What is the Value of Platforms Anyway?...Or...The False Choice Between Reach and Revenue
What is the Value of Platforms Anyway?...Or...The False Choice Between Reach and Revenue
All the attention in podcasting right now is focused on the platforms that distribute content. Has anyone stopped to ask if they are adding any net value to podcasting--or just trying to control.
Welcome to Issue #3 of The Audio Insurgent. So much for “an edition every 2 or 3 weeks”--a lot on my mind lately. I’m sure I’ll settle down eventually.
So today I have two big things: one strategic and one operational and some inspiration. Also one other thing I find inspiring.
I’m going to question the role that platforms play in podcasting...and ask if it has any value at all right now (for anyone other than the platforms themselves). I’ll also sneak in some free advice for the podcasting platform that wants to emerge victorious.
I also have an operational thing: I’m going to share how I build budgets. In setting up projects, many creators screw themselves by not knowing how to create a proper production budget. I’ll share how we do it.
[BIG STRATEGY THING: WHAT IS THE POINT OF A PLATFORM?]
The other week I was on a panel and asked a pretty simple question: What are my thoughts on what podcast creators, platforms, and listeners are looking for right now?
I answered:
Creators want to reach the largest number of people while making the largest amount of revenue.
Listeners want to listen to what they want, when they want.
Platforms want to control everything.
I also said, off the cuff, out loud, and for the first time, that I struggle to understand what added value podcast platforms are currently bringing to the equation.
And just for clarity, when I talk about “platforms” I’m really using a very broad definition: big players like Spotify, Apple, Google Podcasts, and Amazon as well as the larger networks that are sophisticated enough to have paywalls or manage listener relationships and access, like Midroll, Wondery, iHeart, TuneIn, Slate, and Luminary.
What all the platforms I listed have in common is that they have way bigger ambitions than managing RSS feeds and playing out mp3 files. Most also produce exclusive content with big strings attached for creators and listeners. All seem openly interested in influencing, guiding, and controlling the evolution of podcasting itself, to various degrees.
But not often does anyone stop to ask: Besides managing feeds and playing out files, are they really offering any additional value to podcasting?
I argue that the answer today is a firm “no.” Sure, many (with the notable exception of both Apple and Google Podcasts) write big checks to buy rights, create shows, and purchase companies. But who benefits from this? Listeners? Creators? So far, again, no.
Many conversations about the role of platforms boil down to the economics of reach versus revenue. You can reach a lot of people or you can have a lot of revenue. Case in point: exclusive content. Those big checks from platforms usually mean that your show is no longer available everywhere, just where the check writer wants it. Ask anyone who has ever taken one of those deals, and they’ll tell you that their episodes are heard by a fraction of the people that heard them before.
Part of this is simple economics. There are 1,300 people subscribed to this newsletter, largely because it is free. If I decided to charge even a dollar a year and put the issues behind a companion paywall, it is safe to assume my readership would go down.
A friend recently highlighted the greatest example of this in audio: Howard Stern. In 2006, the most popular radio host in America made a decision to broadcast exclusively on satellite broadcaster Sirius (now SiriusXM). He exchanged millions of listeners for a single-digit percentage of his former FM radio audience. He agreed to dramatically reduce his reach in exchange for the most lucrative compensation in the history of audio.
Yet there is a canard lurking that there must be and always is an inverse relationship between reach and revenue. I think that’s an assumption based on watching all these big content deals with the Obamas and Sussexes and others, as well as seeing podcast production companies purchased, then their shows are offered with some flavor of exclusivity.
Platforms write big checks because writing a check is easy. However, the real value of a platform should be expanding reach. For all the money flying around podcasting, almost none of these major players are offering pathways for podcasts on their platforms to meaningfully increase audience. (A notable exception that just popped up this week: Apple Podcast Spotlight. Yes, please, more like this.) Often, platforms are hesitant to even share basic data. Audience data aren’t your concern, creator, take your check and go away. That’s all fine and good until the exclusive agreements end and the shows find themselves with a fractional audience and no relationship with other outlets or revenue sources.
The platform that figures out how to effectively and efficiently build reach--drawing more listeners to a targeted show--will be the one who wins the “platform wars.” They won’t need the big checks. Creators will happily come to them. This isn’t 2017’s podcasting buzzword: “discovery.” Discovery is democratic--how listeners can sort through all the potential listening choices, which will never really work the way people hope. Plus, I don’t think listeners are actually interested in everything. “Discovery” isn't targeted, which is what I’m hoping for.
These big platforms, with multiple touch points with listeners, terabytes of user data, thousands of shows, editorial resources, and countless case studies, should be able to make something a hit just by applying what they know (or should know).
So, why don’t they? Because writing a check is easier. Figuring out the best practices to utilize their platform to grow audience is hard work, and it changes over time, and requires a lot of hands-on mentorship and guidance to creators in order to execute and manage. It is easier just to pay them for an exclusive deal.
It isn’t like this is evil or wrong or anything. A platform is welcome to make any decision it wishes. I’m just not convinced that it is working for them and am certain it doesn’t work for creators and listeners.
Creators can have significant reach and significant revenue at the same time. How do I know this? Because it has happened thousands of times. The definition of “significant” can change podcast to podcast. For every Tim Ferriss there are hundreds of small podcasts that are happy just to earn a living and cultivate a community.
