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Sept. 24, 2019, 10:38 a.m.

Who could have predicted that Podcoin, an app that promised to pay you to listen to podcasts, didn’t work out

Plus: RedCircle wants to build monetization for podcasting’s middle class, Gastropod turns five, and adventures in music licensing.

Welcome to Hot Pod, a newsletter about podcasts. This is issue 227, dated September 24, 2019.

Money for nothing [by Caroline Crampton]. Podcoin, an app that promised to “pay you to listen to podcasts,” shuts down today. It began operation in December 2018 and claimed to hit 10,000 active daily users in April before being added to The Meet Group’s network of mobile apps. (Albeit seemingly without money changing hands — perhaps not surprising since the CEO of Podcoin and the CEO of The Meet Group are brothers.) Now, because it “just failed to sustain momentum,” it is going offline less than a year later.

The mechanism behind Podcoin was questioned by users right from the get-go (as in this Reddit thread, for instance), but here’s how it was supposed to work: For every 10 minutes of podcasts that you listened to via the app, you earned one “podcoin,” which could then be redeemed against rewards such as Bose headphones and Amazon gift cards. In its FAQs, the company referred to the act of listening as “podcoin mining,” positioning their product as a kind of hybrid podcatcher and cryptocurrency, I suppose. On that page, they also detail various checks and balances meant to ensure the listens were genuine, rather than generated by bots.

I’ve been ambiently interested in Podcoin since the first time I saw someone post about it in a podcasting Facebook group that I belong to. It seemed a perfect distillation of some of the more questionable ventures that crop up now and then in the podcasting space. It was created by Geoff and David Cook, siblings from the family who made myyearbook.com and then sold it in 2011 for $100 million. The more I looked into this venture, the more intrigued I became. For instance, this passage — part of the answer to the not-unreasonable question “How is it possible to pay me to listen?” — is wild:

What is wrong with the larger app ecosystem that the idea of rewarding you for your time is so strange. Why is that some corporate overlord should aggregate all your time and leave you even unhappier than you were before while they resell your information to the highest bidder?

From what I could see, Podcoin had no visible means of generating revenue, although there was a long-term plan to charge podcasters to have their shows featured. And although there were various streak incentives that would deliver more “podcoin,” it would still take hours of listening every day for years to earn enough for most of the rewards, a fact quickly picked up by most of the people I’ve seen discussing whether to bother with the app.

That said, some people were obviously engaging with the app, at least if the user figures were to be believed. I went in search of these Podcoin users and ended up speaking to three different people who’d experimented with the app, to find out how a system like this looks from the inside.

Suzy Buttress, who makes The Casual Birder Podcast, told me she was “thrilled” when she first heard about the app since it sounded like a way for her to spread the word of her show to more listeners without having to spend money. (She’s an independent podcaster with a self-described “very limited” marketing budget.) “It felt like a win-win situation. Here were people who already listened to podcasts, being encouraged to listen to more,” she told me over email. Podcoin offered a free two-week promotion after a podcaster “claimed” their show on the app, and Suzy had seen others posting about “incredible uplifts in listeners, of thousands at a time,” she said.

However, her own experience was somewhat different. “During my two-week promotion I received 76 listens and 20 subscribers — far fewer than I was receiving via my other efforts (as evidenced through the podcast destination listening stats that my host provides).” After that initial fortnight, to continue to be featured, a show needed to insert ads for Podcoin, and based on the poor showing Suzy decided against promoting the app and instead chose to stick to the “traditional ways” of raising the profile of her show.

David Couto, who makes Sleepy Time Tales, said he became intrigued by the app both when he initially saw it ranking fourth in the user-agents for his show (he used Chartable to see this) and when, like Suzy, he saw other independent podcasters posting on social media about their Podcoin successes. He similarly saw little return from claiming his show on the app but told me over email that he was intrigued by one aspect of the analytics offered, which allowed him to see what other shows his listeners were listening to.

Scott Ertz, editor-in-chief of Plughitz Live and host of F5 Live: Refreshing Technology, told me that he also initially heard of Podcoin via an online podcasting community, when another member was asking for the group’s opinion of whether an invitation he’d received from the app was “a scam.” Scott decided to look into it in more detail and reached out to CEO David Cook for answers.

