The Podcast Growth Shell Game and How to Fix It

Even in challenging times, podcast audience and listening are up–way up. Once you take a deeper look at the numbers over time, a big red flag emerges.

Jun 23, 2023

Welcome to Dispatch #44 of The Audio Insurgent. We swing fully back to podcasting today, specifically looking at the commercial publishers and the results they’ve seen over the past four years.

So last week’s dive into public radio’s four-year results in monthly podcasting listeners and downloads was the 4th most read and shared dispatch in the history of The Audio Insurgent (and welcome to the 80+ new subscribers who signed up this past week as a result). It also provoked a lot of reactions, online and to me directly. Some surprised me.

First, a number of people responded in shock that I only made a passing five-word mention of the lay-offs and strategic turn-about at Spotify, arguably the biggest story in podcasting this year. Sure, but first, I am deeply committed to not discussing “news” in this newsletter–this is a place for bigger issues and ideas, dissecting strategy, principles, and raising solutions to vexing problems. And second, anyone who has regularly read these dispatches over the past 2.5 years has seen many direct and indirect references to my concerns with Spotify’s activity in podcasting. Many of us knew this day would arrive. It did. I don’t see any point in discussing further right now, especially when the livelihoods of 200+ of our fellow audio creators are collateral damage.

And speaking of those affected by Spotify and other layoffs, I want to offer you a bit of my time for free. Every Monday morning I leave a few slots open for “virtual coffee chats” with non-clients about…whatever. If you’ve been laid off and are trying to chart a course forward, I’m happy to talk about your resume and plans. I’m not hiring, but I might be able to help you sort out options and pathways. I quietly made this offer for those who were laid off from NPR recently and chatted with about a dozen of them. I really enjoyed meeting them and I think I was able to help them navigate a fast-changing but still very-full-of-opportunity podcast industry. If that’s you, ~~see what’s available here and book a slot for yourself~~. Make sure to send along a link to your resume/bio so I can read up before we talk.

Oh, back to reactions to the last dispatch. The second theme to the responses was that some people found it upsetting, sad, or depressing. I both get that and don’t. No one likes bad news (though I’m not really sure that qualifies), so I appreciate that my take on where public radio stands in podcasting isn’t what they’d like to read. However, and I don’t think I’m being pollyanna-ish here, I actually look at revelations like that as good news. Growth means change, and understanding the change that is happening to you or around you gives you a real advantage. I like to know what I’m dealing with. It’s really hard to find solutions and have confidence that the decisions you are making are right and right-sized if you don’t know a lot about your problem.

So whenever people point out issues or red flags with my work, I’m grateful, not sad. I’m glad I understand something better before it gets worse. By pointing out the flags I see in public radio’s podcasting efforts, I’m not trying to shine a light on weakness or bad decision-making–I see it as a clear-eyed, concrete bit of intelligence to act on. It feels a bit conceited to call it a “gift,” but that is certainly the spirit in which it is offered.

The basis of that last dispatch was that public radio isn’t seeing the explosive, exponential, and consistent growth that commercial publishers have seen. But I’ve mentioned there is a big caveat to that growth among commercial publishers. There is an opportunity for podcast publishers to grow better and smarter, and that’s what I’d like to raise today.

So, therefore…

[TODAY’S THING: PODCASTING’S SATURATION OF CHOICE AND HOW TO FIX IT] From my limited understanding of economics and business, there are only two ways for a business to grow its revenue: serve more customers or receive more revenue from your current customers. If you own an ice cream parlor, you can either get more people to come in to try your ice cream, and/or you do things like charge more for your ice cream, entice them to come in more often, or get them to buy other things too (a waffle cone upgrade or perhaps start selling homemade cookies too).

As a media executive, I have always tended to focus on getting more customers–serve more people. Not to the exclusion of smarter ways to draw more value from those customers, but nothing fully works unless there are more fresh people coming in the front door.

