Some industries gestate for a while and then take off, almost overnight. Podcasts are one of the most recent examples of this. How and why this happened provides some interesting lessons for the broader tech and business communities.
Before diving into the podcast business case, there are some other examples in the history of tech that followed a similar path. Take smartphones. The first smartphones were introduced in the mid-1990s, but never really took off. The Blackberry was a success as, basically, a portable e-mail device. But the smartphone business as we currently know it didn’t really take off the second version of the iPhone, the iPhone 3G, was launched in July, 2008. It was successful because the stars aligned: the innovative UI of the initial iPhone was coupled with a better cellular network (3G, not EDGE), and a new business model (the App Store). The industry has not looked back since.
Streaming TV represents a similar example. First, it required a critical mass of households with a fast broadband connection. Then, ‘devices’ in the form of high-quality, inexpensive HD sets and dongles such as Roku and the Fire TV Stick that enabled easier ‘access’ to multiple players’ streaming services. This was further enabled by improved integration these services into smart TVs and even frenemy Cable TV systems (who woulda thunk?), so individuals who weren’t the CTO of the household didn’t have to muck around with switching inputs.
A final turning point was streaming’s equivalent of the ‘app store’: the major bet made in original content, pioneered by HBO but then more broadly by Netflix, Hulu, Amazon, and the like.
And now, podcasts represent the latest example of the stars aligning. This is an industry that muddled along, as a niche service with no real revenue model, for 10+ years. During that period, it was a hobby project for anyone producing podcast content. Few, if any, big players were in the game. But then, circa 2016-2017, podcasts popped. Why?
Again, it was an alignment of the stars, involving a number of factors — some obvious, others less so. First, the nature of content changed. For a time, podcasts were like the audio version of the magazine industry: content was geared to specific communities of interest – sports, comedy, science, politics, etc. But there wasn’t any broader, more horizontal content of mass appeal. Then, along came ‘storytelling’ podcasts such as Serial and The Moth, which spread like wildfire, mainly via word of mouth. It’s sort of an irony, in an era where you can download a 2 GB movie to your smartphone in a couple of minutes, that podcasts were looking like 1930-1950s ‘gather round the radio for story hour’. As some podcasts attained a mass market following, the bigger players (Spotify & others) jumped in, acquiring some content producers and investing big sums themselves in original content.
Second, people became more comfortable with time shifted/on-demand audio content. Ironically, this came 10+ years after the same thing happened with TV (DVRs, then streaming). It took quite some time for a large percentage of the population to realize that they didn’t have to listen to Fresh Air at 3pm, and that they could choose select episodes, or parts of episodes, to listen to. This isn’t a revelation – but I blame the ‘delay’ partly on the plethora of quite mediocre podcast apps, embodied by Apple’s native podcast app. Fortunately, a number of actually OK (but no really good) third party podcast apps emerged over the past couple of years, to break the Apple monopoly.
Third, was the explosion of options and form factors for listening to all this podcast content, across three categories, just like HDTV & dongles: better integration of audio into automobiles, via in-vehicle systems, Apple CarPlay, and Android Auto; the surge in audio headsets, from Beats to AirPods; and a new generation of home audio hardware, starting with Sonos and graduating to smart speakers (Alexa, etc.), that made listening to podcasts while cooking dinner or folding the laundry ever so easier.
The fourth factor is significant but less tangible. In a way, podcasts represent both a new medium and a substitute for an old medium. Amidst the explosion of content, particularly short form, ‘snackable’ content on smartphones, podcasts have emerged as a platform for longer-form, substantive content. In a world of bullet points and sound bites, I revel in hour-long stories and interviews that only podcasts seem to provide. I don’t think it’s a coincidence that podcasts surged at the same time magazine sales collapsed. The long-form profile of Mark Zuckerberg in Fortune has been replaced by the ReCode interview by Kara Swisher.
In the midst of all this, the revenue model is still a work in progress. Most of the most popular podcasts are free or ad-supported. Some are vehicles to build awareness of larger, paid-for content brands, such as The Daily (New York Times). The podcasts that are ad-supported are not big moneymakers. And in an era of targeted advertising, the ‘General Mills Radio Adventure Theater” nature of podcast hosts reading sponsor blurbs is downright quaint and just about perfect for the atmosphere of this cold, blustery November New England day on which this column is being written.
Over in the visual part of the entertainment universe, we might have seen the peak of ‘peak TV’, as the streaming wars could lead to a dilution of content, customer confusion, and further fragmentation. With such a proliferation of original content, it’s no surprise that there have been numerous studies showing consumers are like deer looking into headlights, reverting to reruns of Friends and The Office.
That could happen with podcasts. The mass market adoption of the medium, the relatively low cost of entry, and the involvement of larger brands has led to an explosion of content. There will certainly be a shakeout in the next few years. And there will be increased pressure to actually make money, which could put podcasts into greater competition for our dollar, in addition to our time. But for now, it’s a great time to enjoy this period of peak audio.