“After talking to him via email, I no longer believed that it was a scam (though I also didn’t believe it was a good idea), and decided to give the platform a shot as a podcaster and claimed my shows,” Scott said. However, the promised two-week featured periods for all of the 11 shows he runs never materialized, and he feels like the app had little to offer. “The idea of ‘paying’ listeners is a cute way to get media coverage, but it never had any real-world value for either listeners or podcasters,” he added.

I sent out a lot of inquiries, but I couldn’t find any dedicated user of Podcoin as a listener to tell me about what rewards they might have earned in the nine months or so the app was active. Although based on some rough calculations and the fact that there was a six-hour-per-day “mining” limit, I’d be surprised if many of those Bose headphones actually shipped.

And now, Podcoin shuts down, its superficially attractive promise of payment for podcast listening revealed to be untenable, just as everyone who looked closely at it thought it was. (Although it might not be gone forever; the company’s post about the closure says “We did learn A LOT, and we’ll be applying it to a future app.”) However, before I wrap up this small dispatch from the venture-funded fringes of the podcasting tech scene, I must just share with you this quote from the company’s FAQ page:

We think it’s odd that nearly every venture-backed app today burns money hand over fist and gives nothing back to their audience, and yet, our model is the strange one.

Make of that what you will.

[Nick’s note to the kicker above: 🌶️🌶️🌶️🌶️🌶️🌶️🌶️🌶️🌶️🌶️]

By the way: Pocket Casts, the generally well-regarded podcast app owned by a consortium of public radio organizations, is now free. It has also launched a premium tier that’ll give paying users a bunch of perks. Here’s the official blog post on the matter, and here’s a link to the analysis I wrote in last Thursday’s Insider.

Descript raises a $15 million Series A and introduces an AI-powered “Overdub” feature, built on Lyrebird. Useful, and uncanny. Here’s TechCrunch’s writeup.

Heads up, Canadian and Canadaphilic readers. Just wanted to quickly put something on your radar: the Hot Docs Podcast Festival happening in Toronto November 6-11. I am a massive, massive fan of this festival and of the team that stages it every year. What they’re doing is essential, I believe, to the podcast industry up north.

So if you’re in the area, or are amenable to a brief trip to Drake’s hometown, I highly encourage you to check it out. Can’t make it myself, but I wish I could.

Options for everyone else. If you squint, you might notice a quiet arms race forming around an increasingly apparent gap: monetization opportunities for podcasters who are finding conventional ad revenue progressively harder to access.

Existing players in this space include Slate’s Supporting Cast (which I wrote about in February), a new startup called Supercast (which Caroline wrote about last week), and emerging initiatives from companies primarily focused on other media formats, like Patreon and Substack.

These efforts appear to be fueled by twin observations: first, that the number of podcasters (and therefore potential customers) has ballooned to astronomical levels over the past couple of years, and second, that conventional podcast advertising, long the industry’s default economic engine, feels increasingly constrained within a layer of established publishers and similarly established newcomers (i.e. legacy brands, celebrities, and so on). As such, there’s a potent opportunity to create better tools, systems, and pathways for the wide universe of everyone else to access alternative means of monetization. The question is what those tools will be — and who’ll be able to effectively build them for the masses.

One recent addition to this cadre of note is RedCircle, a San Francisco-based startup founded by Mike Kadin and Jeremy Lermitte, a pair of tech-industry operatives who, as they’re quick to tell you, hail from Uber, the often-controversial ride-sharing giant. “When we looked at the [podcast] industry, we made the observation that there just wasn’t a lot of sophisticated technology in place,” said Lermitte when we spoke over the phone last week. “A lot of the tools we built for Uber were around providing marketers and operations people with tools to run and grow their cities, and so we felt like we could actually apply a lot of what we’ve done for and learned from Uber to create value for a lot of people.”

When the startup made its first press push back in April, much of the emphasis was on a cross-promotion-oriented audience development tool. Since then, RedCircle has expanded its value proposition to offer a broader suite of solutions, including free hosting, standard analytics, and most importantly, infrastructure to help podcast creators directly monetize their shows through channels like donations and premium subscriptions. The website does a pretty good job showing you how the backend of its platform works right off the bat, so I won’t get into the technicals here.

