It’s a podcast about podcasting! About the state of the industry, that is. Because a lot has changed since we recorded “a podcast about podcasts” about four years ago: podcasts, and interest in podcasting — listening, making, building — is growing. But by how much, exactly? (since various stats are constantly floating around and often out of context); and what do we even know (given that no one really knows what a download is)?
And in fact, how do we define “podcasts”: Should the definition include audio books… why not music, too, then? So much of the podcasting ecosystem — from editing tools to the notion of a “CD phase” to music companies like Spotify doing more audio deals — stems from the legacy of the music industry. But other analogies — like that of the web and of blogging! — may be more useful for understanding the podcasting ecosystem, too. Heck, we even throw in an analogy of container ships (yes, the ocean kind!) to help out there.
If we really think medium-native — and borrow from other mediums and entertainment models, like TV and streaming and even terrestrial radio — what may or may not apply to podcasting as experiments evolve? In this hallway-style jam of an episode, Nick Quah (writer and publisher of Hot Pod) joins a16z general partner Connie Chan (who covers consumer startups among other things) in conversation with Sonal Chokshi (who is also showrunner of the a16z Podcast) to talk about all this and more. We also discuss the obvious and the not-so-obvious aspects of monetization, discovery, search, platforms… and where are we in the cycles of industry fragmentation vs. consolidation, bundling vs. unbundling, more? And where might opportunities for entrepreneurs, toolmakers, and creators lie?
Show Notes
- Defining what a podcast is [2:04] and why audio has become so popular [6:45]
- Key statistics and getting data on usage [8:24]
- Issues with monetization [12:34] and the logistics of RSS feeds [17:55]
- Seasonality and binge-listening [20:32]
- Further discussion around analytics and monetization [28:38]
- The pros and cons of interstitials [39:35]
- Competition in podcasts, the rise of platforms, and centralization [46:38]
- Terrestrial radio and why the audio world needs to fragment [59:21]
- Advice for starting a podcast [1:04:16]
Transcript
Sonal: Hi, everyone. Welcome to the “a16z Podcast.” I’m Sonal. So, I’m super-duper excited today, even way more than usual, because this episode is all about podcasting. For newer listeners, we actually did an episode called “A Podcast About Podcasts” about 4 years ago, which you can find on our website, a16z.com. But today we’re focusing this podcast about podcasting, since the podcasting ecosystem has evolved and changed quite a bit since then. By the way, I had hoped that Roman Mars, who was on that episode, would join us again, but he lost his voice so couldn’t.
Our special guest today is Nick Quah, who writes “Hot Pod,” a newsletter that I’ve been following since very early on and has grown to be a go-to source all about the podcasting industry, with analysis, insights, and more. He also publishes and contributes to “Vulture” on similar topics. Also joining us for this episode is a16z general partner Connie Chan who covers consumer, the future of media, and Gen Z social, as well as trends from China, and has observed the podcasting phenomenon there and shares ideas on what more platforms can do here. And the three of us do a hallway-style jam, taking a longer pulse check on where we are right now in the podcasting industry.
Speaking of, since we do mention some companies, please note that the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any a16z fund. For more details, please also see a16z.com/disclosures.
So we began with the latest stats on the industry, touching on structural factors and more, for about the first 15 minutes. Then we do a bunch of lightning-round style takes on how other content and entertainment models may or may not apply to podcasting for about the next 30 minutes. And finally, we go into monetization platforms, analytics, and more — which we also touch on throughout the episode — including impacts on creators. And we end on recent news and moves in the space, such as Spotify Gimlet, how to think about terrestrial radio, and more. But we began by defining a podcast, which seems obvious but isn’t, and is a rather existential question. So, guys, what is a podcast?
What is a podcast?
Nick: So, I mean, the real interesting thing here is, we’re in the midst of a really interesting moment of change, and there is internal conflict within the podcast community about that question. So, historically it’s been largely tethered to the notion of the RSS feed. It’s basically an audio file, or a medium of distribution, that largely happens through, you know, the technology that was carried over from blogging. And now, with the entrance of Spotify, and Pandora stepping up, and Google beginning to do whatever they’re going to do on the search engine side…
Sonal: And Apple, already, as an entrenched player as well.
Nick: Yeah, absolutely. iHeartMedia. And Luminary just announced their, sort of, big $100 million fundraise — and the fact that they’re going to launch in July — a couple days ago.
Connie: With a lot of exclusive content, right? So how does, like, exclusive podcasts fit in with the old definition?
Nick: You know, especially with the Luminary announcement, there was, like, a strong pushback from parts of the community that has been around for a while and, generally, folks who really believe in the open ecosystem. And so we have a situation in which, like, you know, the technical definition is not the popular definition anymore. And if we go from the perspective of what the ordinary consumer thinks of a podcast, that is — it becomes a cultural question, not a technical question.
