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The podcast content debate: Paywalls, distribution, and exclusivity

Three pieces of news have brought the future of audio content front and center.

Luminary, a podcast company aiming to be the “Netflix of Podcast” launched their subscription based app last week. On March 26th, the BBC announced they would remove their podcast content from Google’s Podcast app, Assistant, and home speakers. Most recently, Sirius XM announced they would be making several of their talk shows available only on Pandora.

These headlines are becoming key points in the battle for how and where we listen to podcasts in the future.

1. The paywall debate

Throughout pretty much all of podcasting’s history, content has been free, distributed via RSS feeds and supported by ads. Luminary wants to change all that with a subscription service. — it’s already raised $100 million hoping to put podcasts behind a paywall on their $8/month app. The testing ground was Twitter, and the debate centered around a single ill-advised Tweet.

luminary tweet podcasts don't need ads

It was bombarded by podcasters that had made their living creating ad-supported shows. To have the founder of Luminary, a former Goldman Sachs investment banker, tell podcasters that ads weren’t necessary felt tone deaf. The Tweet was rationed.

Before we grab the pitchforks, Luminary argues that putting content behind a paywall will begin a golden age of podcasting in the same way that HBO and Netflix helped usher in the golden age of television.

One of the big advantages of its a subscription model is that Luminary is able to fund shows before they have an audience, something that’s difficult to do without ad funding. The thinking is that making audio content subscription based will free podcasters from the creative shackles of making ad-supported shows, who will be able to record more innovative shows.

“For podcasting to grow, creators must be able to take risks on more conceptual ideas, and the Luminary model provides that comfort,” – Mr. Davidson.

Luminary’s entrance was such a lightning rod for debate not because of what they were doing, but how.

Their model, however, isn’t novel — Stitcher Premium has already created exclusive originals only accessible on their app and behind a paywall. What makes Luminary so controversial is that they epitomized the flood of VC money to people outside the podcast industry looking to take it over.

One concern surrounding Luminary is how it could smother the “middle class podcaster” — the people with a small yet devoted audience in a niche subject. Would Luminary ever invest in an unknown individual? Judging by their roster of exclusive shows hosted by big names like Lena Dunham, Malcolm Gladwell, and Trevor Noah (to name a few), it seems highly unlikely

The anti-Luminary argument is that making content that’s supported by ads provides more creative freedom and makes podcasting creation accessible to everyone. This model is the backbone — it’s what built the entire podcasting industry, and the industry has evolved in a healthy, creative, and interesting way. If it ain’t broke, don’t fix it.

One thing to keep in mind is that for the ad-supported model to work, podcasters need to be able to garner a huge audience. And to get that audience, they need to be able to distribute their content wherever listeners are. This brings us to our second podcast controversy.

2. The distribution debate

A second debate in the world of podcasting occurred when the BBC pulled its content from Google. BBC’s decision is based on two primary factors:

  1. Unfair competition

The BBC launched its own app called BBC Sounds last year. But when you googled “BBC podcasts,” the only app it pointed you to is Google’s own podcast app. The BBC considers this an unfair practice and feels that Google is unfairly using its search engine to attract users for its own app — at the expense of the BBC.

  1. Access to data

What happens on Google Podcast stays on Google Podcast — and the BBC disagrees. Google is getting a treasure trove of data about who is using their podcast app, what people listen to, how much of it they consume, and so much more. This is information that the BBC desperately wants to learn from in order to make their own shows better.

Similar to Luminary’s announcement that “Podcasts don’t need ads,” the BBC pulling their content off Google was met with mixed reception. While some people were happy to see the BBC standing up to the tech giant, others viewed it as the BBC making it harder for listeners to enjoy their favorite shows. They didn’t want to switch to another podcast app just to listen to BBC content, especially an app that doesn’t offer a unique listening experience.

3. The exclusivity debate

Paywalls and the BBC removing their content from Google are part of a broader debate about exclusive content, which is content that’s either confined to a particular platform indefinitely or “windowed,” where it’s temporarily exclusive then released to the general public.

Until recently, exclusive shows were relatively rare in podcasting land. Spotify began producing exclusive shows like Dissect, a music analysis podcast, or Joe Budden’s show. Stitcher has also produced a few exclusive shows, such as Issa Rae’s Fruit. Pandora recently received a whole slate of exclusive shows when their parent company, Sirius XM, announced that they would be moving a lot of their talk shows to podcast format.

The advantage of exclusivity is two-fold. Exclusive shows usually come with a monetary incentive for show creators, allowing them to mitigate the risk of starting a new podcast by getting an upfront payment for limiting distribution. The other advantage is for the platforms themselves. Like Netflix, exclusive content can attract listeners to your service and, judging by the habits of podcast junkies, getting a regular listener to use your service can be quite sticky.

What do all these podcast debates mean?

The big question about the future of content boils down to two questions. Can podcasting go back to the days of only ad-supported podcasts? And if it can’t, is there enough room for multiple models?

As Pandora’s box of VC money has been opened, it’s hard to imagine that we’re going to regress to a world where all podcasts are ad-supported. Many podcasters will welcome the large upfront payments for content from companies like Luminary, especially since they are currently overpaying for shows, with their average show being bought for $700,000-1.5million per show. It seems highly unlikely that we’re ever going back.

Is there enough room for multiple models? Only time will tell. The podcast industry is growing up. For years we’ve seen podcast creators driving the industry. Now with big tech platforms, VC money, and massive production houses, we’ve entered a new era of podcasting. Will it be this new golden age? I don’t know, but I look forward to listening.

Sam Balter is the host of HubSpot’s podcast, Weird Work. He can be found on Twitter @sbbalter.

The post The podcast content debate: Paywalls, distribution, and exclusivity appeared first on ClickZ.

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