For the past decade, podcasting hasn’t had that problem. At all. Everytime someone measures podcasting’s reach, the year-over-year numbers keep growing. And keep growing. The growth rates are so over the top that we come to expect healthy double-digit growth in our industry, without really doing anything differently.

Even now, in this time of podcasting resets, the audience, today, continues to expand. It just seemed to magically “happen”--there has never been a coordinated effort to market podcasting as a medium beyond word of mouth–and, frankly, why bother when a slow growth year still sees a 15% expansion in new audience?

When I look at the performance of the Top 10 publishers in podcasting as reported in the monthly Podtrac “Top Podcasts, Publishers and Sales Networks” releases from April 2019 to April 2023, I see a lot the industry can be excited about. Last dispatch, I looked at how public radio has fared over the past four years, but what about the commercial publishers? To do this, I took the Top 10 publisher data from each April over that span and removed the public radio networks (NPR and PRX show up in every year, with WNYC Studios in two of those years). As I indicated in that last dispatch, the data tell a very different story, with a huge and concerning caveat.

The good news… and the bad news… is captured in just three bits of information:

From April, 2019 to April, 2023, the top commercial podcast publishers saw monthly audience double (from 55M monthly listeners in April 2019 to 106M monthly listeners in 2023).
In that same period, those publishers saw monthly downloads almost triple in size (from 326M monthly downloads in April 2019 to 886M monthly downloads in 2023).
In that same period, those publishers grew the number of shows they distributed four fold (from 337 shows in April 2019 to 1,397 shows in 2023).

Let’s look at how that plays out in three graphs, starting with Unique Monthly Audience among the top commercial publishers (again, removing the public radio networks) from April 2019 to April 2023.

Have you ever heard of a “hockey stick” growth curve? If you aren’t familiar, you are looking at one. Modest at first, then–boom–quick and large gains over time. This chart is a classic example of this. This chart alone explains all the interest, investment, and excitement pouring into podcasting over the past few years.

Next, Monthly Downloads:

Here, again, huge growth… but wait a minute… things actually look down for that last year. But even with that, downloads have grown 3X in the past four years. More on that dip in a moment… and it is important.

And finally, new show count among the top US commercial publishers:

Upward trajectory… good. 4X growth over four years, good. But look at how that growth slows in the last two years (only growing 3.5% YoY in that last year). And look at how different the shape of this graph is compared to the other two.

So, double growth–triple growth—quadruple growth… great! What is the bad news?

Other analysts may see this differently (and if they do, I’d love to hear their observations), but, to me, the proportions of those three are completely out of whack.

Publishers seem to have driven their growth with an enormous amount of new shows and those shows are, on average, becoming less and less efficient at driving audience.

So…why is this bad? Because the top publishers are now pulling back on the factor that seems to have driven a lot of their previous growth. Publishers have created a paradox of choice–in past years they’ve flooded the market with new shows and either those shows aren’t performing as well or listeners just don’t find all the new stuff as compelling. The new shows have gained audience, but not nearly as well as older shows, on average. Because of the increased number of shows, and slower rise in listeners and listening, the average monthly audience for shows in 2023 is actually half of what it was in 2019. For downloads, the average monthly downloads per show is down by a third. That doesn’t mean there is less listening to legacy shows, just that the new stuff isn’t drawing like the older shows. More stuff, but the average audience and listening is less. There are a number of potential reasons for this, but the bottom line is that it is concerning, almost regardless of the reason.

It would be AWESOME and AMAZING if these top publishers saw this growth without introducing any new shows, but that isn’t the expectation they set. They have trained listeners to expect a constantly flow of new things.

Therefore, the real dilemma here is that publishers need to put out lots of new things–just… they should be putting out better things. Yet, that isn’t what they are doing.

Again, overall downloads are still up… why is that bad news?

Two reasons.