RedCircle’s plan, it seems, is to develop an ever-iterating platform that will be a lot of things for a lot of podcast creators. Which is also to say: RedCircle will very likely continue to expand the toolset it’s offering, up to and including eventually building out an alternative on-platform advertising marketplace. (I’m told that the company has already gotten a few brands on board with that program.) In our phone call, Kadin and Lermitte emphasized a focus on independent publishers, which they seem to define broadly; their current client list includes YouTubers (Approachables), reality TV figures (Dear Albie), and sports radio talent (Tony Bruno).

At the moment, the startup claims to be gaining some steam. Kadin and Lermitte say that they’re growing 38 percent month-over-month; when pressed, they said that number refers to growth in downloads of podcast episodes hosted on the platform. Personally, I’d be more interested to see growth metrics tethered to direct revenue volume transacted on the platform, but I suppose we all have to start somewhere.

Speaking of which, we should talk about RedCircle’s business model. In its current iteration, the startup’s revenue engines are primarily attached to its direct monetization tools: Podcasters using its donation service will be charged 4.5 percent of their received donations (plus Stripe fees), while podcasters using its premium subscription service will be charged 12 percent (plus Stripe fees). Again, RedCircle is likely to expand its services, which means that its revenue channels will also expand along with it.

Given the current business model, I asked Kadin and Lermitte if people should think about RedCircle as, say, Substack or Memberful, but for podcasts. The duo prefers a different reference point: Shopify, the Canadian e-commerce platform giant that offers a suite of services (payments, marketing, customer engagement, shipping, and so on) to a wide range of online merchants. It’s an appealing model, given that Shopify, which is publicly traded, brought in over $1 billion in revenues last year. And you can probably derive the startup’s endgame from this metaphor: If RedCircle is successful, it can become an entire layer of the growing podcast ecosystem.

Of course, the metaphor has its limits. It’s fairly reasonable to conceptualize the growth potential of the online merchant category as theoretically infinite. After all, as long as people need goods and services, there will always be an ever-growing, ever-iterating, and ever-evolving pool of online merchants to meet those needs. But is it appropriate to think of media companies (and podcast publishers specifically) along similar lines? Or are the boundaries of that pool significantly smaller and much more defined?

Lofty questions, these. They’re worth mulling over, I think, not just in the context of the ambition of upstarts like RedCircle, but also in terms of how we should think about the broader trends informing the creation of these ventures. To reframe the questions in the prior paragraph: We know the number of podcasts has ballooned. To what extent is that volume sustainable? In other words, is there enough listening (and subsequent direct revenue engagement) to keep most of those podcasts around?

But those are broader considerations, and I’d understand if you think it to be navel-gazing. For now, and for whatever proportion of those new small-to-midsize podcasts will persist, there exists a definite need for an alternative economy along with tools to support it. Whether RedCircle — or Supporting Cast, Patreon, and so on — ends up being the main solution over the long term remains to be seen. But the opportunity is nonetheless very much there.

Shout-out to Gastropod, the indie podcast about the history and science food by Cynthia Graber and Nicola Twilley, which turns five this week. Five! In podcast years, that’s old enough to be buying your first house but still be riding on your family’s phone plan. Graber and Twilley have built something wonderful, independent, and free. Here’s to five more.

Thirst Aid Kit returns on Thursday. Reminder: The podcast is now with Slate.

Gimlet’s StartUp will return for a mini-season in October, where the marketing vehicle-turned-autobiographical documentary-turned-hybrid of the two will cover the company’s acquisition by Spotify. Once that’s over, I’d love to hear about the experience of the mini-season from the perspective of Spotify’s comms department. I can’t even begin to imagine.

PodFund has announced three more creator investments, including a podcast studio. They are DIVE Studios, Domino Sound, and Osiris Podcasts. Here’s the blog post.

Adventures in music licensing: a case study. So there’s this upcoming independent project that I’ve been tracking pretty closely. It’s called Moonface (stylized as MOONFACE), it’s a six-part fiction podcast by a team led by KPCC alum James Kim, and it’s set to be a bilingual production, carrying out its story in both English and Korean.

