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Midyear Check-In

I feel like I’ve been somnambulant. How is it already July? The past half-year slipped by like a breeze, and I’m still processing the two big news events that have defined the year in podcasting so far: Spotify’s massive buys into podcasting and Luminary’s bungled roll-out, the latter of which has begun to carry the weight of a parable.

Both are complicated stories with endless implications, but they also happen to be the kinds of stories with consequences that will only become truly apparent in the slow, trickling aggregate — bit by bit and then all at once, like tankers in the ocean… or climate change, I suppose. Which is why, at this point into the year, I continue to fixate on anything and everything related to those two tentpole developments. My repetitive return to these topics might strike some as dead horse-whacking, but I’m sticking with my gut. Few stories strike me as more important in podcast-land, at least for now.

First, though, let’s kick off this check-in the way we always do. That is, with the big data points I keep taped to the corner of my desk:

Audience size — 90 million U.S. monthly listeners (or 32% of the US population 12+), according to the latest Infinite Dial report from Edison and Triton Digital, which gives the industry its clearest number to beat. That was a sizable jump up from 57 million last year, and it was the biggest leap in monthly listenership to date.

Advertising — The market estimate for podcast advertising revenue in 2018 was $479.1 million, according to the IAB/PwC’s study on the matter, now in its third year. That’s up $313.9 million estimated for 2017, and the report projects revenues to beat $1 billion in 2021. As always, it’s worth noting that the study primarily draws from the self-reporting participation of 22 podcast companies; which is to say, I view the number to be best interpreted as the floor, or general area.

Now, at this juncture, I usually list a third data point: the number of iTunes — now firmly Apple Podcasts — downloads and streams as publicly disclosed by Apple at the end of every year. The assumption here being, of course, that Apple Podcasts continues to drive the majority of all podcast listening, and therefore serves as a good sizing benchmark. I’m not quite sure how the assumption holds up any more, though we can’t say anything for certain until we get a reliable third-party study or until a competing platform, specifically Spotify, starts putting out similar number flexes. For now, though, I’m content to retire this metric during these check-ins, and acknowledge the probable decreasing centrality of the Apple Podcast downloads/streams data within our framing benchmarks. The times, they are a-changin’, as should we.

Okay! With those numbers laid out, here are the two big questions that I’m taking with me from the first half of 2019:

(1) Do we actually know what Spotify is supposed to become? Given the intensity of the acquisitions and subsequent announcements, it’s tempting to think that we know a lot — or even too much — about what the Swedish audio streaming platform aspires to look like in the future. But I don’t think that’s the case, necessarily. In fact, I’d venture to say we know next to nothing.

We know the moves: the acquisition of content studios Gimlet Media and Parcast; the other acquisition of social audio app-turned-easy hosting platform Anchor; the hiring of TV veteran Liz Gateley as head of creative develop for podcasts; the redesigned UX that positions podcasting on par with music; the testing of podcast playlists; the content deals (see: the Obamas, et. al.); the aspirational messaging of becoming an all-consuming audio platform. But as Spotify officials mentioned on-stage at the Hot Pod Summit back in February, there wasn’t really a master plan in place that drove those first acquisitions, at least not then. Rather, there’s a general goal, and a willingness to make bold bets in that direction.

It remains unclear whether that’s changed. What we have, though, is a muck of details to sort through. How will Gimlet Media and Parcast relate to Spotify, and to each other? Will they be kept silos with their own P&L sheets (for some reason, I doubt it), or will they be directly integrated into the greater machine? How will Gateley’s machinations — which I assume includes further dealmaking, talent signings, and new project development — factor into everything? Who gets priority, both within the organization and, more concretely, within the context of the app’s user experience? How will third-party publishers be handled, and relatedly, how will Anchor be deployed? If it becomes a multi-sided market, how will the incentives work? Who has power, and who gets to make decisions?

Basic questions. What’s not so basic, though, is the complexity of how all these questions will fit together as a system that handles a steady flow of projects, big and small, moving forward. An immediate test case: when it comes to the Obamas deal, presumably a very valuable asset, who in the company gets to take lead on that, and how?

All these detail pieces can be further sorted, I think, under a larger umbrella question: what will be the organizing principle? We can broadly discern the  specific outcomes that are desired. From a business perspective, it’s essentially whatever helps the platform obtain more users, convert more paying subscribers, and keep users staying on the service for longer.

