarnerMedia assets in a merger with Discovery -now Warner Bros. Discovery .  Podcast notes in this: WarnerMedia includes the WarnerMedia Podcast Network which represents over 100 shows, and the popular Rooster Teeth brand.  According to Bloomberg News, AT&T had already been attempting to sell off Rooster Teeth prior to the Discovery announcement.
• Amazon acquires MGM for $8.45 Billion – Amazon is serious about competing in media beyond ecommerce as it continues to invest in audio (Amazon Music, Audible, and Podcasts with its recent Wondery acquisition), and video with Amazon Prime Video and Amazon Studios. Prime Video is a key value ad for Prime subscribers who provide a $20 Billion+ flood of predictable recurring revenue for the company.  In April, Amazon reported that Prime has passed 200 Million subscribers.  Here is a Recode breakdown on the MGM deal from Peter Kafka via:
  • A podcast breaking down the deal:  Why is Amazon Buying MGM
  • An Recode article: Why Amazon is paying nearly $9 billion for MGM and James Bond
• WarnerMedia’s HBO Max adds a cheaper subscription plan ($9.99 vs. $14.99) augmented with advertising;  The “with ads” plan fits in as a competitor to various other AVOD products like Hulu with ads, or NBC’s Peacock Premium with Ads.  Its also a path to customer acquisition and upgrade, and a downgrade option to reduce churn. WarnerMedia contends that the margins on the ad supported tier will match the margins on full premium. Assuming a $20 cpm, an average ad supported sub would have to view 250 ads per month to make up the $5.  Margins then remain constant assuming other operational costs cancel eachother out.
• This Map of the 2021 Media Universe via Evan Shapiro – @eshap – has been making the rounds.  Well done with key data and perspective on size/influence. Some of the audio universe is included – the map shows it in bright orange.

News and Notes on the Big Podcast Players

A group of Podcast Industry frontrunners has emerged through growth/ consolidation.  The top dogs according to Podstruck are: 

*Spotify*  *Apple*  *iHeart*  *Audacy*  *SiriusXM*  *Amazon*

Here is an Airtable showing “Who Owns Who in Podcasting” by @evoterra

You can find the frontrunners among their public company peers in Podstruck’s Public Audio Market Tracker.  

Facebook may join the list pending the success of its recently announced audio initiatives including Clubhouse-like Facebook Live Audio, and Facebook’s podcast distribution plans both with Spotify’s in-app player, and on its own.

Industry momentum heading into May was dominated by Spotify and Apple announcing their podcast subscription plans in late April:

• Apple announces podcast subscriptions on Apple Podcasts (4.20)
  • Pushkin, NPR, Q CODE as early partners
  • Apple Premium Podcasts Recode explainer
• Spotify followed with their own podcast subscription announcement (4.27)
  • NPR and a collection of independent shows were were included in the launch announcement
• A couple of key differences:
  • A Spotify subscription enables listening on any podcast app; Apple subscriptions enable listening only on Apple’s podcast app.
  • Spotify will, unlike Apple, share subscriber email addresses with podcast publishers. 

In truth, Podcast subscriptions have been around for a long time, and podcasters don’t need Apple or Spotify to offer subscriptions. Patreon,  Supporting Cast, Supercast and others have enabled podcasters to easily offer paywalled podcasts with private RSS feeds.  Wondery, Slate, and Cafe, for example, have had subscription plans for years.   

The promise is that Apple and Spotify can make podcast subscriptions mainstream by removing friction from current user upgrade flows, granting legitimacy to the subscription model with their brands, and marketing premium podcasts front and center to the bulk of podcast listeners.  This could create a rising tide that finally makes consumer payments a legitimate second revenue stream for podcasters of all sizes. 

May 2021 News by Company:

Spotify

• Spotify signed exclusive deal with Dax Shepard for his Armchair Experts podcast which attracts 20 million listeners each month; exclusivity starts July 1. The deal follows Spotify’s exclusive lock-up of Joe Rogan and other deals to develop Spotify exclusive podcasts with partners like the Obama’s Higher Ground Productions;
• NPR announced podcast subscriptions on Spotify — with sponsor-free as the hook; 
• Spotify is further dipping its toes into audiobooks through a deal with Storytel.  The deal, which does not reach the US market, adds audiobooks to Spotify by using Spotify’s Open Access Platform to enable Storytel to link its subscriber accounts to Spotify.  
  • Strategy Note:  Spotify’s Open Access Platform allows Spotify to aggregate a variety of third party content .  Spotify’s combination of aggregation and syndication is an interesting aspect of their growth strategy.
• Spotify rolled out some features:  
  • Podcasts transcripts (Techcrunch).  Transcripts are auto generated which may occasionally lead to some confusion and humor. 
  • Timestamp sharing feature – share from the point you want – super useful.

