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Feb. 11, 2020, 11:48 a.m.

If people will pay for MP3s of people whispering them to sleep, why won’t they pay for podcasts?

Plus: A fair-use fracas, audio rom-coms without a business strategy, and the overwhelming whitemaleness of podcast acquisitions.

Welcome to Hot Pod, a newsletter about podcasts. This is issue 245, dated February 11, 2020.

Pay to snooze [by Caroline Crampton]. Pretty much every night, I take a train journey north along the coast of Norway.

As a chronically bad sleeper, I’ve tried a lot of different remedies. Some were a disaster; turns out pillow sprays make me sneeze. But eventually, I worked out, like many before me, that having something to listen to helps me tune out of my own thoughts long enough to fall asleep.

For several years, I used podcasts for this, often relistening to the same episodes over and over, the familiarity enhancing the calming effect. (This has several times made meeting certain podcasters awkward; I want to express my gratitude for their help while not wanting them to know that I regularly use their voice to achieve unconsciousness.) But most podcasts proved too interesting to work for this sleepy purpose — as their creators intended, I wanted to stay awake and listen to the end.

That’s where the Norwegian train comes in. It’s a “Sleep Story” offered by the meditation app Calm. It’s taken from a book called Night Trains by the author Andrew Martin and is read by the voice actor Erik Braa. (Gamers might recognize his voice from the World of Warcraft or Assassin’s Creed franchises.) Braa reads Martin’s description of the train journey between Trondheim and Bodø in northern Norway slowly, his voice set over the sound of rain and of gently clanking carriages. Suffice to say, I’m rarely awake when, 30 minutes later, the train arrives at its destination.

I bring this up here because I think Calm’s Sleep Stories — as well as similar “sleepcast” features in apps like Headspace and Meditopia — throw light on a perennial question we have in the podcast industry. Will people pay for podcasts? This is something we’ve been discussing in Hot Pod for years now, whether via what CastBox was doing in 2018, the “Netflix of podcasting” wars of 2019, or the ongoing growth of tools like Supporting Cast and Glow that enable podcasters to offer their own premium feeds.

Despite these high profile experiments and the bonus-episode culture created by crowdfunding tools like Patreon, I think it’s safe to say that the majority answer to that question across the industry is: “No, not really.” It’s why advertising has dominated podcast monetization up to this point and why the (contested) definition of the word “podcast” has such a strong association with being free to air. Even the podcast-like series made by Audible and kept behind their paywall have always been framed as either a way of hooking users in for the subscription or as a nice bonus for existing subscribers. You pay for the audiobooks, and the podcasts come with them — it’s not a podcast subscription platform.

Something that Nick wrote in our 2020 preview floated back into my head when I was loading up the Calm app the other week: “All audio plays compete for the same global pool of earballs.” This came up in the context of comparisons with the Chinese on-demand audio market, which — at least according to the partial understanding we in the English-speaking sphere have of it — is dominated by “pay for knowledge” platforms like Ximalaya FM, on which millions of users are happily paying for podcast-like audio content.

When APM’s Marketplace covered this trend back in September 2018 as part of a package on the “FOMO industry,” there was a flurry of excitement from those keen to predict a surge in subscription podcasting. As our own coverage of Chinese podcasting showed, there’s a lot more to the space there — but I think there was a general sense that this kind of scaled subscription business couldn’t exist in the U.S. now that a consensus has emerged (for lots of reasons) around advertising.

But the proliferation of sleepcasts in wellness apps makes me wonder if that’s really true, or if it’s just a matter of shifting the narrative. There are many excellent ad-supported, sleep-focused podcasts — of which Drew Ackerman’s Sleep With Me is probably the best known — but people who don’t spend their free time wondering about the future of podcasting are also happy to use and pay for sleepcasts elsewhere.

Whenever I talk to people who aren’t involved in podcasting, I’m struck by how much audio is just…audio to them. A podcast app is one outlet among many where they might find things they like to listen to, alongside places like, YouTube and yes, meditation apps like Headspace or Sam Harris’s Waking Up.

