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Spotify Buys Gimlet Plus Anchor

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Spotify Buys Gimlet Plus Anchor

Spotify has taken its biggest dive into podcasting yet. The purchase of Gimlet was long suspected, but the acquisition of Anchor caught many industry insiders by surprise.

Here’s some background. For some time, Spotify has been the #2 player in the podcast space behind Apple.  We thought Google would leapfrog them, but despite promises made at Podcast Movement 2018, the internet titan has not prioritized the space.  Google’s lag, however, could be Spotify’s gain.

Gimlet Media is a content creation company. It began 5 years ago in New York and creates a number of successful podcasts, including Reply All and Homecoming, the latter of which has become an Amazon Prime TV series.  Spotify has long been in the business of audio distribution of other people’s content. Now they will own a piece of the content creation process. How important was this purchase to Spotify?  The Swedish media streaming platform spent $230 million to buy Gimlet.  This surprised one writer, especially when you consider that iHeartMedia only spent $55 million on Stuff Media, creator of How Stuff Works.

The Gimlet deal was long rumored, but Spotify’s acquisition of Anchor raised eyebrows this morning. Anchor prides themselves on being a one-stop-shop, DIY podcast creation platform.  Novices can record audio directly into their phone, tablet, or PC, syndicate it to all the various podcast apps (including Apple, Google, and Spotify), and even accept donations from avid fans.  The platform is free for users right now; I wonder if that will continue when they are under the Spotify umbrella.

Spotify has now vertically integrated their podcasting strategy. They have a media company (Gimlet), a hosting platform (Anchor), and a distribution network (Spotify). One of the biggest players in the audio work is all in on podcasts.

Are you?

Seeking Personality and Content, Corporate Radio Buys In to Podcasting

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Large corporate radio is buying in to podcasting. Some would argue it’s the podcaster equivalent of a band “selling out for a record deal.”  Others would say it was inevitable. Here’s how we got here. It all started with this device:

Nielsen Portable People Meter PPM
Portable People Meter (image via Wikipedia)

History:

In large markets, the PPM device (above) replaced the old diary based ratings system. Previously, ratings relied on respondents’ memory (and human error). Now, the Arbitron (later Nielsen) ratings people could track actual listening, minute by minute.

  1. The PPMs showed massive tune-out when DJ’s spoke too long or were not compelling.
  2. Radio companies erroneously thought this data meant listeners hated all DJ’s.
  3. The edict came down for on-air personalities to “shut up and play the music,” outside morning drive, news, talk, and sports.
  4. This turned radio stations into jukeboxes, which was fine until services like Pandora and Spotify took hold.
  5. Listeners started listening to their own curated playlists, rather than one put together by some radio programmer.
  6. Radio lost the very thing that differentiated it from other music sources: its personality.

Podcasts began to fill that personality and creativity void, while radio remained dominated by nationally syndicated and prerecorded voices. Podcasters have a passion for specific content, and it shows.  When I attended the Podcast Movement convention this summer, I was struck by the presence of all the major radio companies.  iHeart was there; so were CBS/Entercom, Beasley, and others.  It was obvious why they were there. They saw the personality and growth of podcasting, and they wanted in.

Radio Jumps on the Podcasting Train:

Dan Granger, a Detroiter and iHeartRadio expat like me, wrote an outstanding piece for The Drum, discussing the re-invention of radio. This new dawn comes on the heels of seismic change in the industry. Entercom purchased CBS Radio, making them the second-largest owner in the nation. The biggest, iHeartMedia (formerly ClearChannel), recently filed for bankruptcy protection under $20+ billion in debt.  Here’s the part of Dan’s piece that jumped off my screen.

The radio giants did not go quietly into the night. Quite the contrary. In the last two weeks, I’ve spoken directly with executives at Entercom, Westwood One, and iHeart. They are now in an arms race for on-demand audio content, and do not care if it comes from existing radio talent, launching new podcast talent, or acquiring existing Podcast talent that has already achieved leadership on the charts. Westwood One has emerged from bankruptcy. Entercom is newly empowered as a major player with an appetite to scale into the future. Then there’s iHeart. The industry leader is chomping at the bit, soon to emerge from their Chapter 11 bankruptcy and bucking the gates, poised to go on a content tear. Meanwhile, Panoply shuts down its programming arm, in favor of focusing on their tech platform, while BuzzFeed and Audible both close down their podcast creation efforts.

Granger also shared this Podtrac chart of Top 10 publishers (updated since his piece). He also reminds us that iHeart (still in bankruptcy) just bought HowStuffWorks. PodTrac Podcast Publishers

There should be no debate about terrestrial radio’s interest in podcasting.  They hope to find great content and give it a bigger microphone (so to speak).  The biggest piece of evidence is iHeart’s announcement of their iHeartRadio Podcasting Awards, which I’ll tackle in my next post.

