It’s pretty ironic that in a world where there is so much hype around emerging technology facilitating new ways of telling stories and creating experiences, (AR, MR, VR, AI, 5G, 8K, etc.) we are seeing the biggest boom in a medium that hasn’t changed since its inception. It’s estimated by some recent research cited by Matt Leiber, founder of Gimlet Media that the number of Americans listening to Podcasts at least once a month has risen from 1/6 to 1/3 over the past 18 months. It seems all you need is a good old RSS feed and an MP3 to reach an audience.
However, as someone who dabbles in podcasting myself, I’m excited to see what might be next for a medium that feels poised for innovation. With the recent acquisition of Ancor and Gimlet media by Spotify it feels like change is just around the corner. The implications of this deal and the future of audio content, in general, was the topic of the panel discussion between Matt Leiber mentioned above, Micheal Minago, CEO of Anchor and Dawn Ostroff, Chief Content Officer at Spotify. I’ve summarised some of the key takeaways below and added a bit of my own perspective as well.
For those of you not familiar with the world of podcasting, let’s take a quick look at the players.
Spotify is, well, Spotify. A company better known for its music streaming, but also one that has been pushing more into the podcast streaming space in the last couple of years and see the medium as integral to its mission of becoming ‘The worlds number one audio platform.’ If you look at the two acquisitions, they start to make a lot of sense in the context of this goal.
Gimlet is one of the best production houses in the business, creating shows such as Reply All, StartUp, Homecoming and Science VS. They also have a robust commercial arm responsible for making branded podcasts for the likes of eBay, Ford and Adobe. They are also doing interesting work with helping brands develop their Audio strategies. Coming up with a tone of voice for written and visual communication is commonplace. Not so much for pure audio.
Anchor is primarily a platform that facilitates simple creation and distribution of podcasts for creators — helping aspiring hosts to overcome the technical barriers of mics, cables, platforms and promotion that can turn people away from creating. They are also doing some novel things to help smaller podcasts to monetise their content. But more on that below.
Both Gimlet and Anchor are effectively leveraging what I think is the reason podcasts are starting to look so attractive to brands trying to connect with new audiences. Host read ads. Measurement is still an issue in the world of podcasting, but the connection hosts have with their audiences seems to add a level of authenticity which makes the ad reads extremely effective. If you’ve listened to any podcasts, you’ll likely recognise the handful of brands that have seen this value and decided to double down on it, (I’m looking at you Squarespace and Casper.)
Gimlet has an interesting mix of elements which add up a significant competitive advantage when it comes to ads. Super high production value, the ability to create mini-stories on behalf of brands, the considerable reach of its top-rated shows, and the ability to dynamically insert the ads into each episode. As much of their content is evergreen, they can keep selling inventory against them indefinitely.
Anchor has turned recently to helping smaller shows connect with the type of sponsor that would have simply been out of reach. Matching podcasts with the right brands, facilitating host reads then dynamically inserting the ads. For sponsors, it gives them the opportunity to go broad instead of putting all their eggs in one basket with a super successful podcast. It also takes a considerable amount of manual effort out of the process for sponsors. According to Michael Minago, Anchors CEO, the ROI from ads on the smaller podcasts is in many cases superior too.
There could be some interesting synergies here that speak to the whole creation side of the value chain, from discovery of artists to enhanced production to distribution and monetisation. The panel didn’t see the situation exactly like this, and I certainly don’t think it will be this cut and dry by any means, but the below does represent a potential opportunity to explore some integration points between the brands at lease where capability and core competency sit.
With 200 million people on Spotify, access to the fastest growing segment of podcast listeners, (12-24 year olds) its capabilities in data and measurement, its potential impact on helping both Gimlet and Anchor achieve global scale and prove effectiveness to advertisers is significant. To aid in this I’m sure we’ll also see some considerable experimentation with curation, playlists, search, suggested content based on listening history, etc. Providing podcast creators with the type of data that other mediums have had access to for a long time now could also prove a boon for the whole ecosystem. Knowing when people stop listening could enhance overall content quality.
A Spotify style discovery experience will replace the mostly analogue and organic way in which people currently discover new shows. Delivery and storage was previously an issue for some, with relatively large files being dropped on your phone if you were subscribed to a feed, eating up both your data plan and hard drive space. Moving entirely to streaming could help solve for that. Additionally, because people will be consuming on the platform, they’ll more easily be able to jump between listening on different devices and not lose their place — something you can’t easily do with local files.
For Spotify they play seems obvious; they want podcast listeners. Current users who listen to podcasts on the platform spend twice as much time on the service as pure music listeners. They also enjoy more music as well. Bolstering their podcast offering is attractive as it keeps folk in Spotify’s ecosystem, for new listeners there will be little reason to go to iTunes or download another podcatcher. The end game from a subscription/advertising perspective is pretty self-evident.
There were concerns raised around platform exclusivity of content and no firm commitment from any of the parties on what this might eventually look like, other than ‘we will be experimenting’. Other than being inconvenient if you’re not a Spotify user and suddenly you have to sign up to the service to continue enjoying your favourite show if it switches Spotify say they are committed to the freemium model and most of us already live in a world on multiple services, so I don’t see this as a dealbreaker.
One thing that seemed clear was the commitment from Gimlet to continue producing the kind of content that made them such a success. Acting a little like Pixar within Disney. Matt Leiber spelt out the fundamentals of creating a podcast people want to download time and time again, and as long as they hold true to these, hopefully, quality should remain high.
Moreover, don’t expect this development to go unnoticed by Spotify’s competition. We can expect Apple, Google and a host of niche players like acast and Stitcher to be innovating heavily in the next 18 months.