Calm was valued at $1 billion in a fundraising round a year ago. What it offers is audio, whether or not people working in radio or podcasting think of it that way. My favorite train journey story is 30 minutes of monologue backed by a soundscape and it could easily be distributed via RSS; the only difference is that I’ve paid for the app where it resides.

The question that needs to be asked is: Why will people pay for Calm but not for the premium tier in a podcast app? Part of it has to do with podcasting’s history, of course, but it’s also about the self-help/wellness space that these apps reside in. For me, the apt comparison for Ximalaya FM is something like Skillshare or Masterclass, and I think there’s something of a similar effect with meditation and sleep aids too. Even in the age of Netflix, there’s a sense that self-improvement and education are worth paying for, while entertainment should be free.

All of which is to say: There are a lot of people out there who will pay for paywalled audio content — especially if it’s part of a package that promises to improve their life in some way. It’s just not clear if that model can be successfully emulated when the product is called a podcast rather than a meditation.

Plug and play. There’s always value in a simple pitch, I suppose. For Meet Cute, a New York-based podcast company that announced itself in Variety a few weeks ago, that pitch has two parts.

The first is a pithy if somewhat woo-woo mission statement: “Hope for the Whole World.” The second is a sharp product focus, with the company working to make short-form audio romantic comedies — rapidly and at volume, with the logic of an algorithm and the rigor of a factory floor.

The basic construct of Meet Cute’s audio output is a quick-turnaround 15-minute rom-com, broken down into three-minute-long chapters, primarily delivered over a standard podcast feed. When we spoke over the phone Friday, co-founder and CEO Naomi Shah talked about these compositions in strictly formulaic terms: “There’s usually five parts to the rom-com,” she said. “There’s a meet cute, then there’s some sort of conflict, then there’s usually a couple of steps of working through a journey together, then there’s a resolution, and then there’s happily ever after.” Note how that five-part formulation maps neatly onto the five-episode release structure.

Speaking as a connoisseur of the genre, I suppose that description is generally accurate, though there’s something a little halting about hearing the rom-com broken down into assembly line boxes. Then again, Syd Field was a wildly famous screenwriting teacher, and the reality is that you don’t get well-made stories without a sound implementation of structure. So I should probably take my bleeding-heart artist marbles and go home.

Anyway, here’s the financial context: As the Variety writeup notes, the company has raised more than $3 million from a group of investors that includes Shari Redstone’s Advancit Capital (which has also invested in Wondery) and Union Square Ventures. (Prior to co-founding Meet Cute, Shah was on the investment team at USV, and appears to still formally hold a position there. Cofounder Emily Wilson is a daughter of USV partner Fred Wilson.) The Variety piece has useful detail as to how that money will currently be spent, and you should probably pay close attention to the bit on a fund that “will pay writers $1,000 for their scripts to be developed in a podcast.”

The company is currently pre-revenue. Like, really pre-revenue. I wasn’t given a straightforward answer when I inquired about plans for future ad sales, paywall experiments, or anything like that. “Right now, really 100 percent of our attention is being focused on making the content and putting it out there for users,” said Shah. “So I guess I can’t really answer that question because we don’t really have a business model right now.” That said, the Variety piece notes that the company will retain IP ownership over the stories they produce, which opens up possibilities for derivative revenue. But that kind of money is really hard to get going, so you can’t really position it as a primary business model.

I also wasn’t given a clear answer when I asked about how the team views the nature of its competition — in other words, the market it will eventually inhabit. But one can probably already make a few guesses as to how the Meet Cute story might end, if it does get past…well, its own meet-cute. The key, I think, is to view them as an upstart niche media company built around the audio format and a specific genre focus. From that standpoint, one could evoke something like Dipsea (the short-form audio erotica platform that’s powered by a paywall) or the meditation-focused Headspace and Calm. But a more appropriate comp would probably be Parcast, the volume-driven and ad-supported purveyor of quick-turnaround pulp podcasts that was acquired by Spotify last year.

