Published in Thoughts on Journalism, July 2015
Let’s face it, we still haven’t figured out podcasting yet. As a medium for a creatives, podcasting is one of the most exciting spaces to be in. Content creators have flocked to on-demand audio and are pushing the limits of storytelling and journalism in ways we haven’t seen before. But as an ecosystem of support, distribution, and sustainability — podcasting is one of the most uncertain landscapes to explore.
In the last 18 months we’ve watched podcasting finally begin to crawl out from under the shadow of hobbyists and public radio. By now we all have been accosted by at least one audio fanatic shouting about the mortal sin of not listening to Serial, not to mention the droves of starry-eyed entrepreneurs citing Gimlet’s Startup Podcast. Finally, the audio world seems to have planted itself into mainline American media consumption. With that popularity, we have seen the outset of advertising revenues and networks looking to support creators with serious financial backing. It’s been long overdue and it’s far from fleshed out, but, an industry is starting to solidify. The important question is this: are we building an industry poised to sustain itself?
Advertising at scale
Leading the charge in this podcasting movement are companies like Midroll, an organization that from the beginning recognized podcasting’s lucrative future and quickly became the gold standard for selling podcast advertising. Boasting resale rates as high 98%, Midroll has a dominant hold of the podcast ad market, and makes its bread and butter on direct response companies like Squarespace and Audible. If the podcast you listen to is popular, you can more than likely bet that Midroll is selling its ad space. The key selling point for these ad networks is that you can tap into unrivaled engagement on national markets and reach tens of thousands, if not hundreds of thousands of listeners across the country. For the companies purchasing those ad slots, the positive results have been immediate and measurable. Midroll and others have the fortune of an arsenal of nationally recognized shows with built up followings that attract large ad buys from across the spectrum of products and services.
But with the success of large podcasting ad networks has come the unintended side effect of the podcasting industry only being interested in programs that meet a certain threshold of scale. Which brings us to the elusive 50,000.
50,000 is the magic number for growing podcasts. At 50,000 downloads per episode, you have a ticket punched to the negotiating table. Most people (if not all) generally see this number as a benchmark of legitimacy. At this level of listenership, a podcast can command sponsorship from advertising firms and bring in serious numbers to those wishing to partner with them. 50,000 offers revenue streams that allows a podcast to be worth its while in production cost and time commitment, even when a cut from ad agencies is factored into the mixture. While no one is becoming a millionaire at that threshold, you can certainly make enough to be comfortable in the business. Another big question: How do you get to 50,000?
The Catch 22
Let’s say you have a podcast. It’s a good show. Your listeners seem to think so too. Enthusiasm is extremely high and you want to grow this into an even bigger endeavor. Your show has been sitting around 6,000 listeners an episode. What’s your next move?
Here are some of your options:
You try and attract more listeners by spending money on advertising and promoting your show on other platforms. But money is limited and you don’t know how to navigate the digital media like bigger shows, and the platforms aren’t exactly lining up to take on your micro ad budget… outside of Facebook and promoted Tweets. You go out and try to acquire a podcast sponsorship on your own with a Harry’s Razors or Stamps.com, but the current model does not make it easy to leverage your 6,000 downloads into using your promo code. And the potential money you could be making isn’t anything to write home about. Above all, it’s another time commitment that you don’t have because you have a day job outside of your podcast.Go directly to your listeners and appeal to their sense of donating to the show they care so deeply about. Sadly, even shows with the most loyal fan bases expecting more than $2 average giving per listener is a bit of a moonshot, and definitely not enough to keep the roof over your head. You strike a mixture of the three and quickly find yourself stuck in an all-consuming time drain that might as well make your podcast a full time job — only this full time job doesn’t even begin to pay the bills.
Tragically, you find yourself stuck. You are wearing the hat of a marketer, a business development guru, and an audience relations manager — all things that have nothing to do with why you got into podcasting in the first place, which was to make a great podcast. So you find yourself waiting on the right viral tweet or big guest to catapult you upwards on the charts until the day you have enough of an audience to support yourself and make your program a full time project. Conservatively, unless you make an extremely risky leap of faith and go full time into your show, you’re looking at a 2–3 year labor of love that saps enormous amounts of time and energy before you can see any meaningful support to your podcast.
