Podcasts: origin, business and beyond

I have been spending quite a lot of time listening to podcasts lately. I got curious and looked into their origin, how they work, why they are popular and where they are heading as a business. Breaking them down in this opinionated analysis. You will know everything (almost) about podcasts at the end of six minutes.

Under the hood

Podcasts are audio files broadcasted over the internet for users to download and hear at their convenience. They are accessible through devices that can connect to the internet. Your mobile phone, laptop, PC can become podcast streaming devices. How does it actually work? Podcast creators record the audio in MP3 format and upload it into a cloud hosting service. They also create a Rich Site Summary (RSS) feed for the hosting location. RSS feed is a computer understandable code that tracks updates in a location of the internet such as the podcast cloud portal. Applications like Apple Podcasts, Spotify and PocketCasts track the RSS feed. These applications are called pod-catchers. If a user has subscribed to a podcast in a pod-catcher, new episodes will be downloaded or notified when they are available.

How podcasts work
A free and open podcast system

A Guardian journalist, Ben Hammersley, was writing an article in 2004 to explain the new trend in media broadcasting. He accidentally invented the word podcast by combining “iPod” and “broadcasting”. He is credited for creating the term. But, iPod did not support podcasts until 2005. Usage of iPod in the name was enough to convince Steve Jobs to build the feature into iTunes.

Steve Jobs announcing podcasts for iTunes in 2005 WWDC

Integrating podcasts into iTunes was a game changer. Users can subscribe to their favourite podcasts in a single place and listen across their devices. Today, Apple Podcasts is the most popular pod-catcher with over 800,000 podcasts in the platform.

Why are podcasts popular?

Media companies compete for the time in the user’s day. The time a user spends in a media platform, allows them to run ads or charge a subscription to make money. Prime time, typically 07:00 PM to 11:00 PM, is already dominated by popular media. It’s difficult to acquire time outside this slot because everyone is busy with their job and daily chores. If only there is a way to consume media while doing the routine tasks.

If someone is watching TV, they are consuming the program with their eyes and ears. More senses involved in following something, lesser the scope for multitasking. Radio is still popular due to the multitasking aspect. A coffee shop owner, taxi cab driver or a construction worker can listen to radio without significant disturbance to their work. A song or voice in the background will elevate the vibe of the environment. But, one needs to have a radio receiver device to listen to the broadcast. The radio programs are also pre-scheduled and the user has no control.

Podcasts have taken the best utility of radio and solved almost all of its pain points. With podcasts, every device with internet connection can become a listening gadget. Driving to work, waiting in traffic, morning jog, cooking in the kitchen are all ideal time slots for listening to podcasts. Another key difference between radio and podcasts is that it’s more personal. Users can find and follow podcasts in niche topics of their interest. Podcasts have given the control to the listeners.

For creators, it is easier to create podcasts than any other format of media. A microphone or even a smartphone voice recorder app is sufficient to get started with podcasting. Voice only mode of communication provides a virtual mask for creators to express themselves freely.

Podcasts as a lead generating medium

Many companies offer podcasts for their own benefits. I listen to This Is Product Management where the host brings product leaders from different companies who talk about their experience in managing products. The podcast is owned by a customer feedback platform company, Alpha. “Implement what you learned from the podcast”, says Alpha.

Robinhood’s Snacks podcast is a popular, daily financial news story offering. What is the most common identifier among the daily financial story listeners? They are likely to be stock investors. And, Robinhood is a stock brokerage firm. These podcasts are self sustainable, lead generation tools for their parent companies. Traditional media companies such as BBC, NPR, ABC, Disney also offer podcasts to drive traffic to their business. Some companies use their podcasts to build reputation.

Podcast as a business

Any activity should be able to make money to be called a business. How do podcasts make money?

Podcasts primarily make money by running advertisements. In a typical podcast, there will be an introduction to bait the listener and then, “Before going into the topic, a quick word from our sponsor XYZ”. The main problem of advertising in podcasts is you cannot measure “Click-through rate”. Podcast creators only know how many times their files are downloaded from the cloud. Companies are careful on their advertising spend, they need to know the return on the investment.