Despite the capitalistic oddity of its financial context and the striking literalism of its paint-by-numbers approach, one can’t really deny there’s precedent for a company like Meet Cute and what it’s trying to do. The best-case scenario, I think, would be the realization of something like the Hallmark Channel — a prime vessel of inexhaustible utility from infinite variations of a fairly rigid formula.

Fair-use fracas. Last Wednesday, author and podcaster Rich Roll published a Twitter thread that raised significant issue with WeCrashed, a new Wondery show on the story of WeWork that rolled out in mid-January.

Specifically, Roll highlighted WeCrashed’s second episode, which featured an interview with WeWork co-founder Miguel McKelvey that not only appeared to use significant portions of Roll’s own podcast interview with McKelvey without sufficient attribution, but also edited in such a way that could plausibly make the segment seem as if WeCrashed host David Brown had conducted it. Roll, a former entertainment lawyer, argued that Wondery’s usage of his audio clips exceeded fair use, implying potential legal liability.

Wondery would pull the episode and replace it with a re-edited version around twelve hours later, citing “human error.” Roll was given an apology shortly after.

The question here is how fair use should be applied in podcasting — an industry that is still “wild” and “west” and annoyingly underdeveloped in terms of attribution and underlying monetization inequities. But there’s a more specific thread to this story, too: This is a problem we should expect to see pop up more often as podcasts that rapidly repackage stories that have been told elsewhere continue to grow in number.

There aren’t that many podcast lawyers running around just yet, but that should change. We sure will need ’em.

Meanwhile, in public radio. Sending good vibes to New Hampshire Public Radio ahead of the state’s primaries tonight. As documented in The New York Times, they’ve put a lot on the line with their Stranglehold podcast, which, by the way, I wrote about back in December.

On acquisitions and power. We should probably start at the beginning.

Last Wednesday, Spotify — already the biggest buyer of podcast companies to date — announced its fourth major acquisition, The Ringer. I wrote about the deal and mulled over the details a little more in Thursday’s Insider, where I noted that it wasn’t lost on me (and others) that the four podcast companies acquired by Spotify were all founded by…well, white dudes.

I planned to follow up by writing a whole column about the significance of (and trouble with) this data point. But as I started writing, I realized it had been a while since I’d inventoried the list of all podcast acquisitions. So I dug back through the archives and sent out a few emails and messages, along with a tweet to check for significant omissions.

A handful of helpful replies (and dad jokes later), this is what I came up with:

A few reading notes:

First, I’m using 2014 as a starting point, in part because that’s when I started writing about podcasts and consequently it flatters my narcissistic proclivities to view it as the start of “modern” podcasting. (The potential non-narcissistic argument would be, well, Serial.)

Second, the acquisition numbers as reported and listed in the spreadsheet shouldn’t always be taken in a straightforward manner, as they sometimes include both hard cash or stock and potential payouts based on performance.

Third, The Ringer’s price is still TBD, pending reliable reports, but my working assumption is that it will almost certainly top the $100 million it was pegged at during a previously reported negotiation with AT&T’s WarnerMedia, and by a significant margin.

Fourth, I left out the Barstool sale (which is really a 36 percent investment designed to turn into majority ownership in three years, a stretch in which a lot of things can happen) because it doesn’t strike me as a podcast-first acquisition.

Fifth, I didn’t differentiate between content and technology companies, though I can recognize the argument for doing so. Some other time, perhaps.

Finally, I pulled out the Pop-Up Archive, Pocket Casts, and Castro acquisitions separately, mostly because I couldn’t find any reported acquisition amount and partly because I’m guessing those sums were likely on the smaller side. (Feel free to disabuse me of this notion; my inbox is always open.)

So with all that laid out, it’s time to reiterate something we already knew: Beyond just Spotify, the overwhelming majority of all podcast company acquisitions that have taken place since 2014 were either founded by white dudes or featured an executive team of mostly white dudes at the time of purchase. To frame it another way: It would seem that almost all of the financial beneficiaries in this recent spate of podcast acquisitions come from the same historically advantaged demographic. (Shout-out to half of Pineapple Street and Pop-Up Archive for being the exceptions in this trend.)