What I Learned at Podcast Movement

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Podcast Movement is the world’s largest gathering of Podcasters. Over 2,000 hosts, editors, hobbyists and radio people descended on Philadelphia last week to network and learn what’s trending in podcasting.

This was my first Podcast Movement, and it was worth every penny. I’m really glad I bought the Virtual Pass; there were several interesting sessions that ran concurrently and I could only be in one place at once. Here are some of my biggest takeaways from Podcast Movement.

Sound is the number one tune-out factor. If your audio lacks professional quality, people will not listen. Think about the early days of YouTube. People were simply thrilled to watch videos on the web. Now, if the visuals don’t meet a certain level of “watchability,” people…well, won’t.

Your interviews should be transactional. Guests should be able to get value out of the interaction too; it’s not all about you. If guests feel their time was well invested, they are more likely to be a partner and/or brand ambassador.

Podcasts are not simply a marketing tool. They are also a means to connect and create another touchpoint with your existing audience. Podcast audiences can become communities.

Apple Podcasts dominate the space at 63% of total listening. Spotify is #2 at only 9%. Forutnately, overall podcast listening will get a large boost thanks to Google. There are 2 billion Android users worldwide, and they finally have a native app to listen to podcasts on.

You don’t need a niche or audience to start with.  Pat Flynn mentioned this in a keynote. Just dive in and start. Like any muscle, you’ll only improve by using it.

48 million Americans listen to podcasts, but we should be able to hit 100 million. That’s the number that will open the advertising floodgates. Unlike radio, who hold their loyal listeners close, we need to market in different ways to grow our audience.  The first hurdle is destroying misconceptions.

Edison Research’s Tom Webster, in another keynote, showed a very compelling video of real people talking about why they don’t listen to podcasts.  Here are the reasons, among the “non-believers.”

80% think they “don’t have a podcast app.”

62% think they use too much data.

50% think they are too long.

47% think they cost money to listen to or download.

30% think podcasts are only for educational purposes

(By the way, none of these are true.)

Two final takeaways:

I was suprised by the presence of traditional radio companies at Podcast Movement:

Radio is all in on podcasting. I have a theory on this, as someone who worked in that industry for 15 years. While news, talk, and sports radio continue to thrive, the industry removed most of the personality from music radio, at least outside morning shows. Outside Weenie and the Butt, however, most dayparts are syndicated, and we were told a long time ago to “shut up and play the music.”

This worked for a bit, until Pandora, Spotify and their friends came along. Listeners didn’t need to listen to someone else’s playlist when they could curate their own.

Why were DJ’s muzzled a decade agao? A new ratings system provided data showing that “audiences don’t like when DJ’s talk.” The flaw in this interpretation, however, was one missing word. “Audiences don’t like it when BAD DJ’s Talk.”  As a result of this error, we heard less out of our compelling personalities, and now radio is looking to rebuild that intimate connection with their audience. Podcasts do this exceedingly well, and radio doesn’t want to miss the boat.

Finally, I attended Podcast Movement as an editor looking to hone my skills and network with new clients. I was happy to achieve both. Unless you have an extensive audio background, employ an editor work on your podcast to give it a professional sound. And if you’re looking at the cost of a good editor and hesitating because your revenue isn’t there, you need to come at it from another angle.  How much is your time worth? Think about the four hours you’re spending with Audacity or GarageBand, painstakingly editing your show. Now imagine me plopping in front of Adobe Audition and getting it done in 90 minutes.  Is your time worth the money? Is a more professional sounding product?  If so, reach out.  You can reach me here.

What Can Razors Teach Us About Podcasts?

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Podcast advertising revenue was at $300 million last year. That pales in comparison with Internet and Television at $69 and $68 billion, respectively, according to Recode.  20 years ago, though, who would have imagined that the web would eclipse TV?

Large advertisers are seeing the tremendous upside in podcasts. Through the use of tracking, brands such as Harry’s, Blue Apron and Ziprecruiter have been in the space for quite some time. However, larger brands like Burger King, Budweiser, Delta, Progressive and Gillette are now jumping in, per a recent article in Radio Ink.

That last one is of particular note to me. Gillette owned the razor market forever, until market disruptors Dollar Shave Club and Harry’s came along. Speaking from personal experience, I was very brand loyal to Gillette, and I accepted the extremely high cost of razors.  I shave my head 3-4 times per week, and I go through razors very quickly. A friend turned me on to Dollar Shave Club, and now I get 4 premium blades per month for 10 bucks. This is perfect, as I go through about a blade per week.

Within its first five years, Dollar Shave Club grew to $200 million in annual revenue, claiming 7% market share. The small startup was acquired by Unilever for $1 Billion in 2016.

Dollar Shave Club (and later Harry’s) found a need in the marketplace and filled it. Gillette, like traditional media, had become “fat and happy” and had little competition for consumers and ad dollars. DSC and Harry’s came along, though, and began chipping away.  That’s where podcasting is today. If you were an early investor in Dollar Shave Club, you reaped the benefits when Unilever came in their 9 figure offer.