But what will be the appropriate creative strategy that’ll get them to those ends? Does this mean creating more types of content for more types of people — not unlike, say, what HBO is now apparently being made to do under AT&T’s corporate ownership? Or does this mean something more focused — to have the concept of a “Spotify original podcast” mean a specific thing with a specific brand identity, a la Pixar? (My guess: they’ll first try for both, then they’ll trend towards the former.) It’s all pure potential energy right now, by which I mean anybody can basically say anything about Spotify’s plans and I’ll be like, yeah, totally, cool. But I’m excited for twelve months from now, after the honeymoon is over, when the real work of marriage has begun.

(2) What will people pay for? The immediate lessons from Luminary’s messy roll-out were pretty straightforward. Chiefly: none of this shit is going to come easy, especially when you’re walking into a community forged by strong ideological roots with a big sack of cash looking to make some changes. It behooves one to grasp the full context and incentive system of said community, engage in proper outreach, forge meaningful coalitions. Only then can one begin to do all the disruptive things one aspires to do; in Luminary’s case, that’s the already tempestuous work of deal-making, curating a strong portfolio, build a product experience that’s actually better than the alternatives (and preferably, one that’s not buggy on launch), and market the crap out of the whole banana.

But I also think the larger lesson that we should take from Luminary, as an archetype of the emergent paid podcast subscription platform model, revolves around the question of value — what it is, exactly, that people will be willing to pay for. This is a problem that’s being explored breathlessly just everywhere else in the media business, from news organizations (where things don’t look too pretty) to major media conglomerates looking to play catch-up with Netflix (look, if they got Hiro Murai directing the Station Eleven adaptation, I’m fucking paying for WarnerMedia’s streaming service for at least a month). And so it goes as well here in podcast-land.

This shouldn’t come as a surprise to you by now, but I haven’t found Luminary’s answer to the question all that compelling just yet. The startup’s messaging, out of the gate, was a blend of “don’t you hate ads” (see: the Sign Bunny fiasco) and “we’ve got premium stuff,” with the interpretation of “premium” being some mix of celebrity-power, a handful of not-quite-blue-chip podcast assets, a small spread of native high-upside podcast-talent that might have needed more time as free options in to further increase their stock value, and some side projects from publishers that continue to do most of their business on the open ecosystem. It’s not that any of these portfolio pieces are actively bad — they’re not, in fact most of them are decent-to-quite good — they just don’t collectively form any identity. If you asked me what a Luminary Original is supposed to be, I’d be damned if I could tell you. (I should also add that this critique doesn’t exclusively apply to Luminary; it equally applies to Stitcher Premium as well. And I love Headlong!)

It’s worth restating that the power of a creative identity — a la Pixar or pre-AT&T HBO — is only one of many reasons that someone might choose to pay for a content subscription. Yes, exclusivity might be another, which I suspect was part of Luminary’s thinking, though the proposition is less potent in the face of endless free alternatives. A track record of creating buzzy culture-driving hits could be another, though nobody in podcast seems to have exhibited that edge just yet. Also, as I’ve mentioned before, I still very much believe in subject specificity; i.e. I’d like more sports podcast content in my life,  therefore I would invest in a service that would continuously meet my needs on that front.

And then there are all the reasons for smaller sustainability-seeking operations, principally the whole “I’d pay so-and-so dollars a month because I want to support this publisher” value proposition. You know, much like how some very nice people choose to pay $7 per month to help the continued production from a newsletter about podcasts.

*thank you for your service*

The nexus of paid value and podcasting gets more interesting, I think, when you try to squish Spotify into the equation. Spotify, of course, is already a platform rich with paying subscribers. It practices a freemium model, which gives paid subscribers an ad-free experience and access to more consumption features. At this point, the company haven’t talked very much about pushing hard into exclusive podcast content, but I mean, come on, does a bear crap in the woods? It’s going to happen. And when it does… well, doesn’t it seem that they would basically have the business Luminary and Stitcher Premium want to have? Plus, they’ve already cleared the fundamental hurdle: giving people a reason to pay for them, and getting enough people to build a formidable base. Hell, this race might already be over.

Anyway, that’s it on the check-in front. Oh, I’ll toss in one more thing: my Best of the Year (So Far) list for Vulture. Okay, let’s move on.