The rightsizing of the podcast business
There are two conflicting narratives about the podcasting business today. The first is exploding growth, with revenues and audiences rocketing upward along with newly minted stars and breakthrough content. The other is ominous: most podcasts are no longer in production, there hasn’t been a new mega-hit in several years, while companies are hyping download numbers, cutting podcast titles and staff.
Can both be true?
The first narrative is well covered in the happy press and effusive Twitterites who seem to have an insatiable need to comment on all things podcasting.
The second narrative is worth zooming in on. It is about a rightsizing of the business happening in real-time, and we are likely to see more as we roll into budget season.
What’s really going on
Yes, podcasting is buzzy and fun. Over the past few years, a myriad of big companies and startups wanted in on the new, new thing. They made significant investments in studios, producers, editors, and hosts. Much of this change seemed symptomatic of the great business axiom, “the other guy must know something.” Companies feel a need to jump on a fast-moving bandwagon or risk FOMO. In the case of podcasting, a few hired fantastic talent while others staffed up with people having few, if any, genuine audio bonafides.
Why the cutbacks now? Podcasting is a simple business. Sales dollars chase ears, and many companies that launched podcasts have failed to capture enough audience. It’s not the first-time regular readers of this blog have heard my lament that hits are hard to make, whether it’s TV, radio, streaming, print, or web. Finding and keeping an audience is increasingly difficult and expensive. There are a lot of levers to pull.
Cutbacks in podcasting
Some of the more significant podcasting cuts have appeared in the press. Acast cut 15% of their workforce in September – roughly 70 of 470 people. 470 people! CEO Ross Adams said Acast needs to be “more in step with the future, and market demands, on the path to profitability.”
Spotify recently reorganized its podcast management team, letting executives go who might have overpaid for talent and under-delivered on results. Last week Spotify cut additional production staff.
The new owners of CNN have been chopping throughout the enterprise (goodbye CNN+, we hardly knew you). The podcast unit was part of those cutbacks, dropping underperforming titles, writers, and producers. The company said: “Over the last several years we’ve learned a lot about the topics and productions that most resonate with our audiences. As a result, we’ve refined our strategy to focus our resources more specifically in those areas.” Bravo. The candor is refreshing, and the observation is spot on.
The circle of life in media
All of this is not a new phenomenon. While not directly podcast-related, Vox Media cut 39 staff members a few weeks ago in anticipation of weaker economic conditions.
Last week’s news from Ashley Carmen about podcast companies gaming listens and downloads in hopes of hyping the podcast charts falls into the plot line that audience development is more challenging than during podcasting’s early days. With more and more podcasts, competition for shelf space is fierce. They are not alone. We know of at least one branded podcast company guaranteeing audience by running targeted web banners. You need 6,000 listens… you pay for 6,000.
We also see companies pivoting their core business strategy. Narrative audio, for example, is among the most expensive categories in the podcast space. Companies sprung up with the notion of using podcasting as an Intellectual Property farm team. There are a few success stories, but in macro, very few titles have been able to find enough audience or are successful in getting a Hollywood option. This environment appears to have caused at least one narrative-focused company to pursue other types of content.
Podcasting is alive and well
Many companies are going thru difficult times, as with all media. It’s happening in podcasting, but that doesn’t mean podcasting is over. It just means some of these businesses were overindulgent and, in some cases, didn’t have the goods.
Rightsizing has gone on forever. As an answer to independent high-quality professional video channels, with much fanfare, Disney acquired Maker Studios in 2014 for $500 million. They sunsetted the whole enterprise three years later. Did that mean independent video production wasn’t a viable business? Of course not. Plenty of successful professional YouTubers would agree. During the pandemic, with much success, Disney was back again, this time launching Disney+, a new streaming video service extending their core brand.
Netscape didn’t make it, but Google is healthy. Oldsmobile is gone, but Tesla thrives. Which one are you?
Nimble businesses are always maneuvering for optimal growth. Podcasting is no different. Several overinvested podcast companies will either rightsize, perish, or pivot. On-demand audio is a great business that will continue to grow. The great leveler is the fickle audience. Finding, pleasing, catering to, and retaining them is the forever challenge.
Now the hard work begins.