Apple

• iOS 14.6 adds subscription podcast capabilities (podcast subscriptions still not rolled out) to the Apple Podcast app, and lossless audio to Apple Music. iOS 14.7 coming soon and iOS 15 in the fall.  Note: Spotify announced Spotify HiFi at it’s Stream On event earlier this year as an upgrade.
• In late May Apple delayed the launch of subscription podcasts until June and acknowledged user problems with Apple Podcast Connect.  Throughout the month many publishers reported issues with Apple’s systems.  
• Apple announced a Podcast subscription affiliate program.  A link leading to a subscription earns a commission  of 50% of the first month’s revenue.
  • Here is a link to Apple’s subscriptions pitch and resource guide for podcast creators — worth the read
• Headspace is creating a channel on Apple Podcasts for $3.99/month for a “Sleep Subscription” for 10 meditations; This is not a podcast even by a stretch, and to note, Headspace has a successful subscription app in the app store.  Ditto Blinkist.
• CNN announced a premium channel on Apple and led with a show called The Handoff with Chris Cuomo and Don Lemon.

iHeart

• iHeart launched a programmatic podcast ad marketplace that will enable buyers to target by podcast show category, geolocation, and a proprietary set of psychographic categories.  The marketplace follows through on a plan initiated by iHeart’s October 2020 $50 Million purchase of Voxnest.
• iHeart reports that iHeart Radio has surpassed 150M registered users (cumulative # — not monthly active users). IHeart converted these registrations from 3 Billion app downloads.  Following the math, that’s one registered user per 20 downloads.  Many of those downloads are the result of user phone upgrades as the iHeart radio app has been in the App store for over a decade.  iHeart also claimed a total social audience of 234 million without going into specifics of how/where.
• IHeart continues to co-produce and distribute podcasts with mainstream media partners (iHeart’s podcast network gets the audience reach and iHeart sells the ads).  20 new podcasts were announced with ViacomCBS (the partners are in the middle of a three year deal) and iHeart inked a  multi year deal with Bloomberg.

SiriusXM

• SXM consolidated their sales force combining teams from SiriusXM, Pandora, and Sticher;  SXM also added Soundcloud inventory (SXM made a $75M investment in Soundlcloud in 2020). SXM also represents podcast inventory for other publishers including NBC/MSNBC and CNBC.  The SXM network includes inventory across satellite radio, streaming, and podcasting reaching 150M consumers.
• SiriusXM acquired Roman Mars and team 99% Invisible Inc.  The New York Times reports that Mars’ team of a dozen+ will separate from Radiotopia (which Marsco-founded) to become part of SXM’s Stitcher.  The NYT article mentions that 99% Invisible has been downloaded a cumulative 500 million times since debuting in 2010.
• Here’s an interview with Jennifer Witz, SXM CEO, on acquisitions, competition, and the future of podcasting (Inside Radio)

Audacy (formerly Entercom)

• Audacy announced Q1 2021 earnings. Q1 net revenue came in 19% below Q1 2020 and Audacy reviewed some of the progress it has made in podcasting and other areas.
• Audacy announced a deal to produce music oriented podcasts with Osiris Media.  The first podcast focuses on the grunge scene in Seattle in the 1980’s and ‘90’s. I’d request an episode on the soundtrack of Singles.

Amazon

• Amazon’s Wondery added a Wondery+ subscription option to Apple Podcasts.

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Additional Podcast and Podcast Adjacent News

Companies/Deals

• “Social Voice” maverick Clubhouse launched in Android but continues to lose momentum as iPhone downloads dropped precipitously from over 9 million in February to under 1 million in April (according to Business Insider). Clubhouse recently raised more capital at a $4 Billion valuation. The company is now in a race to keep and grow users. Clubhouse must offer something unique – either content/features or function to stem the attrition as it quickly competes with:  Twitter (Spaces), Facebook (Live Audio), Discord (Stage Discovery), audio chat, Reddit, Slack, LinkedIn, and others large and small.
• Axios reports that The Athletic is in play and mentions The New York Times as the potential acquirer. Axios says The Athletic’s latest capital raise carried a $500M valuation on $80M in revenue and 1.2M paid subscribers.  The NYT has 8M subs/7M digital only.  More than half of the Times subs are for the core news product with a growing share coming from verticals in cooking, games, and audio. It’s unclear whether the 8M subs figure de-duplicates people who subscribe to more than one product.  The audio subscribers come from the Times Audm subscription. An Athletic acquisition could push the Times closer to their 2025 goal of 10M subs in addition to bulking up their sports product and adding an audience to cross sell.  In March, The Wall Street Journal reported on the now dead possibility of an Axios-Athletic tie up as part of a portfolio SPAC rollup.
• China’s Xamalya filed for its US IPO 5/3 – English Prospectus; an interesting read, even if Ximalaya withdraws and registers in Hong Kong instead as China reportedly prefers
• There was a bunch of Buzz about “Netflix Plus” – what it is and what it would include, including podcasts.  Netflix has already created and distributed dozens of podcasts on Apple, Spotify, and your favorite podcast players, but the buzz here is about Netflix rolling out its own audio platform play.
• Podcast hosting platform Sounder acquired Podnods to boost tech/AI capabilities for podcast recommendations.

