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Sept. 18, 2018, 9 a.m.

Cataclysm looming or a business maturing? How to interpret all the recent shakeups in the podcast industry

The past few years marked a period of unchecked experimentation on a large scale. Now, the tests have been run, the results have come in, and the time has come to shift resources based on what was found.

Been quite the week, hasn’t it?

In case you missed it: Last Wednesday, Panoply announced that it was getting out of the content business and, as a result, would be letting go of its entire editorial division — putting more than a few good producers out of a job — in favor of focusing solely on its “podcast hosting and ads services business,” i.e. its Megaphone platform. The company is also getting out of direct ad sales — leaving its client base to shop for new sales partners, seemingly abruptly — in favor of its podcast monetization offering that’s rooted in its partnership with Nielsen’s audience segmentation tool. Which is to say: Panoply is essentially shifting into a direct LibSyn and Art19 competitor with an additional monetization edge.

The Panoply news wasn’t an isolated development. That same day, Slate Group chairman Jacob Weisberg announced that he was leaving to form a new audio company with the author Malcolm Gladwell, he of Revisionist History podcast fame. On Thursday, the linear radio giant iHeartMedia acquired HowStuffWorks’ parent company Stuff Media for $55 million (that’s $5 million above what Scripps paid for Midroll, by the way). Capping things off, later that Thursday, the media conglomerate Endeavor began rolling out word of its own podcast division, Endeavor Audio, to the public.

That’s a ton of big news for a two-day span. Each story is complicated enough on its own, but the clustering of stories was dramatic enough to inspire questions about what they mean as a collective and what they tell us about the podcast industry. Joshua Benton strung together the news blitz on Thursday, closing with a useful framing question: “Is this a classic case of legacy media (iHeart) buying into its digital disruptor (podcasting), à la the investments of companies like Comcast, Hearst, Time Warner investing into digital natives like BuzzFeed, Vox Media, and Mic? Or something less positive, a sign of further shakeouts in an industry that, while far more structured than in its loosey-goosey early days, is still relatively decentralized?”

In my understanding, the Panoply decision was driven by a cold calculation. Put simply, the company has moved to no longer stretch its resources (and identity) across multiple lines of businesses — content, direct ad sales, technology — and to restructure itself purely around the one business that it has identified as having the most differentiation and long-term growth potential in the marketplace. Panoply may have had some high-profile shows over the years, but the business of hit production is exorbitantly risk-heavy, and when it comes to podcasts, you’re talking about an environment with an infinite competitive horizon already stacked with formidable players.

That challenge is further grounded with a more mundane truism: It’s hard to build any business, but it’s exponentially harder to build three interrelated businesses from scratch at the same time. Based on the messaging that came out from the restructure, it seems Panoply’s higher-ups determined that it would be more prudent to put all their chips on Megaphone. (It should be noted Steve Lickteig, EP of podcasts at sister company Slate, asserted over Twitter that Panoply’s move has no bearing on their operations. “We are still 100% in the game,” he wrote.)

Some readers wrote in to draw a line between Panoply’s withdrawal from the podcast content business and Audible’s early August move to eliminate a considerable number of roles within its original programming unit, particularly the podcast-style production team led by former NPR exec Eric Nuzum. Some suspected the two stories to be linked by a similar skepticism, perhaps from the companies’ respective higher-ups, about the prospects of podcasting.

I don’t see how that could be the case. If anything, Panoply’s move feels like a doubling down on the industry’s prospects, as the choice to focus on Megaphone is itself a bet that there will be more popular and profitable podcasts to come that would need next-gen technology support.

The Audible situation is a tad messier. As I’ve mentioned previously, I suspect the reshuffling of the company’s original programming division to primarily be linked to the executive turnover that took place last December. A shift in leadership philosophy and internal politics, in other words. In any case, the platform appears to going down its own path on original programming: audiobook-only products, theatrical adaptations, meditation app acquisitions. The Amazon-owned audiobooks giant may not be competing within the infrastructural context of podcasting, but they still very much compete for the relationship with audiences. Those two stories aren’t linked by skepticism about podcasting; rather, they’re linked by a similar move to double-down on their respective ecosystems in pursuit of the same goal: to derive value from capturing the earballs of people everywhere.

Nevertheless, the timing of the Panoply news was suspect, as it took place shortly after the company presented at the IAB Podcast Upfronts where, among other things, it announced a new fiction podcast co-written by The Bright Sessions’ Lauren Shippen and starring Kelly Marie Tran. (The project is still apparently going to roll out in November which…you know, awkward.) I don’t know, exactly, what’s behind the strange timing, but I reckon it has to do at least something with Jacob Weisberg’s decision to head out on his own.

In parallel to the Panoply news on Wednesday, Weisberg announced that, after 22 years, he was leaving the Slate Group, which houses both Panoply and sister company Slate, to form a new audio company with Malcolm Gladwell. His departure comes at a moment where Slate, a veteran internet magazine operation, appears to have found some success navigating the choppy digital media waters with the help of a growing podcast business. At the end of 2017, podcasting made up 25 percent of the company’s revenues, up from virtually nothing in 2014. And this year has looked to be a good one so far for Slate podcasting. Working off the strength of a formidable long-running portfolio that includes the Slate Political Gabfest and The Gist, the company has been rolling out a fleet of new shows, which includes the critically-acclaimed, widely consumed (its first season reportedly brought in 11 million downloads), and utterly fantastic Slow Burn. More big projects are in the oven: I’ve previously reported that Slate is working with author Michael Lewis to develop a podcast series.