And what happens when someone is really successful at generating significant reach and significant revenue? Often the platforms scoop them up, write them a massive check or buy their company, and then force them into their false trade-off between reach and revenue, such as Bill Simmons, Joe Rogan, Gimlet Media, and other targets of exclusive content agreements you’ve read about lately.
If you look up “exclusive” you’ll find five definitions. One of them talks about “exclusive” meaning “special” or “high-class.” The other four include words like “restricted,” “excluding,” “for only a select few,” and “unable to exist.” Tell me again how these arrangements have any benefit for creators or listeners?
Ask anyone who has signed one of those exclusive relationships if they are pleased with how it is working out. You won’t hear a lot of happy stories.
[BIG OPERATIONAL THING: HOW TO CREATE A PRODUCTION BUDGET, PART 1]
Creators always talk about how companies and networks screw them. From my view, it is far more common for creators to screw themselves. Creators can be great storytellers, great conversationalists or talkers, great producers, but they are shitty at math.
I’m not great at math, but I’ve screwed things up enough over my career to figure out how to make things make sense for me.
Outside of having a killer idea, the next most important thing for podcast creators is knowing how to build a production budget.
This is a huge task, so I’ve decided to break this out into three installments over the next few editions of this newsletter.
Today, I’ll start with people costs.
Most of the expense in podcast budgets, especially during a pandemic (where there are no travel costs or studio expenses), is the cost of paying and outfitting the people who will work on it. So getting this right can make or break you.
There are two keys to doing this well: considering the real costs and properly estimating the time it will take.
The most common mistake I see in production budgets is creators who under price themselves. If a project will take 8 weeks, they calculate what their take home pay is for eight weeks and ask for that. The smarter ones will calculate that based on their gross salary. In other words, if they want to make the equivalent of $70,000 a year, the first producer will ask for $7,500 for the 8 week project and the slightly smarter producer will ask for $10,800. They should be asking $20,000.
Here is how I get there.
Step One: Calculate total costs
Someone wanting to make the equivalent of a $70,000 salary does start out with a base of $1,346 a week. But there are many costs that should go on top of that. These cover benefits, taxes, and other costs necessary to outfit that employee to work that week.
At Magnificent Noise, we build in the following costs as well:
(All costs are per week of work)
$31 Computer (cost of a computer spread out over 24 months)
$200 Office space, supplies, and expenses
$9 ProTools license
$6 Dropbox license
$5 Descript license
$1 G Suite license
$3 Expensify
$2 Slack license
$4 Asana license
$25 Justworks fee
$25 General expenses
That may seem like a lot of little costs, but it adds up to $311 dollars per week.
Also, on top of the base salary, we add an additional 30% to cover employer taxes, benefits, workers comp, unemployment, and other similar items.
So that takes us to
$1,346 Base salary
$404 Taxes and fringe benefits
$311 Other direct employee costs
$2,076 Total per week
That first producer who is just charging their take home pay for eight weeks? They aren’t working for a salary of $70,000 a year. Instead, they are accepting the equivalent of a bit more than half that.
Step Two: Calculate total time
This is simple--it just requires honesty. How long will it really take to do the work. Okay, now how much time will it REALLY take to do the work? Okay, now add 20% more time. You aren’t doing this to pad the budget, you are doing it because you will still be lucky if your project runs only 20% over.
Step Three: Do (a tiny bit of) math
Super simple, can be done in the calculator app on your phone:
Weekly rate X Number of weeks
That’s it!
The $20k I suggested? That is the $2,076 total costs multiplied by 9.6 weeks (120% of the expected timeline for the 8 week project).
That underpriced producer above who not only didn’t ask for the right amount, but also underestimated the time by at least 20%? Now instead of $70k, they are working for about a third of that--equal to about $26k a year, about $12 an hour.
There are other ways to budget, including using things like AIR Media’s rate guides, but this is the system that works for me: a real idea of cost and a real idea of time.
Next time we’ll go through all the other items to consider for a proper podcast production budget. The third installment will show how we lay this all out in a simple spreadsheet (and I’ll share one you can use).
[ONE INSPIRATIONAL THING: A VISION FOR AN ANTI-RACIST FUTURE IN PUBLIC RADIO]
If you ever intersect with public broadcasting, I would encourage you to read this.
It is an anti-ractist vision for the future of public radio, complete with actions and accountabilities. The cherry on top is the coda: buy-in from stations from a variety of market sizes--showing there is no excuse for inaction.
I must confess that when I first read this, literal tears came into my eyes. Why? Do I agree with this: fuck, yes. Do I think it is bold, exciting, and wise? Absolutely.
But what really moved me was the leadership and vision. This effort was headed up by Celeste Headlee, a multi-talented writer, reporter, and host who has had more than one reason to give up on public broadcasting and care about other things. But she didn’t. I’m so grateful when I read this.
For those who have read my writing on public radio, I’ve felt that over the past decade, public radio has showed up with the proverbial knife to the media gun fight. As a result, public radio is on the verge of blowing it.
When I read this, I am so inspired, so thrilled to see where it goes, and more optimistic than I have been lately. And when I read the more than 400 signatures, I see a list of the literal future of that industry. Go, go, go people.
And you, seriously, go read it.
That’s it for now.
If you are still reading this, you are either very bored or getting something out of this. In either case, feel welcome to let me know.
I struggled to find an image to go with this post and nothing seemed to fit--all too cliche. That explains the random picture of a turnip above. Mystery solved.