2020 was a pivotal year in the development of podcasting as an industry. The major business models, players, and axes of power are coming into focus as the industry matures.
Prognostications about the future of podcasting often boil down to a simple question: will podcasting will end up looking more like digital music or digital television? In the music industry, people have access to the same enormous catalog of music (more or less), through several different services, either for a monthly subscription fee or free with ads. In television, there is no single place to get “all” TV shows; instead there’s a growing number of mostly paid subscription digital platforms with distinct (if slightly overlapping) subsets of the universe of content.
The events of the past year tell us that the answer to that question is some of each. Podcasting looks like it’s headed towards a two-tiered future, where the lower tier looks like YouTube or Spotify Free and the higher tier looks like Netflix or Hulu.
The first tier follows the original path of podcasting toward ubiquity and ad revenue: publishing as many podcasts as possible, getting them onto as many podcast apps as possible, and selling as many ads as possible. The kings of this strategy are iHeartMedia and National Public Radio. Both have podcast playing apps, but both are mainly about developing and promoting podcasts and monetizing them through ads and sponsorships. Both have had decades’ worth of head starts over newer competitors owing to their roots in broadcast radio, ad/sponsorship sales, and syndicated programming.
This year iHeart put itself on a trajectory to be majority-owned by Liberty Media, which also owns Pandora and Sirius XM satellite radio. Sirius XM itself acquired Stitcher—with its stable of hundreds of podcasts and a major podcast ad sales network—in October. Especially with the possibility of all those satellite radio shows spinning off podcasts, the resulting company will become the biggest player in America in ad-based podcasting (not to mention broadcast radio).
The risk in the ubiquity strategy is in the limits of advertising. iHeartMedia in particular risks developing a huge stable of podcasts that sound like AM/FM talk radio on demand, with large loads of slickly produced third party ads replacing the homespun host-read ads that have been endemic to podcasting (and, of course, were endemic to broadcast radio several decades ago) and turning listeners off. Signs of this are already starting to appear with jarring out-of-context ads playing during breaks on certain iHeart podcasts.
The higher tier in podcasting belongs to the big content-platform companies that have decided to invest in podcast content: Spotify and Amazon. The strategy for each of them is to bundle podcasts with music under a single monthly paid subscription plan. Spotify started out on this path in 2019 by buying up a few large independent podcast publishers and the podcast publishing platform Anchor.