Publishers have been saturating the market with new shows, which isn’t necessarily bad in itself. But now, driven by concerns over ad revenue, publishers are really slowing down on new show growth–and that dangerously correlates with the decrease in downloads we see in that 2nd chart. Arguably as a result of slowing new productions, and despite a growth in audience, monthly downloads stalled out between April of 2022 and April of this year, a decrease of 2.8%.

Let me backup on this and spend some time diving deeper here.

When I first saw this data, I thought of this classic TED Talk from Malcolm Gladwell about choice and spaghetti sauce (this TED Talk is so good and has application to so many things in understanding customers–seriously, it is 17 minutes, very entertaining, and a fantastic bit of mind candy). In the 1980s most grocery stores had a small number of pasta sauce brands, each offering a very small number of varieties of pasta sauces. But then product researchers realized that instead of making one great pasta sauce that everyone enjoys, they should offer a number of options that are LOVED by small segments of the market. Some like chunky, others like loads of garlic, others prefer vodka sauce, and so on. If you go to the pasta sauce aisle in the grocery store today, there are dozens of brands and dozens more varieties–often an entire wall of variety. It is the paradox of choice: lots of options for lots of different tastes and interests. The pasta sauce makers grew by expanding options. That can grow business in the short term, but if you’ve ever heard of The Paradox of Choice by Barry Schwartz, all that choice often proves overwhelming and stressful. Yet, ironically, customers don’t want to give up that level of choice.

Podcasting publishers have done the same thing with shows that sauce makers did years ago–trying to drive growth by adding more and more (and more and more and more) shows. As I mentioned, the top publishers collectively grew their offerings four-fold. That mirrors the industry-wide growth in show offerings from publishers of all sizes. Publishers HATE all this choice (even though they made it happen), because it is expensive and makes it hard to market new shows to listeners. Listeners seem to enjoy it and it has drawn more people into podcasting and gotten more of them to habituate.

Then, things start to get rocky in the ad market and what do publishers do? They try to pull back on choices. Before the pandemic, commercial podcast publishers gunned it: year over year show count among top publishers grew an astonishing 34% between 2019 and 2020, it has slowed each year since, down to a measly 3.5% from 2022 to 2023. And anecdotally speaking to many creators and networks, that number seems to have slowed further this year.

If you agree that new shows are a primary factor driving growth, once you turn down the flow of new shows, your downloads stop growing. And that’s exactly what happened.

To put an even finer point on this with a more succinct example, what top podcast publishers are doing now is similar to Netflix saying, “You know, there are plenty of shows in our library that you haven’t watched yet. So, we aren’t going to offer you any new shows.”

What do you think would happen to Netflix if they did that? Yet that is exactly what podcast publishers are collectively doing now. Perhaps they call it “focusing on their core properties” or “switching our strategy to ‘always on’ shows”--but the net result is the same: saying to listeners, “You have plenty already. We are pulling back our investment in new things.”

As I mentioned, there is a second reason this correlation is concerning, and that is the lack of focus or best practices on building audience. Simply put, publishers don’t know how to grow new shows.

They will complain, constantly, about how hard it is to launch new shows, but for all that talk, there is little effort to learn how to do it smarter or better. Beyond cross-promos, guest swapping, and hitting up platforms for exposure, there aren’t many tactics that seem to be working and even those tactics are years old. The industry lacks fresh, clear thinking on how to build shows and audiences.

In conversations I’ve had with numerous reps from shows, networks, and publishers, it seems everyone’s focus has been to achieve show growth by moving listeners from show to show with cross-promos. It’s cheap to execute and often will drive up sampling. And if the destination show is appealing, may spark some growth, but it isn’t bringing any new people to the portfolio. It is kind of like a massive shell game, swirling listeners in between a catalog of shows.

Audience building requires making shows better. Audience building means convincing occasional listeners to come back more often. Audience building means building long term relationships with new and existing audiences.

I recently heard an episode of a show that contained FIVE different cross-promos for other shows, some for shows that clearly weren’t a match for the show I was listening to. First off, how many new shows does this network really think I’ll sample? Five? Yet this is the network's best thinking on how to build audience for those five shows?