Sonal: Which, by the way, I want to say, parallels the history of the web. Because this, to me, reminds me, very much, of early blogging…
Nick: Absolutely.
Sonal: …and debates about what is a blog, what is an article, what is a website?
Connie: Yeah.
Sonal: And there was this almost religious, existential debate between the early, kind of — in fact, some of the same people because Dave Winer, one of the people who invented…
Nick: Who also was important to the development of podcasting.
Sonal: Right.
Nick: It’s the same figure, yeah.
Sonal: Exactly. But I think he was technically the first person to do a podcast, like in 2003 or something…
Nick: Right.
Sonal: …or one of the early people. And he’s also who specified the RSS feed, which drives the pipes, and plumbing, and ecosystem of podcasting.
Connie: But today users don’t even think of podcasts that way. It’s like, if it’s just recorded audio of people talking, oftentimes we’ll just call that a podcast.
Sonal: Yeah. One of my favorite things is when the people always call our videos podcasts. Like very few people find that…
Nick: I’m mean, that’s a holdover. Like Joe Rogan still does that. There’s a lot of people who still — dual video and audio, and still call it podcasts. I mean, the way I see it is that the tension has always been between people who see podcasting as the future of blogging, and people who see podcasting as the future of radio.
Sonal: Yes, exactly. You nailed it.
Nick: And we see that tension clash many, many times. And I think we’re in a place where that no longer matters because, ultimately, the mass consumer will lead us where they want to go.
Sonal: Yes. And like the web, the analogy that I would draw is to the advent of the graphical user interface, and how browsing, computing, etc. — there’s always a phase in every technology where there’s a GUI phase, where once you have an interface that’s user-friendly and easy to navigate.
Connie: Right.
Sonal: And what’s interesting about this is that we’re in the phase where the listening has become easy to navigate.
Connie: And more accessible.
Sonal: More accessible.
Connie: Through various kinds of hardware, too. For example, listening to podcasts on their drive to work, because the cars are enabled with podcasts.
Sonal: Right, like the smartphone-connected car, essentially.
Connie: Or AirPods making it so easy to listen to something while multitasking.
Sonal: And in that sense, podcasts are different than audio books, obviously, just for the sake of definition.
Connie: But I would say, like, you can argue that, over time, that even that definition may blur.
Sonal: Of audio books and podcasts?
Connie: Right.
Sonal: Yeah.
Connie: Like, one day a podcast might just be thought of as, like, a self-published audio book.
Nick: I have long believed that audiobooks should be central to the conversation as well, especially a couple of years ago when Audible built, sort of, an original programming team that took after podcast-style programming. And the fact of the matter is — it’s like, these are all distributors and platforms of the same kind of good. It’s just that we think of them and we class them differently. And they also, sort of, are products of different economic systems.
Sonal: I do want to add to this mix, though, that I would not confuse music into this. And the reason is, first of all, from a creator perspective — every tool, until now, has been very music-creator centric for podcast editing, creation, etc. And so, there’s a really bad structural legacy effect of equating podcasting — I mean, we’re essentially bootstrapping tools tailored for music for podcasting, so the new wave of podcast native tools is really important. Full disclosure, we’re investors in Descript. And it democratizes the editing of podcasting because you can essentially edit audio like a Word doc. But the main point here is that I do think music should be treated very differently than podcasting.
Connie: I completely agree.
Sonal: Yeah.
Connie: To me, like, it’s audio with spoken word.
Sonal: Yep. Versus sung.
Connie: Yeah.
Sonal: So, I guess we’re agreeing on, just to recap the definition of podcasting — it is audio. It could potentially blur into including books. If not in a content perspective, then — to Nick’s point — then even in a distribution and business model perspective. But we agree that music should be treated differently.
Nick: Absolutely.
Sonal: And the common denominator here is spoken word.
Growing popularity of audio
Nick: The Infinite Dial Study, which is, sort of, an annual survey conducted by Edison Research — they just announced their latest results earlier this afternoon. The most interesting thing is that there were increases in both audio books and podcasting. So podcasting had significantly, like, a large leap this year. But on audio books, like, after a couple of years of largely being flat, it’s been increased again. And I think that’s a, sort of, really interesting question because I can’t quite think of a structural reason why that would be the case other than…
Connie: AirPods.
Nick: …it’s the, sort of, like tethered effect.
Connie: In addition to that, you have all kinds of really easy-to-set-up wireless speakers at home that also make it [easier] to…
Sonal: Yeah, like Alexa.
Connie: Yeah. To consume this kind of content.
Nick: It reminds me of, like, what people say about the Kindle and romance novels. It helped, like, sales increase because it made people, like, more willing to buy it and consume it, because then nobody would judge them.
