It Is hard to identify the moment when podcasting took off, because it keeps having them. In June last year Barack Obama showed up at a Californian man’s garage to tape a podcast (“WTF with Marc Maron”) while “Serial”, a podcast series about disputed real-life stories launched in 2014, has surpassed 100m downloads.
Listeners will be forgiven if they feel they have heard this story before. Podcasts were meant to have arrived a decade ago. But they remain a tiny market for advertisers—$50m to $80m annually in America compared with $16 billion on terrestrial radio. Can podcasts finally hit the big time as a business?
There are reasons for optimism. The audience has grown quickly. In 2006 11% of Americans aged 12 or over had listened to a podcast; by 2015 that had tripled, according to Edison Research and Triton Digital (an ad-technology firm). Technology is pushing podcasts into listeners’ ears. In 2014 Apple put a podcast app on the iPhone that is all but indelible. In 2015 Spotify and Pandora added podcasts to their music-streaming services. As increasing numbers of cars get wireless-internet connections, that too should boost podcasts.
An industry to support podcasting is developing. In 2015 two former bosses of Westwood One, a broadcaster, launched DGital Media, which hosts and monetises podcasts. In July E.W. Scripps, another broadcaster, bought Midroll, a firm which connects podcasts to advertisers, for $50m. Firms like Art19 allow advertisers to update and insert ads into podcasts, including back catalogues.
For presenters, podcasting can be lucrative. In October Bill Simmons, a sports pundit who had a popular podcast at the ESPN network, launched one under his own name with multiple sponsors. With 20m downloads in the first three months, Mr Simmons could gross more than $5m in his first year. In December Gimlet Media, a podcast network started by Alex Blumberg, a radio journalist, raised $6m at a valuation of $30m.
Still, most podcast ads are for smallish niche businesses. There are two obstacles to attracting big-budget advertisers. One is that it is hard to know who is listening to podcasts, rather than just downloading them. The second is that, so far, few podcasts have a big enough audience. “You’re either buying a premium podcast or you’re not buying,” says Teddy Lynn of Ogilvy, an ad agency. However, Mr Lynn believes podcasts will one day be “bundled” for sale as TV shows are, and that the audiences will prove attractive for advertisers because they are “highly engaged”, not passive listeners.
That is surely true of “The Nerdist Podcast”, a chat show started in 2010 by Chris Hardwick. In its first year it had zero revenues. In 2012 Legendary Entertainment, a film studio, bought it. Now it grosses millions of dollars a year. Mr Hardwick says the show helped dispel the myth that podcasts were “just this thing you did in your mom’s basement.”
© The Economist Newspaper Limited, London (January 20th 2016)