Alfred Liggins, CEO of Urban One. Photo by Anita Sanikop
Contrary to popular belief, podcasting is experiencing robust growth. However, several myths and misconceptions are holding the industry back from reaching its full growth potential, according to marketing and technology insight provider Mar Tech Series.
The portion of Americans who listen to online audio and podcasts has reached record highs, Edison Research said in its 2023 report, The Infinite Dial. Podcast are growing because they are offering content that appeals to highly specific demographics. About 183 million Americans are listening to an average of nine podcast episodes per week, up from eight episodes in 2022.
Audio invokes an emotional and instant response from listeners that is unlike anyother medium, Mar Tech reported.
Here are 13 facts about the current economics and science of podcasting, including Spotify and industry trends.
The low cost of creating and placing audio ads is a major draw to podcasting. Audio advertising costs an average of at least 90 percent less than other media, while bringing brands much closer to their desired demographics.
Podcast advertising is maturing in terms of both audience sizes and measurement capabilities, attracting the attention of more later-stage brands, Digiday reported. Once a go-to marketing channel for direct-to-consumer brands, podcasts have become a mainstay for more seasoned advertisers, agency executives say.
Spotify is the No. 1 U.S. publisher of podcasts, bringing tens of millions of content to the platform and getting listeners to tune in, but so far, Spotify has not made money, according to the Wall Street Journal podcast.
It was the largest U.S. podcast network in Q4 2022 and Q1 2023, according to Edison Research and claims to have 100 million-plus podcast listeners worldwide and 5 million-plus podcast titles in 170-plus markets.
Spotify bet $1 billion that podcasting would pay off as it sought to diversify beyond music streaming and find other sources of revenue. It signed big deals with celebrity podcasters like Joe Rogan whose shows would become Spotify exclusives, meaning listeners couldn’t get them anywhere else. Rogan is the biggest podcaster in the world.
Going forward, Spotify executives have said the company will focus more on using its technology to help independent creators make new shows. Executives have talked about becoming more like YouTube, selling ads to run with creators’ content and sharing the revenue. Not only does Spotify want to sell ads against its own shows, but it wants to build an ad business where it sells ads against lots of publishers and network shows.
“That piece of its business is really where the focus has shifted in recent months and really where there seems to be a promise of success and ultimately profitability,” said WSJ reporter Anne Steele, who covers the music industry.
Is Spotify still disrupting podcasting?
“Without Spotify making this bet that it did, we wouldn’t have seen this arms race across the podcast industry,” Steele said. “So it was Spotify’s investment and very vocal message that podcasting is a big tent pole of the future of our business that got these other tech giants. Every other tech giant got into podcasting after, and because of Spotify. It really did bring podcasting as a business a lot further. But it ended up being a tougher business than it realized when it initiated this billion-dollar bet on the business.”
Award-winning journalist and podcaster Jemele Hill has not renewed her exclusive “Unbothered” podcast deal with Spotify after it ended in March. Hill owns the intellectual property rights for “Jemele Hill Is Unbothered” and “Sanctified,” so it was her decision to keep those shows on Spotify, according to Hollywood Reporter. “Black Girl Bravado” will still be available on Spotify as it is a licensed series.
Hill joins other high-profile podcasters who didn’t renew Spotify contracts, including Meghan Markle and Prince Harry, Barack and Michelle Obamas’ Higher Ground, Esther Perel and Brené Brown,
Hill co-founded the production company Lodge Freeway Media and worked at ESPN for 12 years co-hosting “SportsCenter.” She left the network in 2018 after calling Donald Trump a “white supremacist.“
Spotify’s Dawn Ostroff, who designed its podcast business, resigned in January and the company reorganized its podcasting group in June, laying off 200 staff members. The company said it would focus more on partnerships with “leading podcasters from across the globe.”
Spotify continues signing up original shows with new seasons of “Heavyweight” and “Science Vs”; Alex Cooper’s “Call Her Daddy” Season 3, “Case 63” Season 2 starring Julianne Moore and Oscar Isaac; and “The Riddler: Secrets in the Dark” starring Hasan Minhaj.
Spotify has a much larger share of the audio business than Netflix has in video. It’s No. 1 competitor, YouTube, isn’t technically in the audio business, Bloomberg reported. And yet, Spotify has lost money every year along with all the other music streaming services. “That’s what happens when you pay music rights holders about 70 percent of your sales in exchange for their songs,” Lucas Shaw wrote for Bloomberg.
Spotify initially planned to diversify by investing in podcasting, spending billions of dollars building a podcast business hoping to reduce its dependence on music. Now the company is resetting its strategy, realizing that creating new original hit podcasts is almost impossible.
“It has started to think of itself more like YouTube,” Shaw wrote.” The company will still fund original shows, but it’s more interested in being the platform that every podcaster uses than the studio or exclusive rights holder.”
It now distributes close to 5 million podcasts and says it wants to reach 50 million creators. However, YouTube generated almost $30 billion in advertising sales in 2022 and shared about half of that with creators. Spotify generates about $12 billion in sales and most goes to the music business. Almost none goes to podcasters. Spotify is trying to change this.
It wants to build advertising technology resembling Google’s AdSense or AdWords for audio, or at least a version of the YouTube advertising business. The effort is going in the right direction but “Spotify still needs to convince (or force) creators to use its tools and give the company a piece of their advertising sales,” Shaw wrote. “The biggest podcasters sell their own advertising and don’t share it with the company. Spotify executives have been saying for at least two years that this revolution is coming. The pressure to deliver on that promise is growing by the day.”
In January 2023, Spotify Advertising wrote that it was seeing greater diversity in audiences and brands, increased listenership, and increased ad spending driven by more traditional advertisers. Advertisers are taking notice in diverse categories, recognizing podcast as a valuable channel for marketing brands, products and servicec to their target audience. Early podcast investors such as tech and entertainment brands remain top spenders, but Spotify said it saw exponential growth in new categories in 2022, including B2B, medical/pharma, and travel/leisure.
Spotify identified several other trends:
U.S.-based podcast listening rose steeply in 2022 and was already established in the U.K. and Germany but skyrocketed in Spain, Italy, and France. Millennials and Gen Z represented the biggest demographics in podcast listenership in 2022.
New audiences were attracted to podcasts: teens age 13 to 17 and the 55+ group showed increased engagement, with 42-to-49 percent growth.
Across all platforms, listeners streamed society, culture and news podcasts the most. On Spotify, the comedy category was the most popular.
Mobile continued to be the most popular way to listen to podcasts in 2022, accounting for 91 percent of time spent on Spotify.
In a survey earlier this year, 1,002 podcast U.S. podcast listeners age 18 to 69 were polled for habits and trends. Of those, 57.8 percent responded that they preferred listening to shows on YouTube, according to the survey conducted by voice actor marketplace Voices, which helps brands find the right voice-over for artists, musicians, audio producers and translators.
Podcasters often provide full video podcast episodes on YouTube, which provides both distribution and marketing, Forbes reported. However, YouTube only allows premium members to listen to audio on-the-go with the display locked and on in the background, a disadvantage for a widely used podcast player.
In the Voices survey, 70 percent of YouTube listeners respondents said they prefer live-read ads to pre-produced spots. Half of all listeners on YouTube said they wanted podcast ads to be more personalized and relevant to the podcast they’re listening to.
YouTube podcast advertising is effective in getting listeners to spend, Forbes reported. YouTube listeners spent an average of $143 on purchases from podcast ads, higher than the industry average of $133.