A third of Americans have listened to a podcast in the last month, per Reuters and Business Insider. That number may not seem like a lot, but it’s growing rapidly with the advent of smart speakers, word of mouth, and Google’s investment in podcasting. If Android users have the ease of access of their iOS counterparts, expect even more exponential growth on the horizon.  Lather up and dive in.

Jon Gay, aka Jag in Detroit, is a 15 year radio veteran turned podcast host, producer, and editor who can launch, syndicate, and produce your podcast. Learn more at JaginDetroit.com.

Podcasting Revenues Have Doubled – Are You In?

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Is there money in podcasting? In a word, yes.

A new study out this week from the Interactive Advertising Bureau (IAB) shows remarkable growth in the podcast space.

Among self-reporting podcasters, revenue grew from $119 million in Fiscal Year 2016 to $257 million in Fiscal Year 2017 a growth of 117%.

In terms of overall industry growth, the total US podcasting market has grown from $169 million to $314 million in the same time period, an 86% growth.

This more comprehensive indicator of podcast revenue is expected to double again, reaching $659 million by 2020.

That’s a lot of numbers. Let’s look at facts. Podcast listening is exploding, thanks to several factors, including:

  • Smart Speakers Like Google Home and Amazon Echo, aka Alexa.
  • Smartphone capability in cars with Apple CarPlay and Android Auto
  • The vast amount of content available thanks to a low barrier of entry for podcasters.
  • More Americans have heard of a podcast than can name the current Vice President.
  • Listeners’ fatigue with terrestrial radio. With some exceptions, several large companies own most U.S. stations, and have homogenized the content and removed personality.

That last point is important. Local radio was able to survive the advent of television, the Internet, and more thanks to its intimate connection with its audience. When you’re in the car, it’s just you and the DJ. And that personality can paint a picture in your mind’s eye, unlike television. Some hosts still wield that power. Those that don’t are being replaced by podcasts.

It’s this opportunity to create an intimate relationship with a captive audience that makes podcasts to valuable to content producers and their employers.  If someone is listening to your podcast, they’ve sought out your content. This is true of mass appeal shows like The Daily from The New York Times, as well as niche audiences like Four Finger Discount, which dedicates each show to breaking down one episode of The Simpsons.  As of this writing, the cartoon has aired 639 episodes, so those podcasters have some catching up to do.

Four out of five podcast listeners consume all, or almost all of the show. This differs from radio, where impatient listeners are incessantly punching their presets in the car. Sure, podcast listeners enjoy multiple shows, but they often consume them one at a time. You don’t have to resort to old “keep them listening” radio tactics such “We’ve got your shot at $1,000 coming up in 7 minutes!”

One area where podcasts have learned from radio is the “endorsement.” Per the IAB study, “host reads” make up 2/3 of all podcast advertising. This makes sense when you think about it. Listeners are coming to podcasts because they trust the hosts and the material they present. Thus, the hosts of Pod Save America, even if laughing, are more effective ambassadors when reading copy for Ziprecruiter than a voice-over announcer would be.

Here’s the rub. You’re not going to make money out of the gate with podcasts. Sure, you might get lucky and go viral, shoot up the Apple Podcasts charts, get shares from social media giants, or be a talented salesperson who could sell snow to an Eskimo. But the more likely revenue path is to be patient and focus on quality.

The podcast barrier to entry is extremely low. Theoretically, you could create a podcast with just an iPhone and its own internal microphone. Think about this, though. Remember when YouTube started? We’d watch anything! Live videos on the computer – so cool, right? As the tech improved and the competition grew, however, our tastes became a bit more discerning. All of a sudden we lacked patience for low resolution or shaky videos. Soon we started losing interest in anything that wasn’t HD quality. Now, there are YouTube videos with better production value than some television shows.

The same trend is taking shape in podcasting. Sure, your cousin Joey is naturally hilarious, and his podcast of walking around the street was compelling, at least for awhile. However, if you want to be taken seriously, especially by advertisers, you’d better sound like you know what you’re doing.

If you have the financial means and can commit several thousand dollars to recording equipment and a studio, that’s great.  But you need to plan on investing at least a few hundred dollars to launch a quality show. Some costs you’ll need to consider:

  • Microphones
  • A recorder
  • A hosting platform
  • A produced intro and outro (you CANNOT use just any music in a podcast)
  • Editing software or a freelance editor who can cut and mix the audio for you

That’s where I come in. If you want your podcast to sound professional enough to sell to advertisers, you need a professional. I worked in the radio industry for 15 years and had to edit on-air quality audio daily. Since then, I’ve been in the podcast space.  If you’re interested in my help, I can help you conceptualize and launch your show, and I can edit for you as well.  Drop me a note via my contact form here.