The media business is in deep trouble. While there are a few successful subscription outlets (like the New York Times), most news media outlets depend upon advertising to create revenue. And unfortunately for them, three technology trends make it increasingly difficult to create ad revenue:
- Ad blockers. News media firms have tried to secure online ad revenue by making ads more obtrusive. As a result, many consumers now employ ad blockers just to clear out the noise. This, in turn, makes media firms even more desperate, leading to even more intrusive ads, creating a downward cycle.
- Social Media. Many consumers now use Facebook, YouTube and Twitter as a gateway to news, clicking on stories that their connections have shared. While those clicks do generate page-views for the news media site (and thus the potential for ad revenue), the use of social media makes it harder for news media sites to create reader loyalty.
- Fake News. Fact-based journalism costs money to create. Fake news, on the other hand, requires no research and no fact-checking. News media firms are thus put in the difficult position of competing for ad revenue with firms that have much lower costs and which can therefore create more volume. This makes it harder for reputable firms to make money.
Many online news sources constantly fight an uphill battle to grab eyeballs (and display ads). The most common coping strategy is to increase the quantity of content without regard to quality. Essentially, many media firms "spray and pray"--throw as much as possible against the wall to see what "sticks."
Unfortunately, that's a recipe for lowering the average quality of the content on a site. It also creates a "sameness" amongst the media sites. Content becomes less unique and more of a commodity, less likely to create reader loyalty and ultimately less able to generate ad revenue.
There is one segment of the news media, though, where quality massively outperforms quantity: podcasting.
According to a January 2017 report from the market research firm Podtrac, nine of the top ten podcast publishers (in terms of unique visitors and unique streams and downloads) produce a small number of high quality shows.
For example, This American Life and Serial (they come from the same studio), enjoy a unique monthly audience of 4.7 million, generating 16.1 million streams and downloads each month. Those numbers are huge when you consider that one show is weekly and the other is only released on a yearly basis.
By contrast, the only top ten producer doing "spray and pray" podcasting is CBS with 418 podcasts, mostly re-purposed network content. While CBS generates 11.7 million unique streams and downloads, it only wins a comparatively small monthly audience of 1.7 million uniques. Sad.
In podcasting, quality beats quantity in terms of creating and holding an audience. While most of the quality content currently being developed and distributed through public radio, there are now independent startups that generate ad revenue with similarly high quality content.
One of the most visible of these startups is Gimlet Media, whose new podcast Crimetown recently hit the top 20 podcast list. I recently spent a half-hour discussing the podcast business with Gimlet president and co-founder Matthew Lieber. According to Lieber, high quality podcasts create sustainable ad revenue because the advertisements are integrated as part of the entertainment.
"We decided from the start that we didn't want to go the way of radio advertising, where ads are distracting and irritating. Instead, we create ads that reveal something more about the hosts' personality."
Indeed, when you listen to Gimlet content, the ads feel like a part of the show, making it unlikely that anyone would ever bother to block the ads electronically. Because the ads are non-obtrusive (and don't run while you're not listening), listeners can't "change channels" to avoid ads, as they do with broadcast radio.
In other words, podcasting isn't vulnerable to the technological pressures that are affecting the online news business. Podcasts can create a loyal audience that is willing to listen to ads without complaint. What's more, high quality podcasts create binge listening, which means that listeners are exposed to the ad message multiple times in a short period of time.
This translates into highly effective ad campaigns. Lieber says that one of his major customers, Ford Motor Company, recently told him that podcast ads were far more effective than any other media in terms of creating new business.
Finally, podcasting, as a medium, has huge growth potential. According to a March 2017 report by Edison Research and Triton Digital, the percent of population that listens to podcasts nearly doubled (8% to 15%) from 2014 to 2017. And there's plenty of room for more growth because, according to NPR, about half the potential audience doesn't even know that podcasts exist.
Podcasting, in short, looks likely to be a game-changer media companies savvy enough to start creating quality content to escape the rampant commoditization of online content and consequent watering down of ad revenue. The only question is: which online media firms will "get it" and which will miss the proverbial boat.