Report: Podcast Enthusiasm Dissipates

Hyperbole aside, there is an unmistakably dour vibe now permeating podcast land — and for good reason, according to Bloomberg. Following a prolonged buying spree, some of the industry’s biggest spenders are now pulling back due to growing concerns about the economy and the possibility of weakening advertising sales in audio.

Sirius XM Holdings Inc. has slowed down its dealmaking, and Spotify Technology SA is freezing its US budget for new podcasts, according to people familiar with the situation. Amazon Music has pulled back on new deals and instructed its team to reduce offers that were already on the table but unsigned, said two people who asked not to be identified because of the sensitivity of the negotiations. In some cases, all three companies are offering smaller upfront payments to new shows and seeking to keep more of the resulting advertising revenue, according to several people familiar with the matter. Shows that used to be able to claim 80% of advertising sales are now often forced to settle for 50%, two people said.

During the boom years, it felt like podcast licensing deals were ever escalating in value. But lately there have been signs that the steep upward trajectory may be tapering off.

 

Earlier in 2022, Jacob Weisberg, the founder of podcast producer Pushkin Industries, began looking around for a new licensing partner. Pushkin’s current deal with iHeartMedia, signed in 2020, was about to expire. Pushkin started working out a promising new arrangement with Amazon that would have paid the podcast network more than $10 million in exchange for the rights to distribute and sell advertising on the company’s shows, which include Malcolm Gladwell’s Revisionist History and Rick Rubin’s Broken Record, over a several-year period.

But then the retail giant returned with bad news. Due to spending constraints across Amazon, the audio division could only offer an amount significantly less than the initial proposal, according to people familiar with the negotiations. Pushkin, which declined to comment, has so far balked at the reduced offer.

“There are just so many shows out there, so many good shows, and it’s harder and harder to break through.”

But in recent years, even as revenues kept rising, the number of podcasts competing for attention and ad money grew at an even faster rate. In the first quarter of 2020, Spotify had 1 million podcasts on its platform. By September of last year, the number had more than quadrupled to 4.7 million. A similar explosion in supply happened across the industry. The resulting glut of programming helps explain, in part, how an industry that is still expanding can now often feel like one that is contracting. The overall pie may still be growing but lately most everyone’s relative slice has gotten smaller.

The podcast industry is also suffering from the broader, macroeconomic downturn hurting media and tech companies. The Media Titans 30 Index, which includes audio companies like Spotify and SiriusXM, is down nearly 40% over the past year, shedding more than $300 million in market value.