There’s no denying that if you are someone like Sarah Koenig or Alex Blumberg, and have spent years in the ears of millions of listeners (think NPR & This American Life), you are starting with a leg up. Name recognition and feed sharing goes a long way in content growth and many programs stemming from built-in followings or Ira Glass’ pedigree lends a certain self-fulfilling prophecy when looking to grow an audience. But what about the creators with no built in following or celebrity? How do we chart a pathway to find new voices in media?
Let’s talk about small & local business
In every disruptive innovation, there is collateral damage. Specifically to those industries that previously relied on the ecosystem that has been dismantled. It’s no secret that digital audio will eventually kill FM & AM dial. Podcasting is by no means the fatal blow to terrestrial radio, and in fact, it may just be the solution to radio’s increasingly marginalized clientele.
Local businesses have been pushed to stay involved with dying media (like terrestrial radio) as scale becomes a much higher a priority for advertising platforms. As a niche or local brand, your target goals and budgets can’t justify national ad buys, but the options for small scale advertising remain stuck in poor metrics and low engagement. Social media seems attractive through its targeting and cost, but 1.5% conversion rates and costs of engagement hovering around 5–10 cents a click are out of the question for most. Even worse are the prospects of terrestrial radio and print whose increasing irrelevancy is only outweighed by its lack of metrics. In a digital age when the scales are supposed to tip to David’s hand over Goliath’s, small businesses are in a foggier landscape than ever before.
Herein lies podcasting’s golden opportunity. There are hundreds of podcasts sitting in limbo trying to navigate their way to the success threshold. These shows have dedicated, growing followings of localized listeners that feel a tight connection with the content creators. Similarly, there are increasing numbers of local businesses trying to find the best path to advertising for their products and services in way that means something more than an ad click or an embed post. Here are two markets whose needs are completely complementary to one another and whose growth spells success for both sides. Through that lens the answer becomes pretty obvious — what the podcasting ecosystem needs are Indie Labels.
In the music industry, independent labels play a critical part in supporting and growing original content. Indie labels fill the gap as tastemakers, and take risks when large scale organizations can’t. They are designed for growing markets with local support first and they know how to navigate the regional markets they inhabit. They focus very heavily on brand identity and authentic ties with the companies that support them.
Translating indie labels to podcasting results in indie networks. The principles remain the same: these networks can create the support system to bridge podcasts from 0 to 1 (or in this case 0 to 50,000); they take on the hat of marketer, audience development, and monetization so the creatives can do what they should be doing; they can connect shows and audiences by region, instead of numbers. Lean and dedicated teams can find extremely lucrative numbers building out these networks all the while growing the revenues for the brands and organizations partnering with their podcasts.
Imagine places like San Francisco, Chicago, Washington D.C, and their massive regionally defined economies all having their own localized podcast networks: each unique with its own identity and content that especially resonates in the regions they represent. Indie audio networks have the ability to take creators and grow with them. By using their local advantages, indie networks can offer things like production assistance, recording space, live events, local sponsorship, marketing, and audience development. As shows gain a more national following, the networks can use that further influence to find and develop more engaging shows.
Major and Minor Leagues
The podcasting world continually proves that great audio provides amazing returns for both advertisers and content creators. Citing the success of Gimlet, Earwolf, and PodcastOne, it’s more than a proof of prototype that you can build a sustainable model of support for on demand audio. The problem is, the road to tapping into that national level of support is anything but easy.
In the race to bring podcasting to the scale and leverage support from other digital mediums, on demand audio has neglected the one market that stands the most to gain from supporting podcast content: small online and local business.
While companies like Midroll do the important work of courting national brands and bringing higher ROIs to their ad campaigns, we also need indie networks doing the equally important work of finding those programs in need of distribution and support and serving as the bridge from 0 to 50,000.
There is a vacuum of support and distribution for growing podcasters, matched almost 1:1 with the vacuum of engaging advertising platforms for online and small business. Indie networks, like the model we are building at Goat Rodeo, are the solution the podcast industry has yet to address. Industries need more than just big players. The audio world needs development, farm teams, and minor leagues. If we can start to fill that gap, then we can finally start to see real access points for new voices and unique content to emerge in the space.