Sonal: Oh, the judgment side. Interesting. For me, it’s actually ease of access, because I used to be — I’m really embarrassed to admit this publicly — I used to subscribe to the Harlequin romance on demand service, where you’d get, like, the books a month, and you’d pay, like, $11 or — I can’t remember what it was. Because I’ve always been a huge reader of romance novels as a very nice, lightweight thing to do. But what’s the analogy to podcasting? What’s the connection?
Nick: To me, I think it’s more ease of access around better hardware.
Sonal: On demand, get it quickly. So speaking of the data — and you mentioned that the Edison Research study came out today. And that’s, sort of, the definitive and longest running survey of digital media consumer behavior — in America, at least. But I hear a lot of mixed messages. I see, like, people cite this stat and that stat out of context. So, why don’t we just do a quick pulse check on what are the key stats. And Nick, maybe you could recap for us what the key stats or big trends to know are here.
Nick: Sort of, I think there are a couple of big takeaways here. One is, when it comes to the familiarity of the notion of podcasting — and this doesn’t mean people who heard the word actually know what it is — it’s officially hit 70% of all Americans. And when it comes to the number of people who’ve actually tried out podcasting — you know, maybe they didn’t stick around a bit but they just tried it, at least — it’s gone over 50%, so about — an estimated 144 million Americans. Retention rates are, sort of, like, really interesting. Like, monthly podcast listening is also going up. It’s now 32% of Americans, up 26% from last year. That’s a pretty big leap.
Sonal: I mean, just, that’s one third. That’s a lot.
Nick: Yeah. And there’s also a really interesting slide in here attributing some of the increase to Spotify. There is a stat here that shows, among Spotify listeners between the ages of 12 to 24, monthly podcast listening went up to 53%. And so, there’s a lot going on. I think, currently, it’s such a moment of flux. It’s a little unclear what the structural pillars are anymore. And I think this is one of those things where we’re just going to have to, like, look back at this moment to figure out where we turn.
Sonal: So, what’s a high-level recap on that summary of the stats?
Nick: The high-level is that this past year has seen an unprecedented growth. For the longest time, podcast growth has been steadily and slow, and now it feels like it’s taking some sort of a leap. And so, I feel like this past year has been the moment where it’s tipped into some form of mainstream.
Sonal: That’s fantastic. So, potentially, an “inflection point” as people like to say in the business.
Connie: The usage of podcasts and the consumption of it has risen dramatically in the last year or two. But what always shocks me is that the revenue that podcasts generate is still such a small amount, given how many hours people are spending consuming this kind of content.
Nick: So, there is a study out there from the IAB — the caveat being, it was funded and financed by a constellation of podcast companies — that puts the number at around 600 million-plus-plus this past — last year. And it’s projected to keep growing, of course. Monetization is a severe issue. And it largely has to do with the fact that podcasting, as a technology, hasn’t quite caught up to how the rest of the internet, kind of, works in terms of dynamic ad insertion. And it doesn’t allow, like, heavy increases in inventory and swap outs in inventory, in a way that a lot of advertisers are now accustomed to getting from, you know, marketplaces like Facebook.
Connie: And then, even that, like, from an advertiser’s standpoint, you’re paying per download, because you aren’t getting, like, these per-listen metrics back. So from the advertising standpoint, it’s still really hard for them to measure the ROI from sponsoring a podcast.
Sonal: Yeah.
Nick: Yeah. And that’s why, historically, we’ve seen a bunch of the activity among advertising from direct-response advertisers, because they have a secondary metric of conversions on their promo codes and whatnot. And what they’re able to find is that the conversion rates are good. But when it comes to something like a brand advertiser, or an advertiser that needs to, you know, lay an impression on a consumer over a 5-, 10-year period, they need to know that they’re hitting the people that they’re hitting.
There are a lot of movements right now towards standardizing what even a listen means. And this will become increasingly complicated as Spotify and Pandora…
Sonal: Everywhere.
Nick: Right.
Sonal: I mean, right now, you don’t know, is it a download, is it a click, is it open, is it <inaudible>? I mean, who the fuck knows? It’s, like, a mess.
Connie: Or like how long did you listen to it, right?
Sonal: Right, the engagement. So that’s actually what I care the most about as a creator. Because when I was at WIRED, Chartbeat changed me as an editor. And I need to know where people drop off. That is a number one thing. So I don’t know if you even know this, Nick. We were in the launch set for when Spotify launched their first move into podcasting, in 2015. They selected us as one of their media outlets, because our podcast was one of the very few that covered tech in a thoughtful way. And the reason I was so excited about Spotify — because Spotify didn’t really have much of a podcasting audience back then…
Connie: Yeah.
Sonal: …was they showed me this really beautiful dashboard that showed you the potential, and where people drop off.
Connie: But you don’t get that from all the other places…
Sonal: No, you don’t.
Connie: …our podcasts are distributed.
Sonal: It’s still limited because not all of our listeners are listening on Spotify.
Connie: Right, right.
Sonal: They’re on SoundCloud, they’re on iTunes.
Connie: Right.