Advertising/Marketing

• The Podcast Upfronts took place from May 11 – 13.  Here is an agenda including speakers and companies.  If you were registered for the event, you can access recorded video.
• BetterHelp continued its dominance of the top Podcast Advertiser slot in April 2021’s top spenders from Magellan AI.The biggest mover was Samsung which went from zero to $1.42M in monthly spend.    Click here for the full top 15 lists.
• Around the Upfronts, the IAB released confirmation of 2020’s podcast advertising growth from (iab.com).  There was $842M in 2020 Industry Ad Spending vs. $708M in 2019.  Podcasts ads are headed to well over $1B in 2021.  
  • While steady, double digit growth, it is linear vs. exponential.  At some point innovation, volume and marketer acceptance will accelerate spend.  The IAB report forecasts a jump to $2B in 2023 which would start to justify the investment and enthusiasm the big players have been showing.

Podcasts/Content News

• The Podcast Academy awards show – The first ever Ambies streamed on Sunday May 15th – Replay here.
  • Background on The Academy and the Ambies from the LA Times:  “Awards ceremonies have failed big lately. Can the new Podcast Academy break the curse?”
  • Winners listed here: “Podcast Academy Honors ‘Dying for Sex,’ ‘Wind of Change,’ Marc Maron at Inaugural Ambie Awards” (Hollywood Reporter)
• Who are the podcasts in your neighborhood?  The concept of podcast “neighborhoods” is explored in a thought provoking post by Dan Misener of Pacific Content
• Podchaser released an API that lets developers pull Podchaser content and metadata into their applications.  
  • Podchaser raised $4M in January 2021 to build a third party discovery platform for podcasts. It offers a directory with metadata that aims to be as complete for podcasts as IMDB is for films.  
  • In addition Podchaser offers a profile based social sharing network so people can see what others recommend. 
  • The syndicated data includes “ratings & reviews, over 11 million creator & guest credits, user-curated playlists created for every niche, top podcast charts*, audience size & demographics*, and so much more!” according to Podchaser.
  • You can see my “top 8” and who I’m following here.
• The Guardian explores Celebrity Podcasts:  “A real turn-off: are celebrities ruining podcasting?”
• Ricky Gervais announces subscription podcast “Absolutely Mental” with Sam Harris (5/3); 
  • 11 episodes for $14.99 (packaged like an old school iTunes TV series)
  • Direct from www.absolutelymental.com; pay by credit card (powered by Stripe), or Google Pay (in Chrome) or Apple Pay (in Safari on mobile) and listen anywhere.
  • Spotify, Apple, and other podcast players have a trailer and 30 minutes of episode one, and promotion of absolutelymental.com to subscribe 

Final Ramblings – Podcasting within a Media Perspective

We break down the Podcast ecosystem along the following lines:

1. Context within the overall Tech and Entertainment Industry Economics.
2. Context within the overall audio, voice, and artificial intelligence industries.  
3. The leadership and influence of the Big Players on the ecosystem.
4. The innovation and leadership of companies of all sizes below the top layer.

Podcasting sits broadly within the context of the overall media industry, and more narrowly within audio. 

In general, big companies focus on scaled growth, feature matching, and activities that exploit their leverage, while smaller companies focus on innovation and all manner of growth. Big companies that can execute successfully in both ways become true market leaders.

So what is the best analog for podcasting in big media ecosystem?

For now, the best analogy for development of the podcasting ecosystem is OTT streamed video.  The comparison carries along these lines:

• The podcasting and internet video streaming ecosystems have enabled anyone to create, aggregate, and broadcast content globally at a minimal cost. 
• Just as the OTT video business is an evolution of traditional broadcast & cable, and movies; podcasting and on-demand audio is an evolution of broadcast radio, recorded music and audiobooks;
• While repurposing of content is valuable, technology and consumption patterns created by streaming/on demand media have deeply influenced and changed creative formats for both video and audio.  
  • Podcasting is a prime example of this, and, clearly there is a lot of connective tissue between OTT video streaming and podcasting when looking at YouTube.
• Streaming and On-demand has expanded funding for a much broader variety of creative projects taking bigger risks and serving smaller niche audiences.
• Video and audio business models center on both advertising/sponsorship and consumer payment  models.

There are lessons to be learned by comparing and contrasting audio and video business models and following consumer behavior in the more economically mature market. At some point we may even see premium audio and video products converge.