Pocket Casts and Premium App Pathways.
Pocket Casts, the well-regarded third-party app that was acquired by a consortium of public radio organizations last May, announced earlier this week that it’s making a fundamental change to its business model: where Pocket Casts previously utilized a one-time purchase model, the app’s base experience will now be free.
In a complementary move, the app has also launched a premium subscription service called Pocket Casts Plus, priced at $0.99 per month or $10.00 per year, which will give premium subscribers access to its desktop apps, cloud storage for creators and listeners, and cosmetic stuff like exclusive app icons and themes.
Pocket Casts CEO Owen Grover tells me that this switch-up has long been in the works. In an email, he wrote:
We’ve known for some time that our business model both limited our reach (all of our competitors are free to download, and big platforms like Spotify, Pandora, iHeart & etc have only ramped up podcast content & feature promotion, etc) AND created misalignment between our partners (with their free access philosophy) and ourselves.
The premium pricing certainly contributed to the “mark of quality” aura about the app, but the best way for us to deliver value for our partners is to reach the broadest possible audience of engaged, passionate podcast listeners. Again, the notion here isn’t to appeal to EVERY listener. We know our product appeals particularly to habituated and sophisticated fans, and we want to compete and win in that segment. Going free was the way to go.
The year-plus long interval between acquisition and this shift, I’m also told, was largely due to preparatory processes: making changes to the backend infrastructure, improving UI, and growing the product and engineering team to get all that work done.
The move makes sense. First of all, switching the business from a one-time payment to a recurring revenue model offers the company more upside: there’s more potential revenue to be gained over a longer time horizon from a base set of recurring subscribers… assuming, of course, you can convert enough premium subscribers at the end of the day. Interestingly, the shift appears partly framed as a move towards app modernity. As Grover told The Verge, the team apparently realized that the one-time download fee model was “antiquated.” (Curious word choice, but I’ll roll with it.)
Secondly, repositioning Pocket Casts as a free product greatly expands the potential surface area for the app. After all, because Pocket Casts now costs nothing to download and try out, it therefore has the capacity to reach a greater number of people who may end up using the app as their primary listening tool — and some percentage of those people would end up becoming premium subscribers.
But of course, the key question, as previously mentioned, is whether enough people end up becoming recurring payers to off-set whatever costs went into the post-acquisition updates. Which is to say: are the premium subscription offerings sufficiently strong to attract a sufficient base of paid users?
Obviously, we’ll see, but my sense is that the lanes for premium app value props are somewhat limited, and generally pretty complicated. Four off the top of my head:
- Let’s call it the “super user” route, which offers users deep cosmetic offerings and future listening tools that befit the kind of person who consumes hours and hours of podcasts per day. This would involve a big bet on the idea that there is a significant, and meaningfully growing, the number of people who really really really listen to podcasts.
- Let’s call it “support us” route, which is somewhat consistent with the general public radio ethos in that the main idea is that users would be paying to support the continuation of the enterprise. That might be a little complicated with Pocket Casts, though, given the ownership situation as well as the fact that a rather popular alternative in the market is Marco Arment’s Overcast, which fits into the argument significantly better. (In case you’re curious, Overcast’s premium sub, which costs $10/year, gives users cosmetic icon options, the ability to your own audio files to the app, the removal of podcast banner ads specific to the app, and good vibes for supporting Arment’s independent efforts.)
- Slightly off-beat, but let’s call it the “genuine value add” route. The way I’d describe this: becoming a premium subscriber offers you a way into the podcast experience that’s far beyond what you can conventionally get elsewhere. In my head, a good candidate would be… shit, I don’t know, I was going to say Breaker, given its social graph-emphasis, but the basic idea is to offer a “new layer on the experience” proposition. Genius, but for podcasts, or some crap like that.
- Finally, obviously, and most controversially: exclusive content. That will be such a political bag of worms at this point in time, but… given Pocket Casts’ public radio affiliation and positionality, you can’t really deny that there’s a differentiated and defensible lane here.
Anyway, one last thing I wanted to hit before I close out this already extended story: the relationship between a mostly free product and user data.
So, here’s where my head is at: if I were the consortium of public radio organizations — which includes WNYC Studios, WBEZ, NPR, and This American Life — that bought Pocket Casts last summer, I reckon that my primary operating position is not to view the app with a revenue-maximizing mindset, but to use it as an opportunity to reach the largest number of people possible.
Part of this, certainly, would be motivated by simply wanting to expand the surface area of engagement between public radio and audiences. (Higher touch = higher affinity.) But there’s also the potential of knowing more about listening behavior so that the publisher-side can be better informed about what shows to make and how to make ‘em. Also, to say it out loud, there’s the whole advertiser and sponsorship data need piece as well.
Here’s Grover, when I raised the question:
We are VERY protective of our users’ data. It’s a major piece of our brand promise, and our partners understand this well.
I do think we can help our partners understand consumption trends over time. Not by handing over any of our users’ PII, but by thoughtful (anonymized) cohort analysis, information regarding how certain types of content performs on our platform, and so on.
We WANT to help our partners and work with them closely. AND we’re committed to taking the best care of our users. We’re not gonna let Facebook happen here!
So there you go. Hold ’em to it, folks.
On a related note… speaking of Breaker, the app is now on Android. Bunch of app action this week.
Descript raises $15 million Series A, Acquires AI Company. Descript, the next-gen audio editing tool, has raised $15 million in Series A funding. For the unfamiliar, Descript’s tool allows users to edit audio as if they were editing a text transcript, and it’s powered by a technology that mixes speech-to-text transcription and artificial intelligence. The startup was founded by Andrew Mason, who previously founded GroupOn and Detour, and the tool is increasingly favored by podcast production companies. The round was led by Andreessen Horowitz and RedPoint.
The news comes with two related developments:
(1) The launch of Descript Podcast Studio, which it describes as a “full multitrack podcast production studio.” I’m taking this as the startup doubling down the nature of its client base.
(2) More important: the acquisition of Lyrebird, a Montreal-based artificial intelligence startup whose efforts will power Descript’s new “Overdub” feature, which… well, let me put it this way: Descript currently allows users to switch around portions of an audio file using a text-oriented interface. Overdub, as hinted by the name, would let users make small and targeted AI-generated adjustments to the audio itself. If you flubbed, say, the mention of a number in the recording, Overdub theoretically allows you to change the number that was verbally recorded by simply changing the text.
So, yeah, this comes with concerns about deepfakes and digital alteration and all that, and Mason tries to address those worries head on in the official blog post on the matter.
Can’t help but feel like the future is indifferent to my feelings about it.
The Daily officially hits 1 billion downloads… and, perhaps more importantly, according to the blog post on the matter, each episode brings in about 2 million downloads. So, if you’re part of a daily news podcast team, that’s your north star.
Vulture: “New York’s Most Powerful Book-flubecer Runs a Podcast on Park Avenue.” Here’s the money line: “‘For all the podcasts there are, only a few actually move product,’ a senior books publicist told me. ‘Zibby can move product.’” That is some Breaking Bad shit right there.