Listening Numbers Are Booming, But Even Spotify Doesn’t Know If It Will Make Money From Podcasts.

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I’m a bit old school. While podcasting occupies much of my time each day, a long-established habit of slowly leafing through the pages of newspapers continues to be a source pleasure. Print discoveries are made without digital nudges from algorithms.

Among my favorite finds last week was in the “C-Suite Strategies” section of The Wall Street Journal and a surprisingly revealing comment by Spotify CFO Barry McCarthy.

Asked by a reporter “why is podcasting an important medium for the company to expand into?”, McCarthy answered: “It remains to be seen whether or not it becomes an important medium.”

Huh?

His company spent approximately $400 million this year on three podcasting firms, in the expectation that these investments would increase Spotify’s growing subscriber base.

As more people discover the many rewards of podcast listening, many content producers and distributors are allocating a growing part of their media budget to podcasting. And for good reason.

“Frankly, if Spotify didn’t get into podcasts it would risk losing share of the audio listening market to other platforms,” said a recent post by the financial advice site, Motley Fool.

Despite soaring revenues from music subscriptions, the fast-growing streaming giant operated at a small loss during the first quarter of 2019 and for all of last year.

Podcasting is a big bet and McCarthy admits that “there’s a fair amount of uncertainty” about whether it will have a positive impact on profitability, “which is probably troubling to investors.”

Assuming that consumers will pay for podcasts that have, until now, been free may be a risky investment. While the most popular shows reach hundreds of thousands of listeners, most expensively-produced podcasts don’t make a profit. And compared to other media, podcasting’s share of the advertising pie is slim indeed.

One industry projection forecast that by 2020, U.S. podcast advertising would grow to $659 million, while in 2018, radio ad sales were $17.8 billion.

Overall digital advertising revenue last year surpassed $100 billion!

The numbers beg the question: How well-deserved are big podcast investments by venture capitalists and others? Will millions of listeners pay for monthly subscriptions to Spotify, Luminary, Pandora and other platforms?

While podcasters celebrate expanding opportunities, growing media coverage, dazzling new shows and a steady rise in consumer acceptance, the industry’s producers and investors must broaden their horizons.

“Some fear that podcasting has become a community talking to itself— a coastal thing like electric scooters and avocado toast,” wrote Gerry Smith in Bloomberg Businessweek.

Yes, the pod potential is huge. But competition is increasingly fierce. Obstacles remain. A little more caution and humility may be in order.

Richard Davies is a podcast consultant, media coach and former network radio journalist. His weekly solutions journalism podcast is “How Do We Fix It?

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Let 550,000 flowers bloom. The stunning variety of podcasting is also its charm.

I was kind of giddy last weekend after that SNL podcast skit. The one that made fun of our emerging industry. In the send up, a bearded and bespectacled Liev Shreiber (who played Michael Barbaro) said that podcasts “are like delicious little whispered documentaries.”

Wow, SNL is making fun of us! We’re on the map. One more step further away from being a narrow niche medium that people have heard about, but don’t listen to.

Great!

“Our time has come,” I happily tweeted out, without much more critical thought than @realDonaldTrump gives to his early morning Twitter blasts.

But then came Tuesday, and my friend and wise counsel, Steve Goldstein, firmly brought me down to earth.

Thud.

“While it was fun to watch, it was also disconcerting and may help explain the slow growth of podcasting,” wrote Steve in his blog about the SNL skit. “With all of the buzz and noise, it feels as though podcasting should be exploding more like Smart Speakers and yet the growth is relatively slow.”

And then the “ouch” line…

“In many ways, the SNL bit reinforces what lots of people already think about podcasts — an elite niche with self-important story tellers telling oddly obscure stories.”

Is this why three-quarters of Americans are not regular podcast listeners?

Are we over-populated with earnest public radio types?

Perhaps we are. But it’s worth noting that during many years of commercial radio stagnation, loyal, well-educated, and often affluent public radio audiences have steadily grown — just like the committed audience for podcasts. And today, NPR and Radiotopia are champions for our business, repeatedly sponsoring panels and showing up at marketing, advertising and podcast conferences.

Instead of merely speaking to their own narrow commercial interests, Kerri Hoffman, Jarl Mohn and other public radio executives spread the message about the general joys and benefits of podcast listening. We appreciate their support.

And it’s worth remembering that podcasts are about much more than “buzz and noise”. 50 million people are listening in the U.S., or double the estimated number five years ago. 50 billion downloads have been made on Apple Podcasts.

In 2018 alone, we’ve seen the launch of Google Podcasts, and after years of resisting podcasting, online audio rivals Spotify and Pandora are jumping on board.

Lost in the media coverage of podcasts are many independents, who are quietly connecting with a vast range of niche audiences. From “The Lonely Palette”, the delightful show that “returns art history to the masses, one painting at a time”, and Hagerty Sidedrafts, a show about classic cars and the people who made and collect them, to New Books Network, a consortium of more than 80 serious author-interview podcast channels, podcasters are finding passionate, switched-on listeners.

At last estimate there were 550,000 podcasts in production. Hooray for that. The flowering of podcasts is a joy to behold. In the language of gardening, we are hardy perennials, here to stay.

Our ground cover continues to deepen and grow.

Richard Davies is a journalist, podcast consultant, media coach and co-host of the weekly news solutions podcast, “How Do We Fix It?”