A coupon code style advertisement is a quick fix to the problem. “XYZ.com/podcast-name”, became the norm in the advertisements. Users are incentivised to visit a website under a given URL with a promise of discount. Another challenge here is the user may skip the entire advertisement part. The playback metrics are unreliable.

This problem arises due to the design of podcast publishing. The podcast owners do not control the applications that are used to listen to their content. The free, open, decentralised architecture became a hurdle to run advertisements.

Another way to earn money is to charge the listeners. Platforms like Patreon allows multi-tier subscription models to create live stream, shout-outs and exclusive content to the listeners. But, people are used to listening to podcasts for free. Subscription model for audio content isn’t mature or scalable yet.

Podcast analytics

Advertisers are in a dilemma whether they are overpaying for podcast ads. Without metrics, it’s not easy to answer the question. In the last five years, ideas are emerging to fix this problem. Backtracks, calls itself “the world’s most advanced podcast analytics and hosting platform”, has developed an open source analytics standard to be integrated on the server, website or mobile podcast applications to run analytics.

Podcast architecture with Backtracks SDK
Podcast architecture with Backtracks SDK for analytics

The podcast analytics Software Development Kit (SDK) allows the podcast creator, advertisers to uniquely measure the impact of every episode and campaign. They can now know which part of the episode is played, how many people listened through the entire episode and more. It helps the creator to objectively measure their brand and advertisers can reliably spend on their marketing campaigns.

A closed opportunity

Podcasts were created in the distributive framework. The monetisation challenge pushed for innovation in the domain. Podcast analytics is a success but taking control of audio files is still a prolonged challenge in the distributive system. A closed model can solve this problem efficiently.

Imagine a platform where the creators upload the audio files. The platform manages the listening application with its registered users. It will have complete control of the usage metrics and can even change the advertisement from time to time. Just like YouTube. Now, who in the audio medium is as big as YouTube? 🤔

Spotify, it is.

I wrote about Spotify’s thin margin in the competitive music industry in the “tip jar business model”.

Spotify pays $0.00437 per stream to the owner of the music rights. That will take over 300,000 streams to earn a minimum living wage. Spotify is paying out 75% of the revenue, it is the best they can do with their business model.

the “tip jar business model”.

Spotify’s current business model is not working well for the company or the majority of its small creators. Spotify can build a podcast platform where subscribers listen to exclusive content. It will be another channel of revenue for Spotify without the rights problem. If it grows big, they can bundle subscriptions across music and podcast platforms.

Spotify's closed podcast system
Spotify’s closed podcast system

Spotify saw this coming and made multiple acquisitions of podcast platforms namely Anchor, Gimlet and The Ringer. It announced Streaming Ad Insertion (SAI) technology, in January this year, that enables it to dynamically insert ads in real time based on who is listening to the podcast. Stitcher Radio is another podcast and radio broadcasting platform that tries to centralise monetisation in podcasts. It owns Midroll where advertisers are matched with popular podcast creators.

Closing thoughts

Podcasts have been thriving for the last twenty years in the decentralized environment. Platforms like Spotify and Stitcher are trying to create a closed system. It compromises the freedom and openness that made podcasts successful in the first place. There are challenges in on-boarding existing podcasts as exclusive Spotify offerings. Spotify can try to become a better pod-catcher with its SAI technology and other innovations. But it is caught in a position to create its own high quality, exclusive podcast content. Where have we heard about a company that is put in a position to create original content to thrive sustainably? 🤔

That’s right. Spotify is aspiring to be the Netflix for podcasts.

Update:

Few days after publishing this post, Spotify has bought Joe Rogan’s podcast as an exclusive in a deal worth more than $100 million. Spotify’s stock soared 8% after the announcement (~$5 billion).


Hope you learned something new. I write on business and technology topics. Consider subscribing to my blog to receive upcoming posts directly to your mailbox. I promise to publish useful content 🙂

Feel free to say hi on Twitter or LinkedIn


Thumbnail Photo by Sam Rios on Unsplash

Accessibility and inclusion in UX for Product Managers

I stumbled on the topic of accessibility and inclusion while learning user experience (UX) design from MOOCs. At first, I thought it’s a reasonably familiar topic but I couldn’t have been more wrong. After reading through several resources, I now firmly believe, there is no better way to practice user empathy than understanding accessibility and inclusion. This blog post outlines the need for accessibility and inclusion in building products and how it’s a win for everyone involved.