Also, it’s going to feature a good deal of licensed music (including tracks from Clairo, Big Thief, and Peggy Gou), which is something I’ve long wanted to see done more widely in podcast production. Getting the rights to use music is a pretty costly transaction, though, often prohibitively so for independent productions made on a shoestring budget. So I thought I’d check in and talk with Kim about his (admittedly atypical) experience getting labels on board with his project. The chat ended up touching on a broader series of topics around the idea of music and podcasting. A lot of it could be useful to you.

I decided to run this as an “as told by” piece, for readability’s sake. Here’s Kim:

James Kim: Music is one of the most underutilized aspects of podcasting. It can affect the mood, the pacing, the emotion of a scene or story. But it’s also not as simple as slapping down a music bed with some marimbas and calling it a day — there’s an art to it. There are also a ton of decisions involved that can either make the music work or not: when you should bring a score or a song, how long it should play, if certain musical moments hit in a scene, how does the music complement the moment and the story, etc.

Andrew Eapen is the composer on MOONFACE. We started discussing how we would use music on the show about eight or nine months ago. I created a music bible and broke down every instrument I wanted to use, with specific examples from film scores and bands. We even made a mood board of how we wanted the music to feel. There’s not much happening sonically in the show, so the music was going to carry the bulk of the emotional weight.

I knew I wanted to use a good amount of pop and indie music in MOONFACE. We have original scoring in the podcast by Andrew, but I wanted to experiment with using pop music to find out how that could bring new layers to the experience. And of course, I wanted to make sure that I was cleared to use them, because the last thing I want to do is pull an episode, find a replacement track that I’m free to use, and then reupload it.

But I knew I didn’t have enough money to pay for the licensing. On the low end, it could cost around $500 to get the rights to use a song, and upwards to thousands of dollars depending on the artist and how popular that song is. The process could get quite complicated. You gotta get both the publishing/sync license, which usually belongs to the record label who distributed the song, and the mastering license, which usually belongs to the record label or artist who made the song. Both come with separate prices.

The price can also be affected by how the song is being used: if it’s in the background or front and center, how long the song is being played, if your podcast is available in certain areas or if it’s available worldwide, if you want to use the song for just a year or forever, and so on. It was a lot, going through the process six or seven times for each song I wanted, but it was definitely eye-opening. Especially because I feel like it’s a new territory for podcasters to be thinking about.

So, I didn’t have a ton of money to throw at this podcast. I had a total budget of $10,000. But I figured I would reach out and ask if there were any way I could use the songs I had in mind…for free. It was a big ask, but when we got to negotiations, I made it clear that I wasn’t making this podcast for a profit. I wouldn’t sell any ads or have any paywall or set up a Kickstarter. This was all self-funded — I even took out a personal loan just to cover the costs for the project — and I’m just making this podcast simply because I wanted to make something I’m passionate about. Something that would make people feel something, and hopefully expand what a podcast can sound like.

More podcast outlets are taking music licensing seriously, I think. For instance, Gimlet (where I now work full-time) hired the amazing Liz Fulton a few months ago as a music supervisor to oversee things such as music licensing and a ton of other stuff. But getting permission to use pop music is generally a newer idea in podcasting. Even when I was going over the music licensing contracts for MOONFACE, there were sometimes no checkboxes to mark that the show was a podcast. Sometimes I had to explain what a podcast was, and how it was different than other mediums. So, both the music and podcast industry have a long way to go.

Moonface will drop in its entirety on October 9.

Three things I find interesting

  • A new project tracking public media mergers, appropriately called the Public Media Merger Project. Shoutout to Elizabeth Hansen, friend of the newsletter and the person who’s leading the project.
  • From Quartz: “How Neil Young’s failed anti-streaming business helped the music industry.” Neil Young, catalyst of dialectics.
  • Google says it’s making adjustments to how it is storing audio recordings off its Google Assistant-powered products, seemingly as a response to backlash over privacy issues. Here’s the official blog post, and I found the Wired writeup most comprehensive if you’re starting out with this thread.
POSTED     Sept. 24, 2019, 10:38 a.m.
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