The podcasting scene will explode

“Media companies will continue adapting their franchises to podcasts, agencies will empower brands to create new shows, podcasting networks will devise new aural experiments, and even more independents will pop up from unexpected places.”

Some media analysts see a bubble poised to burst; others, incremental growth. I see something more radical: a complete regime change in the audio landscape. Finally.

rex-sorgatzRight now, radio dominates — terrestrial radio occupies 52 percent of all audio consumption; satellite, another 8 percent. And in total, those two comprise 74 percent of all audio revenue. (Music streaming and downloads nab most of the rest.)

Yet they suck. They suck as user experiences; they suck as content sources.

Satellite radio sucks the most. It’s a stultifying interface, most of the content is terrible, and it costs you money. It’s the worst format that you have to pay for. (SiriusXM inexplicably pulls down $4.2 billion per year in revenue.) If ever there were an industry ready for disruption…

But before jumping off the prediction cliff, let’s acknowledge the obvious: Foretelling the rise of podcasting is a tale as old as Odin, or at least Odeo. And after years of hopeful hypothesizing, podcasting still only captures 2 percent of all audio consumption. But three factors — all relatively new — will push podcasting into the mainstream:  

  • Better experience. One of the few good things about radio is that when you get into a car, “it just works.” But now that mobile phones seamlessly connect to Bluetooth-enabled cars without any fuss, radio’s advantage is diminished. Also, a spate of podcasting apps have given consumers diverse playback options, which in turn pushes further innovation and best practices in user experience.
  • Better content. As Serial accrued 3.5 million downloads per episode at the end of last year, “What’s your favorite podcast?” became a popular conversational gambit, which propelled networks like Gimlet and Panoply to create even more quality shows. Almost overnight, the biggest complaint about podcasting has become that there are too many good shows to follow.
  • Better revenue. Even medium-sized podcasts can now command a $20-$50 CPM for a 60-second spot. (Radio grabs less than $2-$10 CPM.) Among the many reasons for this: quality of the content, desirability of the audience, and intimacy of the ads.

Podcasting is now poised to finally gobble up that aging radio audience. With superior programming delivered in a better experience at less cost, there’s no reason that podcasting can’t overtake satellite radio. This will happen surprisingly fast.

But going a little further out on a limb, here are some specific sub-predictions:

  • HBO will use Bill Simmons to build a new media network. Most of Grantland’s revenue derived from a podcasting network, which is slowly being reconstituted at HBO. One of the biggest mysteries in media right now is what shape his new HBO website will take. I expect something that looks less like the text-rich Grantland and more like a media-centric platform.
  • Serial will break new records. With the help of real-time breaking news, the audience for the new Serial will be even bigger than the first season.
  • Gimlet Media will launch a fusillade of shows. A couple will fail, but this is a hits business, and by the end of the year, the network will dominate the iTunes charts. Within two years, the company will have a $100 million valuation.
  • Revenue opportunities will increase. Right now, Mailchimp and Squarespace are like the DraftKings and FanDuel of podcasting — suspiciously pervasive. But high-end brands are banging on doors to sponsor high-quality podcasts. Because the demand is still high, the Super Bowl-level CPMs will not shrink, but a more diverse crop of advertisers will emerge.
  • Howard Stern will join the “loser” revolution. Many pundits predicted, inaccurately, that Howard Stern would not renew his SiriusXM contract, hoping that he would instead move to Spotify, Netflix, or Apple Music. (Another sign of the antipathy toward satellite radio: This prediction was more of a wish-fulfilling mass projection than actual soothsaying.) But this didn’t happen — or did it? If you haven’t noticed, the Howard Stern Show has quietly drifted onto YouTube and Soundcloud in an official capacity after years of quasi-illicit accounts. (I say “quasi” because they looked suspiciously like in-house creations with obfuscated usernames.) “Podcasts,” Howard Stern said earlier this year, invoking his old shock jock persona, “are for losers.” But this is classic Stern subterfuge — his show has already become a podcast.
  • Podcasting will die, but thrive. It’s true, podcasting in 2015 is like blogging in 2004. And blogging didn’t die — it became pervasive. Podcasting will endure a similar evolution, with so much adaption that “podcasting” will erode as a term while the form becomes ubiquitous. Already, the traditional silos of a media industry are taking shape, with new companies appearing to handle analytics, distribution, production, and advertising. Expect more “studios” and “networks” to emerge.
  • Content sources will multiply and surprise. In a year of highlights that included Marc Maron interviewing Barack Obama in his garage, something called the “GE Podcast Theater” producing the surprise hit The Message, and a venture capital firm producing one of the best tech podcasts of the year, we can expect to see more programming derived from unforeseen places. Media companies will continue adapting their franchises to podcasts, agencies will empower brands to create new shows, podcasting networks will devise new aural experiments, and even more independents will pop up from unexpected places.

It will be a good year to listen.

Rex Sorgatz runs the consulting agency Kinda Sorta Media.

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