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Insider: April 22, 2021 — Apple Podcasts Subscription, What Else?

Busy week, huh?

On Monday, we got news of Facebook’s big “push into audio” (which you should be generally skeptical about), and on Tuesday, Apple staged one of those splashy press events where they trot out the latest hardware models, products, and software updates. There was some word in the lead-up to the event that Apple Podcasts would be the subject of one of those highlights, and as the presentation played out Tuesday morning, that turned out to be the case.

Well, sort of. Podcasting got all of seventy five seconds, and while the announcements themselves are potentially paradigm-shifting — emphasis on potentially — much of the communication of what those announcements actually meant had to be in the post-game. That, in my estimation, has led to some messiness and disproportion in the resulting coverage.

Here’s what I’m going to do: I’m going to spend today’s Insider piecing together a reference document on the big beats of what these announcements contain: specifically, around the Subscriptions aspect. I’ll probably update this post over time, in case I got a detail wrong or I bump into something germane that I missed earlier. I’ll leave the actual consideration of who these changes benefit, who it doesn’t, and what it all means to Tuesday’s column. I have a lot of thinking and outreach to do.

Okay, so, in my understanding, there were three main podcast pieces to Tuesday’s announcements:

  • The unveiling of Apple Podcasts Subscriptions, which lets podcast creators and publishers implement direct revenue options within the context of the Apple Podcast app itself;
  • A redesigned Apple Podcasts experience on the consumer side, which includes a new look, UX additions, and the inclusion of “channels,” a curation framework that will presumably make it easier to surface and browse through networks and publishers with multi-show portfolios.
  • An updated Apple Podcasts experience on the creator side, which includes the new subscription toolkit as well as various quality-of-life improvements.

Obviously, the Subscriptions stuff is the big, potentially paradigm-shifting stuff here, though, as we get into the details, the importance of those two other things shouldn’t be discounted in relation to the first thing. We’ll spend this letter digging into the Subscription details.

I’d like to start by emphasizing what this is not. This isn’t Apple building out a “Netflix for Podcasts,” as some previously speculated they might. Which is to say, this isn’t Apple replicating its Apple Arcade or Apple TV+ playbook and getting into original content business — at a scope and depth beyond the stuff what they’re already producing now, which is generally oriented towards marketing their other businesses — and trying to build out a Luminary-style proposition. Therefore, I don’t believe this should be read as Apple directly engaging with Spotify in some arms race over original, exclusive content. I’ve seen some write-ups framing the announcement in this way, which, you know, is unhelpful.

But it is Apple responding to Spotify’s expansionary efforts over the past few years, and the pursuit here seems to be an infrastructure play more than anything else, one that sees Apple Podcasts taking more after the App Store playbook… with some crucial contextual differences, of course.

Let’s break some key details out:

(1) Optionality. It’s my understanding that the bulk of how the Apple Podcast platform works will remain the same, more or less. Podcast creators can still distribute their ad-supported shows over the platform by submitting their RSS feeds through the usual way — though, apparently, there have been some technical hiccups since yesterday — and listeners who have long-standing relationships with existing shows probably won’t see much change.

The Apple Podcasts Subscription stuff appears to be something that gets layered onto the existing experience, present only to the extent that publishers and creators adopt this new in-app toolset. In other words, it seems to be presented as a complementary model, not a substantive one — it’s not Apple Podcasts forcing podcasters to switch business models — but of course, activities on a platform tend to be shaped by the direct incentives afforded to them.

(2) Pricing. Podcast creators who want to use the subscription toolkit will be charged $19.99 per year (I’m inclined to think of this as a hosting fee), but more importantly, Apple takes 30% of any direct revenue that creator makes on the platform in the first year. For every year after that, Apple takes a 15% cut.

I’ll say a few things at this point. First of all, the 30% slide down to 15% over the two year stretch makes some sense to me from Apple’s perspective. It’s an incentive structure to encourage podcast publishers to give this a mid-to-long term go, and should the publisher end up being successful with the implementation, they’re more likely to be locked into the platform in Year Two than Year One.

Others have pointed out that the revenue cut structure here mirrors other parts of Apple’s businesses. 30% is the percentage taken on the App Store, though this is a point of increasing contention (and political combat), and one should note that Apple has played around with the cut as a result of that contention, see: this story about Apple’s “small business program” that implements a 15% cut from apps that make less than $1 million revenue. Meanwhile, Recode’s Peter Kafka points out that the 30%-15% cut slide is the same scheme Apple TV has with TV streamers distributing over that platform, though I haven’t been able to find a corroborative article…

Anyway, here’s my last thing on this: 30% feels really exorbitant to me. It’s fine if you’re already a big presence with the potential to drive meaningful subscription revenue off the bat, but it does feel tremendously prohibitive to shows with smaller followings. I imagine if you’re a show that already drives a ton of direct revenue through Patreon, you’re probably looking at this and wondering why you’d want to switch.

