Global radio revenue is under threat from digital titans.
|May 19||Public post|| 4|
Cultural sectors discussed in today’s newsletter: podcasting; radio; music
Podcasting has been a growth industry this year, particularly after Spotify announced its intentions to rapidly expand into podcasting back in February. Podcasting is still a tiny industry compared to radio, but recent moves by both Spotify and Google are beginning to lay the foundation for podcasting to eat into radio’s massive annual revenue over time.
For context, the US podcasting industry earned US$314 million in revenue in 2017, according to a report from the Interactive Advertising Bureau (IAB) and PwC. But that pales in comparison to the US radio industry, which earned US$22.1 billion in 2017.
So what are Spotify and Google doing to make inroads into radio revenue?
It’s basically an enhanced version of Soundtrap’s previous offering, with the new features being “all-in-one recording, remote multi-track interviewing, smart transcribing, full audio production and publishing to Spotify.”
The most interesting feature is probably the transcription, which Soundtrap says will help podcasters with SEO (search engine optimization).
Google’s playing in this market too
Speaking of search, earlier this month Google announced it will begin indexing podcasts and that people will be able to play episodes from within its search engine. That feature is now live, as you can see from this screenshot of my favourite NBA podcast Open Floor:
When you click one of the episodes, it opens up a browser version of its Google Podcasts product:
Google Podcasts isn’t a brand new product, but this is the first time it’s been available inside the browser. It was initially launched in June 2018 as an app for Android phones and Google Assistant devices (such as Home speakers). The new integration into Google’s core search product on the Web does come with limitations for non-Android users. For one, you can’t subscribe to new podcasts without using the full Android app.
Another ‘limitation’, if you want to view it that way, is how durable Google Podcasts will be. As Ben Golliver from the Open Floor podcast likes to say about NBA players, “the best ability is availability.” But Google products aren’t known for sticking around. Indeed, it has a reputation for shutting down nearly everything it launches on the Web - other than search, of course. A recent victim was Google+, its ill-fated social network. More infamously, after Google came to dominate the RSS Reader market with Google Reader, it promptly shut it down in 2013 and cratered that entire market.
It’s highly unlikely that Google Podcasts will come to dominate podcasting, since both Apple and Spotify are the two leading players right now - and both have significantly more leverage in podcasting than Google. That said, it’s a promising sign for the market that Google has 1) made it easier to find new podcasts in its dominant search engine, and 2) also made it easier for people to try random episodes within the browser.
Why is the Soundtrap news important?
But back to Soundtrap - what makes this news important for the cultural industries, and in particular radio and podcasting?
Simply put, it’s another piece in the jigsaw puzzle Spotify is slowly putting together to create a viable ecosystem for podcasting in the mainstream.
While Spotify has been piecing together its podcasting platform for both producers and consumers for several years now (Soundtrap was acquired at the end of 2017, after all), Spotify has only really gotten serious about podcasting this year.
In February, Spotify made several big acquisitions. Firstly it acquired Gimlet Media, a podcast network and producer founded less than five years ago, for a staggering US$230 million. It also bought Anchor, a podcast creation and hosting service, for $110 million and another podcasting network, Parcast, for $56 million.
During its fourth quarter financial results announcement at the same time, Spotify broadly hinted that more acquisitions were to come. The company said it may spend up to US$500M on “multiple acquisitions” this year in the podcasting sector. After the three acquisitions noted above, there’s still around $100M of that budget to spend.
February’s announcements marked a clear strategic shift for Spotify. Founding CEO Daniel Ek wrote in his blog post announcing the Gimlet news that Spotify would be “audio-first” going forward – meaning not just music anymore. And as part of this new strategy, Spotify is specifically targeting radio users.
“People still spend over two hours a day listening to radio,” wrote Ek, “and we want to bring that radio listening to Spotify, where we can deepen engagement and create value in new ways.”
So back to Soundtrap. Its product is not dissimilar to Anchor, the other podcast creation and distribution company Spotify now owns. But in a nutshell, Soundtrap is a more sophisticated tool aimed at podcast professionals. Anchor is aimed at a more casual podcaster - it allows creators to easily record on mobile, for example.
Another key difference, as pointed out by podcasting industry analyst Nicholas Quah, is that Anchor will host your podcast files and allow you to distribute to any platform - whereas Soundtrap will only publish directly to Spotify. So if you’re a podcaster and want your show to be on, say Apple and Stitcher, then you’ll need to host the files on a platform like Anchor.
Regardless of the differences between Soundtrap and Anchor, they both ultimately serve the same purpose for Spotify: growing the amount of quality podcasting content in the podcasting ecosystem, by giving podcasters better and easier tools. Spotify can then of course promote that content heavily in its app, which is currently still primarily used by consumers to listen to music.
Incidentally, in yet another sign the podcasting content market is getting serious, today Sony Music announced it is jumping into podcasting too. A source told Variety, “expect them to build their podcast business the way they built their record company.”
Spotify app redesign; and its search challenge to Google
On the consumer side, Spotify will soon be launching a redesign of its app - which will emphasize podcasts in addition to its core music programming.
A Bloomberg report this month stated the redesigned app is currently in testing. According to Bloomberg’s Lucas Shaw:
Tabs at the top of users’ libraries display the words “music” and “podcasts” in a large font, according to people familiar with the matter, making podcasts more prominent and accessible than they are now. […] The new version of the app puts podcasting and music on equal footing…
Interestingly, the article also hinted that Spotify will challenge Google in search. Spotify Chief Financial Officer Barry McCarthy is quoted as saying:
There is no search engine, no search interface that understands what podcast you and I like. We’re working hard on that problem.
It’s hard to see anyone supplanting Google on search, and it looks like Google is already heading Spotify off at the pass with its playable podcast listings (as noted above). However, Spotify can certainly make podcasts much more discoverable within its app than iTunes has done.
In fact, I’ve had trouble finding podcasts even in the sophisticated indie app I use: Overcast for iOS. Overcast is leagues ahead of iTunes as an app for listening to podcasts, but even so its search leaves a lot to be desired. So in my view, there is plenty of room for Spotify to provide a great leap forward for in-app search and discovery.
This is great time to be a podcaster, or a podcast listener for that matter. On both the production and consumption side, Spotify and Google are busy building out the podcasting ecosystem.
As yet, Apple remains a sleeping giant in this space. It still dominates the current, relatively small, podcasting listening market with its ancient and creaky iTunes app. But it’s Spotify and Google that are making all the moves to widen the podcasting market, in order to capture some of that massive radio revenue.
It’s still early days, and of course the best radio stations have themselves adapted to podcasting - just look at all the great content NPR and other public radio stations put out in podcasting form.
But what I love about what Spotify in particular is doing now, especially with Soundtrap and Anchor, is that it’s giving emerging talent the tools to create professional-level audio content. Once Spotify puts that content in front of its 200+ million users with its upcoming redesigned app, expect to see a thousand voices bloom.
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