Disability – redefined

When I heard disability, I used to think about people with physical disability such as those who have lost their limbs, vision, hearing. The World Health Organisation (WHO) says over a billion people, 15% of the world population, have some form of disability. They mention disabilities due to ageing, chronic health conditions, mental illness among others. Many people live a normal life without knowing they have a disability like color blindness. WHO argues disability is not just a health problem, it’s a phenomenon reflecting the interaction between features of a person’s body and features of the society in which he or she lives.

According to WHO’s argument, disability happens at the point of interaction between a person and the society. Consider a deaf person walking into a job interview and facing an intercom door.

The user faces enormous friction in this situation. It is a loss for both the candidate and the recruiter in the world surrounded by non-inclusive, inaccessible products. The philosophy of inclusive design addresses this problem.

Inclusive design

Inclusive design is about considering the full range of human diversity such as age, class, color, gender, literacy, race and all forms of disability. Any exclusion results in hampering the interaction of the individual with their friends, family, their neighbourhood and society. Ramps and access cards in buildings, Braille inscriptions in elevators are examples of inclusive approaches to design and offer social participation for everyone.

There is a misconception that inclusive design means designing one thing for everyone. It means creating multiple things where everyone has an option. For example, an inclusively designed train station may offer stairs for youth, escalators for elderly and elevators for those who are wheelchair-bound. The use case of mobility inside a train station is solved via multiple designs with a primary motive—do not exclude anyone.

Challenge of exclusion

Exclusion is the biggest challenge in entertaining diversity. There are temporary and situational exclusions in everyday life. Few of my MBA batch-mates broke their legs and were wheelchair-bound for months. They faced temporary exclusions from several activities on the campus. Navigating to the check-in counter of a busy airport with luggage creates a situational exclusion. Mobile phones come handy in such circumstances. The touchscreen of a mobile phone that contains every necessary option within a reach of the thumb is designed with inclusive design philosophy.

Permanent, Temporary and Situational exclusion
Permanent, Temporary and Situational exclusion. Credits: Microsoft Design

Technology interactions depend on the way we touch, see, hear and speak and remember. I have personally faced difficulties in teaching my father how to use a mobile payment application. He was forced to learn the nuances of One Time Password and Two-Factor Authentication. Many essential modern applications are not friendly to elders. It begs a question whether technology is adapting to us, or we should adapt to technology.

Empathy

Empathy is a key ingredient in designing accessible and inclusive applications. Personal biases can influence the way we speak and behave. It can easily influence the products we build unless we choose to empathize with the users.

Product Managers (PM) usually think about user personas when they face a problem statement. Need-driven user personas help PMs practice user empathy while designing products. A noise-cancelling headset or a blindfold during prototyping will come a long way in making the product more accessible. Empathizing with users will help us see more barriers than we can imagine.

Solve for one, extend to many

User empathy and inclusive design philosophy will help us design solutions that can work for multiple situations of exclusion. Consider the high contrast screen that was invented for people who had vision impairments. Today it helps people who are using their laptops under sunlight—a situational exclusion gap.

Audible, the popular audiobooks company is powered by the concept of storytelling that was initially catered to people (primarily children) who cannot read with their eyes. Video captioning that was intended to help people who cannot hear is currently used in busy airports, video call transcription services. When solving a problem for blind or deaf people, we are not only solving for them. We need to start thinking about enabling participation for people with disabilities in everyday life in society. We can extend those products and make it accessible for many more people in the future.

Takeaway

While designing a product, recognize the exclusionary aspects. Empathize and learn from the diversity of users. Solve for one and extend it to many. These are the most important takeaways from my UX lesson yesterday.

Most of the references are taken from Microsoft’s design blog. It has quite a lot of films, guides on the topic of inclusive design. I highly recommend checking them out.


I hope you learned something new. I write on business and technology topics. Consider subscribing to receive upcoming posts directly to your mailbox. I promise to publish useful content 🙂