Which raises the question: Why is Weisberg leaving to form a new audio venture with Gladwell now instead of keeping things in-house at Slate? I have no special insight into this, and there’s likely a ton of backstory we’re not privy to, but I can’t help seeing a possible parallel with the Panoply story here. Whatever the overarching circumstances, this could well be a situation where Weisberg and Gladwell want to run where they could previously only walk.

Anyway, specific details about Weisberg and Gladwell’s new venture are still scant, but we do know that it will focus on producing podcasts, audiobooks, and smart speaker content. I find the explicit evocation of audiobooks especially interesting; given Audible’s strategic shift to partnering directly with well-known authors to produce audiobook-only products and bypass publishing houses, it’s hard not to imagine the play here. And if Weisberg and Gladwell haven’t already thought about striking up a direct relationship with Audible, they should be.

I’ll admit to not being particularly surprised about iHeartMedia acquiring Stuff Media. I’ve heard rumors about HowStuffWorks slipping on a price tag as far back as June; when I followed up with the company, those rumors were categorically denied. (¯\_(ツ)_/¯). But here we are.

I vibe with Josh Benton’s suggestion that this story is, indeed, one of a legacy media acquiring its way into area knowledge and expertise of its digital disruptor. The move is good for iHeartMedia: Up to this point, the liner radio entity had experimented with various ways of interpreting the on-demand audio business, with ambiguous results (as communicated through ambiguous Podtrac ranking analytics) and some minor measurement controversies along the way. In HowStuffWorks, they’ve acquired a humming content factory that already performs well within the context of podcasting. (Endeavor Audio pulled a similar move in its rollout, striking a partnership with the Parcast network and its lines of genre product.)

On HowStuffWorks’ end, things strike me as a little more mixed. The Atlanta-based podcast giant has been at this for a long time, persisting through early podcast history beneath the umbrella of multiple parent companies before spinning out as an independent entity and raising $15 million in Series A money about a year ago. Since going solo, they’ve expanded, struck a few new partnerships, modernized their backend, and rolled out a few big-swing shows, including Atlanta Monster. That the company decided to be acquired (for $55 million, which feels a little flat, IMHO) rather than staying independent to either (a) further bump that number up or (b) become a bigger business of their own is the sticking point. A year is a really short time for a spin-out and exit, so either they didn’t read their long-term independent prospects positively…or perhaps this was always part of the plan.

Anyway, the Panoply and iHeartMedia-HowStuffWorks stories interact in a really interesting way: Prior to the acquisition, HowStuffWorks hosted its podcast portfolio on Megaphone, which I presume is an arrangement that’s pretty lucrative for Panoply. It’s unclear to me whether iHeartMedia will move HowStuffWorks onto another platform — perhaps its own in-house solution? — or whether they’ll keep things as is and build a sales infrastructure to meet it. We’ll see.

So, taken collectively, what do all these stories mean? Are they data points contributing to some impending cataclysm, or do they point elsewhere — towards something simultaneously better and worse, something just different?

One way to read this is a story of an industry “maturing.” In the final accounting, we have: a broad multi-purpose podcast company that’s restructured into a pure tech company, one big radio company gobbling up a smaller podcast content company, and one brand new content company. Put another way: You have a company that’s finally decided on what it should be, one big legacy media company buying their way into the medium, and a new audio company built on the foundation of a really popular blue-chip podcast (and Broken Record).

Another way to read it: The past few years marked a period of unchecked experimentation on a large scale, where a wide spread of gambits were laid out with ample runway. What we’re seeing might now might be the beginning of a turn: The tests have been run, the results have come in, and the time has come to shift resources based on what was found. In other words, as the podcast industry continues down its steady and relatively unsexy path of growth, players are reshuffling their decks in response.

The unfortunate reality, of course, is that the machinations of companies, corporations, and organizations tend to come at the expense (or indifference) of workers. With Panoply’s exit from the content business, a number of talented producers are back out on the job market at the end of the month. I tweeted out earlier that I thought the market for is better now for experienced audio producers that it ever was, given the preponderance of new audio companies and increased need for skilled labor. (Yes, everyone can make a podcast. No, not everyone can make a listenable one.)

I do believe that, by the way, but the belief is not without caveat: By a “better” job market, I mean that the current environment is one where producers can get paid gigs more easily than, say, five or six years ago. That doesn’t necessarily refer to the ability to get a desirable job at a company that will make good decisions, listen to you, and provide you with a place to grow — that’s a whole other bag of worms. But you can get paid. And that’s the frustrating heart of all this: Abundant jobs or no, producers function within a system where the fates of workers are mostly at the relatively unprotected mercy of capital, companies, and their leadership team struggling through their respective problems of identity, vision, and product-market fit.

One last thing. The framework for thinking through all of this remains the same: Demand for time-shifted on-demand audio content continues to increase, and demand for good on-demand audio creators and producers are going up accordingly. The central question we’re grappling with here is how money gets made. That story is only partly about how the podcast industry/community figures out its arrangements and business model. It’s also about how it deals with opportunities, challenges, and interactions with other systems — audiobooks, music streaming platforms, and whatever else lies around the corner.

This is an excerpt from this week’s Hot Pod newsletter, which you can read in full here.

POSTED     Sept. 18, 2018, 9 a.m.
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