For what it’s worth, I don’t believe that acquisitions should necessarily be taken as good or desired outcomes. That’s just me. The way I see it, acquisitions are part of a wider spectrum of potential economic opportunities afforded by this new media ecosystem; other pathways include, say, lucrative production partnerships and deals, long-term independent ownership of a sustainable revenue-generating operation, or even going public (should that ever happen for a podcast company), among others.

But acquisitions often represent the quickest path to wealth generation for entrepreneurs. That’s significant, because to phrase things very simplistically, wealth translates into power. To unpack more specifically: Wealth conferred via acquisition, in the context of an emerging industry like podcasting, also translates into industry-shaping power. So it’s exceptionally noteworthy that one specific demographic — again, the same one that’s had historical advantages in all other aspects of the economy — seems to be accruing the bulk of that industry-shaping power at a time when the podcast industry is still eminently moldable.

I’ve always viewed podcasting as fertile territory for new realities in media entrepreneurship. Its core promise is to afford people previously shut out of conventional media systems an opportunity to participate in the process and the returns of media entrepreneurship. From that standpoint, it’s hard for me to view this set of outcomes, which show no real sign of changing direction, as anything but an alarming under-realization of that promise.

My point isn’t to take away anything from the achievements of those who’ve actually sold their companies. In almost (almost!) every case, I can see viable arguments for the strategic value in those deals.

My purpose here is to highlight the fact that we haven’t seen more acquisitions of podcast companies founded by women or people of color — even though quite a few of them exist right now.

I’ve heard the counterargument: the idea that the acquired companies were generally at a more “advanced” stage than others, and as such were able to provide more value compared to those that haven’t been acquired. Come on. Looking at the full spread, you know that isn’t always the case.

There’s not much mystery as to why this happens. Part of it’s rooted in the nature of the companies doing the acquiring; there’s a structural tendency for leadership teams to make acquisitions of companies with similarly-styled leadership teams. This state of affairs is further exacerbated by what happens on the flipside: Entrepreneurial opportunity isn’t equally or equitably distributed among women and people of color.

Again, this whole thing about the distribution of podcast riches is significant because it also means that podcast industry-shaping power — by virtue of decision-making, investing, resource allocation, and so on — is being structurally allocated among the same kinds of people that have always held that kind of power in other places, a situation that holds especially more weight when it’s happening in an industry whose identity, composition, narrative can still be rigorously shaped.

This is a crucial time, and the risk of what happens from here is a situation where that structure of power continues to replicate itself, bringing podcasting to a place where it ingests the same gender and racial opportunity gaps found in all the older media industries when those gaps could well have been tackled from the get-go.

(Again, I really don’t want to further gas up the idea that an acquisition is the ideal endpoint of any entrepreneurial context. Gah.)

Smarter writers than I have argued elsewhere — vitally, robustly, rightly — about the myriad reasons to diversify the decision-making ranks at all levels, whether you’re looking through the lens of equity, efficiency, ethics, and so on. The fundamental limitation of leadership teams made up of only one type of person is their struggle to understand (and therefore serve) people outside their own demographic contexts. Which means that those companies, and the industries they collectively make up, are less able to adequately serve a wider range of people who might well benefit from their products/programs.

The thing that arrests me most about this bugaboo is the familiarity of it all. We’re having versions of this exact conversation in any number of other arenas: public radio, Hollywood, book publishing, sports, the art world, politics, yadda yadda yadda. And what we’re seeing with this spate of podcast acquisitions feels like a frontier of squandered opportunity. It directly contributes to the replication of a power disparity in a context that could’ve started in a more progressive state. Again, acquisitions aren’t everything, but they are meaningful, which is why if we don’t see any conscious counter-balancing of the trend, we’re set for a shittier (albeit familiar) world.

Then again, here’s something I’ve also been hearing with increasing frequency: So what if podcasting is shaping up to look like everything else? What really ever gave it the potential to be any different? Good question. You tell me.

Illustration by Dion MBD used under a Creative Commons license.

POSTED     Feb. 11, 2020, 11:48 a.m.
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