Patreon, by the way, takes between 5-12% of revenue depending on the plan, plus payment processing fees, and other competitors, like Supporting Cast, have already come out to emphasize that their takes are likely a fraction compared to Apple’s.

One might want to switch to Apple, though, because of this…

(3) Experience. Stratechery’s Ben Thompson’s column on this laid out the possible upside of building a subscription business using Apple Podcast’s tools very clearly. In short, on the one hand, the frictionless payments facilitated over the Apple experience — combined with the sheer number of people who are already locked into the Apple ecosystem — has the potential to push more sales and reduce the level of churn. And on the other hand, current direct revenue options, like Patreon, require podcast creators to implement pretty cobbled-together solutions: it’s contingent on getting listeners to become marginally tech-savvy enough to navigate RSS feed uploads on a podcast app. (Though, it’s my understanding that there are some smart link options these days that ease that flow considerably.)

Still, there’s a bigger contingency in place: all other options depend on the Apple Podcast app letting listeners upload custom RSS feeds into the player. Now, there’s currently no sign that Apple’s interested in closing that option up — and cutting out the open ecosystem altogether — but the very possibility, no matter how remote, might bother some folks.

(4) Publisher customizability. I should probably spend some time going over how these subscription tools can be implemented.

Structurally speaking, podcast creators can equally use the tools to create a freemium model — i.e. become a paid member to access exclusive content, ad-free experiences, and so on — or a fully subscription-oriented business, like a Luminary-style thing. Actually, exactly like a Luminary-style thing: the moneyed startup was announced as a launch partner, and it seems like that business is now a position where it can be entirely rebuilt over Apple’s new subscription infrastructure, as opposed to having to improve their underwhelming app. I imagine this opens up the lane for more subscription-first podcast publishers to pop up… as well as for more subscription-first digital publishers to dip their toes into podcasting.

Publishers using the subscription tool can set their own prices starting at 49 cents per month, and can apply the paywall to individual shows or a collection of shows. They can also do things like provide free trial periods and stuff like that. You know, basic marketing shit.

(5) About the back end. Now, this appears to be a sticking point for some people. While the bulk of the Apple Podcast experience — at least for now — remains RSS-oriented, all the subscription content will be facilitated over a closed back-end system. On the listener side, this probably won’t come across very much, as my sense is that Apple’s going to endeavor to have the combined RSS and non-RSS experience be more or less seamless to the point of not being discernible. But that’s going to matter to some publishers, even those who aren’t particularly militant about RSS and its structural relationship to openness: it means needing to repeat work if their subscription business is stretched across multiple platforms.

(6) On data. Another major sticking point, though this will probably rankle a lot more people: mirroring the App Store context, Apple will be the entity that fundamentally owns the relationship to a given publisher’s paid members or subscribers. Beyond some rudimentary analytics — stuff like geographic location, some listening data, and so on — publishers won’t get that much data about their paying customers, including contact information. Which, of course, means that should a publisher wish to migrate their premium/freemium subscription business away from Apple Podcasts, it will be prohibitively difficult to do so.

Some larger context to consider: Apple engaging in a more aggressive privacy stance of late

(7) Roll-out. The subscription tools rolled out for creators, spanning over 170 countries and regions, as of Tuesday, but will appear on the listener side starting next month. The roll-out of the new app design is pegged to the roll-out of iOS 14.5, which comes out next week.

(8) Miscellaneous Details

  • This bit in Kafka’s write-up is interesting: “Apple won’t require podcasters to create Apple-only exclusive shows, but it does want them to distinguish between stuff they’re already distributing via Apple and stuff going up on other platforms: That could mean ad-free shows or shows with extra content or brand-new shows that only exist on Apple.”
  • You can dig through the Apple Podcasters Program Agreement here. This blog post, by Podsights’ Nathan Gathright, picks out some pretty interesting nitty-gritties, including language granting Apple the right to create transcripts, use publisher podcast content to train machine learning models, and some suggestion of Apple Podcasts’ possible appearance on Android.
  • I mentioned launch partners earlier. Here’s an incomplete list: NPR, QCODE, Imperative Entertainment, Meet Cute, PRX/Radiotopia, Luminary, Tenderfoot TV, The Los Angeles Times, The Washington Post, Broccoli Studios, Pantsuit Politics, Pinna. Not present, interestingly enough: The New York Times, Vox Media.
  • The NPR thing is interesting. On Tuesday, I obtained an internal email indicating that “The NPR Board has approved moving forward with paid podcast subscriptions to support our shared mission by creating new revenue streams for public radio and driving membership to NPR Member stations.” I’ll have more on this for Tuesday, but the email also noted that this subscription effort will stretch across both Apple Podcast and Spotify, and will be designed to bundle value for both NPR and local stations.
  • Speaking of which, keep in mind that Spotify, too, is cooking up some subscription tools.

Okay, I’ll cap this for now, and again, I might update this post as I bump into more information. These are the puzzle pieces; on Tuesday, I’m going to try to piece them together.

Update 1: Fixed roll-out info.