Someone may read this and accuse me of talking out of both sides of my mouth: “The glut of new shows is essential” … “The glut of new shows is dangerous.” I understand that. Both statements are true. What is important is the intention and strategic awareness of those choices and their impact. It is all about balance.

Here are some realities that podcasting publishers need to accept, understand, and act on:

Podcasting needs a constant and expanding stream of new programming. Just like every publishing media, you need new things to offer to your customers. They won’t just keep watching, reading, consuming the same things over and over again. They want novelty and newness. Listeners want to know “what have you done for me today?”--regardless of how much they love what you’ve made in the past. And speaking of novelty…

Podcasting needs to experiment with new forms, formats, and ways of telling stories. Podcasting not only needs new shows, it needs better shows. It needs inventive shows. Everyone loves ice cream, yet no one wants to eat it at every meal. Listeners, readers, viewers–they all love something exciting and new, and will eventually tire of even long-running franchises. If you were to tell me ten years ago that a major studio superhero movie and a Pixar feature would both roll out on the same weekend in 2023–and both flop–I would have thought you were crazy.

Podcasting needs to focus efforts on expanding audience to existing shows. Even in podcasting’s world of niches, there is no podcast that has fully reached its niche. The podcasting publishers who will win longer term are those who figure out audience development across their portfolio, for shows large and small. And if a show doesn’t have a clear pathway to growth, perhaps it shouldn’t remain part of your portfolio. It will just slow you down.

So, whew. That’s a lot. I’m sure you are a bit exhausted and overwhelmed reading this. I certainly am from writing this (this is probably the longest dispatch I’ve written to date).

I took all that from three charts? Yes, I did. Obviously a lot of other information rolls into this, but when I see that performance over four years, I see a lot of unbridled enthusiasm, a scattershot attempt at scaling up to meet the moment, and then some equally uninspired pulling back that may do more harm than good. Others may take issue with my interpretation here, and I welcome that–there are few definitive answers to draw based on this limited data. But the reason I’m comfortable saying all this is that I’ve spent a lot of time thinking through other possible reasons why the downloads and audience growth would be out of sync like this, and every alternative I’ve thought of is equally bad for the short and long term health of those major commercial publishers.

So going back to the beginning of this dispatch… should you be sad or depressed about this? Hell, no. Ask yourself: how do you use this? How do you use it to push for your group or organization to get smarter about setting expectations around projects, putting better projects out into the world, and giving them the audience development resources they need. How do you push for innovation and risk-taking? How do you use this to make change?

If you want guarantees about future success, I’m not going to give that to you. We have been in uncharted territory in podcasting for well over a decade and will probably remain in uncharted territory for a decade more, at least. This is not a journey for the meek or those uncomfortable with ambiguity.

But great days lie ahead, and your show and organization can be part of it, but only if you make smart choices about what you put out into the world… and how.

[COULD WE TALK ABOUT SOMETHING ELSE PLEASE?]

What I’m reading: Nine Black Robes by Joan Biskupic

What I’m listening to: The Love Invention by Alison Goldfrapp (Apple Music | Spotify) and Oh Me Oh My by Lonnie Holley (Apple Music | Spotify)

[ONE LAST THING: UPDATE FROM MY GARDEN]

In a recent dispatch, I mentioned my joy at keeping our local deer out of my yard using a combination of Predator Pee and mint spray. That plan was surprisingly and satisfyingly effective… until, this weekend, it wasn’t.

I was surprised how many readers reached back to me to share the pain and joy of trying to grow hostas around a lot of wildlife.

But then the rabbits got hungry…

Oh well, we’ll try again next spring. At least they made it to June.

Okay, that’s it for today.

If this was forwarded to you or you read this online, would you mind subscribing?

And while this is free, you are also always welcome to buy my book or (even better) buy me a beer.

Make great things. I’ll be listening.

--Eric