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The audience for podcasts is younger, wealthier and more tech savvy than its radio listening peer group. Unfortunately there are a lot fewer of them. Listener growth has begun to dip. Digital advertising rates may follow suit.
Content is probably to blame. A few years ago, podcast networks such as Wondery, Gimlet and Acast envisaged a broad range of auditory products, from long-form non-fiction to original dramas. But such productions are expensive and fight for space in a crowded market. Interview formats with recognisable names are cheaper and quicker to produce. True crime series Serial may have been the first podcast hit but Joe Rogan’s rapid-fire output of one-on-one interviews has made him the most popular podcaster in the US.
Yet even Rogan cannot square the economics of podcasts. Music streaming group Spotify spent a reported $200mn in 2020 for Rogan’s exclusive content. It has predicted podcast revenue of $100bn over the decade, adding Meghan Markle and Prince Harry to its roster. It is right that revenues are growing. EMarketer puts US podcast ad spending at $2.2bn this year, up from $1.7bn the previous year. But this is about a tenth of the sums spent on radio station advertising.
Costs are high. In the last quarter, Spotify reported a €302mn net loss on revenues of almost €3.2bn. Chief executive Daniel Ek has said that the era of megadeals for podcast hosts is now over.
Across the US, more than 31 per cent of the country listens to a podcast at least once a week, according to data from Edison Research. But not all of them regard podcasts as an audio product. Many watch the interviews on YouTube.
Nor has the rise of podcasts fully cannibalised other forms of entertainment. Over 80 per cent of Americans still listen to AM/FM radio at least once a week — even among the youthful 18-34 cohort. Podcasts may be more fashionable but they are years away from replacing radio.
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